In the Epilogue, the authors mention, as they did at the beginning of the book, that there is no unifying theme to Freakonomics. The common thread throughout the book is to thinking differently about situations, such as why people are named certain ways or why people actually want to deal drugs. These are things that I've wondered about at some point, and this book as enlightened me as to why these things happen.
I would recommend this book to anyone that wants to see economics used in a different, unconventional way. Anyway who thinks economics is uninteresting should definitely read this book. It brings the subject into a whole new light.
Friday, December 7, 2007
Chapter 6
Chapter 6, the final chapter in the book, displays the most popular names in socioeconomic groups and discusses how successful people given different names become. However, it isn't the name that makes the person successful for unsuccessful. The man that named two of his sons Winner and Loser found this out first hand (and why he named his son Loser I will never know). Loser had become successful as a police sergeant and Winner had a long history of criminal activity.
The book has several lists of names given to children that are black and white and in different socioeconomic groups. The names that are given to black and white boys and girls are usually very different. A black mother giving her child a distinctively black name usually comes from an unmarried, low income, low educated household from a black neighborhood. The black mother wants to name her son or daughter these names to keep the black culture alive through the family and not "act white." Just as black children have to "act black" so they don't get taunted, mothers have to name their children black names to not "act white."
I was looking through the lists and I noticed my name, Justin, on the "Most Common Low-End White Boy Names. Not only that, but my middle name, Anthony, as also on this list of five names. I come from a middle-income family, so I sort of go against this finding. I just thought it was interesting.
It is also interesting how popular names change so quickly. Names that were popular only 30 or 40 years ago, such as Linda, Debra, and Sandra, are hardly used anymore. People are trying to keep up with the trendy names of the time. There are some names that seem to stick for a while, such as Michael and David. I'm sure there will be many names in ten or twenty years that will hardly ever hear of today. The names may seem very weird to us now, but now so weird down the road. Down the road, I will probably want my son or daughter to have a trendy name to stay with the times.
The book has several lists of names given to children that are black and white and in different socioeconomic groups. The names that are given to black and white boys and girls are usually very different. A black mother giving her child a distinctively black name usually comes from an unmarried, low income, low educated household from a black neighborhood. The black mother wants to name her son or daughter these names to keep the black culture alive through the family and not "act white." Just as black children have to "act black" so they don't get taunted, mothers have to name their children black names to not "act white."
I was looking through the lists and I noticed my name, Justin, on the "Most Common Low-End White Boy Names. Not only that, but my middle name, Anthony, as also on this list of five names. I come from a middle-income family, so I sort of go against this finding. I just thought it was interesting.
It is also interesting how popular names change so quickly. Names that were popular only 30 or 40 years ago, such as Linda, Debra, and Sandra, are hardly used anymore. People are trying to keep up with the trendy names of the time. There are some names that seem to stick for a while, such as Michael and David. I'm sure there will be many names in ten or twenty years that will hardly ever hear of today. The names may seem very weird to us now, but now so weird down the road. Down the road, I will probably want my son or daughter to have a trendy name to stay with the times.
Chapter 5
Chapter 5 is about parenting techniques. The authors talk about how correct parenting techniques are constantly changing. So called "experts" keep publishing books on a new technique that parents should use for their children. Parents always want to follow the correct techniques out of fear: Fear that the child will not grow up properly.
I feel that parenting does make a reasonable difference as far a personality goes. My parents always looked out for my best and always wanted me to focus on the right direction: getting good grades in school, joining clubs, making new friends. I think if my parents didn't push me for these things and praise me when I did well, I wouldn't have cared as much.
The book then goes on to discuss that maybe parenting doesn't make as much difference as everyone thinks. But in what aspects? As far as schooling goes, goes does not make much of a difference, according to the Chicago Public School system "experiment." I agree with Richard P. Mills' reasoning that children are not prepared for high school work. There needs to be a renewed emphasis on getting children prepared for the future.
Looking back, even though it was my high school, I don't think it prepared me well for college. I was in honors, but the work was far too easy. I got to college thinking it was going to be a breeze, that I wouldn't have to study much and still get good grades. I was wrong, of course, and when I started getting my grades after a couple of semesters, I wasn't too pleased. School work needs to challenge students to get better. When you don't think you can do it, you need to push even harder to accomplish your task.
