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Last Updated: Tuesday, 12 July, 2005, 10:34 GMT 11:34 UK
Freaky economics
By Brendan O'Neill

If you think economics is all boring tables and pie charts - all "footsies" going up or down and other seemingly inexplicable events described in the pink bit of the newspaper that most of us discard - think again.

Steven Levitt, an economist at the University of Chicago and editor of the Journal of Political Economy, has won widespread praise and fame on both sides of the Atlantic for making economics, and specifically statistics, exciting.

There isn't a "footsie" in sight in his new book, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. Instead, Levitt applies economics to everyday life.

Taking something of a surreal approach to stats, his book analyses data to answer such eclectic questions as: Why do crack dealers tend to live with their mothers? Why is a man called DeShawn likely to have different job prospects from a man called Jake?

And the most controversial question of all in the book, is there a link between rising numbers of abortions and falling crime rate? (If you're itching to know the answers, don't worry - all will be revealed in a mere moment.)


Freakonomics has stoked controversy, become an international bestseller and won itself a cult following to boot. It has already topped the New York Times bestsellers' list and the Canadian non-fiction book chart, and Levitt has been hailed even by the normally stuffy Wall Street Journal as the "Indiana Jones" of economics.

"What I do is actually quite simple," he tells me during his whistlestop and, by the sound of things, quite exhausting trip to London to promote Freakonomics, published here this week.

"My book simply shows that you can use data to understand a modern world that seems incredibly complex. We show that, sometimes, you can make a little headway to understanding the world and its weird phenomena if you are armed with some of the ideas of economics, as well as the data."

My book is very politically incorrect, but not purposefully or ideologically incorrect
Steven Levitt
So, to return to the three taster questions posed above. Levitt carried out an economic analysis of a drugs cartel to show that the reason crack dealers tend to live with their mothers is because it's all they can afford.

He found that a crack-dealing outfit is usually a pretty ruthless pyramid-shaped organisation, where those at the top make a lot of cold hard cash but those who dispense the wicked white stuff on street corners tend to earn less than the US minimum wage.

Levitt analysed job market data to show that those with a "black" name - that is favoured by African-America families - such as DeShawn, are likely to have worse job prospects than those with a "white" name, such as Jake.

Why? "The kind of parents who name their son Jake don't tend to live in the same neighbourhoods or share economic circumstances with the kind of parents who name their son DeShawn," he writes in Freakonomics.

"A DeShawn is more likely to have been handicapped by a low-income, low-education, single-parent background. His name is an indicator - not a cause - of his outcome."


Then there is Levitt's economic analysis of abortion and crime rates, which has rattled America. He claims that Bill Clinton's apocalyptic warning of a crime wave in the 90s did not come to fruition because of Roe vs Wade, the landmark Supreme Court ruling of 1973 that legalised abortion in the USA.

He argues that the women most likely to have taken advantage of Roe vs Wade were poor and unmarried, whose kids - if they had been born - would apparently have "led unhappy and possibly criminal lives".

Do you see where the argument is heading? In a nutshell, Freakonomics claims that legalised abortion killed off many future criminals, using data to show that 20 years after Roe vs Wade there was a dip in the crime rates. It's a distasteful claim and it has stuck in the throats of many in the USA. But Levitt stands by it.

Steven Levitt
Levitt: Data can reveal a lot
"We simply followed the data and that is where we ended up," he says. "My book is very politically incorrect, but not purposefully or ideologically incorrect. It's just that we went with the numbers, regardless of whether our conclusions might cause offence."

This is a common theme in Levitt's book, indeed he says that relying on data to make sense of seemingly peculiar things is "the only unifying theme of the book".

But can we really hope to understand the world through stats, data, percentages and tables? Can making sense of society and why people behave as they do be reduced to a number-crunching exercise?

Isn't there a danger that Levitt overlooks political and social forces and the fact that people can shape their destinies, even if it's not in circumstances of their own choosing, in favour of turning humanity into something to be studied under a microscope?

Social phenomena

"No one individual could hope to explain everything that is going on in modern life," he says. "But we can offer a snapshot of why certain things happen. The data can reveal a great deal about people and their lives."

To me, this reliance on data is both the strength and weakness of Levitt's book. It is what makes his book fascinating and quirky, providing new ways of looking at old problems. But it also means that social phenomena are only ever described - and described in narrow numerical terms - rather than analysed or potentially resolved.

Indeed, when I suggest that some of the issues highlighted in Levitt's book are as susceptible to political solutions as much as statistical analysis, and that sometimes DeShawns do get as good jobs as Jakes, he responds: "Yes, but we cannot fundamentally reorganise society - that would be politically untenable and too expensive.

"Well, maybe someone smarter than me - one of those true scholars, perhaps - could tell us how the world should be. But I'm interested in using my skills as an economist to describe the world we're in now."

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