The authors then talk about the Early Childhood Longitudinal Study. They talk about what factors the study showed that were positively correlated (through regression analysis) with test scores and factors that were not positively correlated (eight of each). I went on to think about myself and the factors that are positively correlated with good test scores, since I generally tested well on tests such as FCAT.
While my parents don't have graduate degrees, they both went to college. My mother was over thirty when she had her first child (me), and I did not have a low birth weight. My parents speak English. I did not have many books in my home, but I had things like encyclopedias to use before we got a computer. These factors lead to me be a fairly intelligent student and test well.
What also helped me was that my parents rewarded performing well in school. My parents would always be very happy whenever I brought home A's. What influenced me even more was that they were not happy with me making anything less than a B. If I brought home C's, they would always want me to do better. My parents would also reward me with money for A's and B's.
I feel that parenting does make a reasonable difference as far a personality goes. My parents always looked out for my best and always wanted me to focus on the right direction: getting good grades in school, joining clubs, making new friends. I think if my parents didn't push me for these things and praise me when I did well, I wouldn't have cared as much.
The book then goes on to discuss that maybe parenting doesn't make as much difference as everyone thinks. But in what aspects? As far as schooling goes, goes does not make much of a difference, according to the Chicago Public School system "experiment." I agree with Richard P. Mills' reasoning that children are not prepared for high school work. There needs to be a renewed emphasis on getting children prepared for the future.
Looking back, even though it was my high school, I don't think it prepared me well for college. I was in honors, but the work was far too easy. I got to college thinking it was going to be a breeze, that I wouldn't have to study much and still get good grades. I was wrong, of course, and when I started getting my grades after a couple of semesters, I wasn't too pleased. School work needs to challenge students to get better. When you don't think you can do it, you need to push even harder to accomplish your task.
The authors then talk about the Early Childhood Longitudinal Study. They talk about what factors the study showed that were positively correlated (through regression analysis) with test scores and factors that were not positively correlated (eight of each). I went on to think about myself and the factors that are positively correlated with good test scores, since I generally tested well on tests such as FCAT.
While my parents don't have graduate degrees, they both went to college. My mother was over thirty when she had her first child (me), and I did not have a low birth weight. My parents speak English. I did not have many books in my home, but I had things like encyclopedias to use before we got a computer. These factors lead to me be a fairly intelligent student and test well.
What also helped me was that my parents rewarded performing well in school. My parents would always be very happy whenever I brought home A's. What influenced me even more was that they were not happy with me making anything less than a B. If I brought home C's, they would always want me to do better. My parents would also reward me with money for A's and B's.
Monday, November 26, 2007
Chapter 4
Chapter 4 starts off with the interesting comparison between the abortion ban in Romania and the crime in America. Later on in the chapter, Levitt shows the connection between abortion and crime and how legalizing abortion has led to a decrease in the crime rate. The reasons noted are that children are not brought up in unstable homes, such as one parent homes, parents unable to raise a child due to money or age, and others. It seems to me that these factors are legitimate factors in how a child acts. If he or she is brought up in a loving home, they know how they should act, even though they may not always act that way. If they are not, they do not know how to react and start doing whatever they want, including crime.
He also talks about seven reasons noted in newspapers for the drop in the crime rate, and how some were backed-up by research and some were just opinions of the writers. The reasons that did hold true were increased reliance on prisons, increased number of police, and the bursting of the crack bubble. All of these reasons seem to make sense, and all are backed by the data researched. The others I thought would have been factors in lowering crime, especially innovative policing strategies, but I guess I wasn't looking at the big picture.
I thought it was interesting when the book showed the chart on how many weeks of pay an employee was compensated for when they damaged or lost a body part. It's interesting to see how companies few how important a certain body part is. But how do you value a body part? It is very difficult and varies among different people. This coincides with punitive damages: How much money should you get above and beyond compensatory damages for being injured by the defendant? Sometimes the punitive damages are TOO much ($1 million for a scratched arm).
He also talks about seven reasons noted in newspapers for the drop in the crime rate, and how some were backed-up by research and some were just opinions of the writers. The reasons that did hold true were increased reliance on prisons, increased number of police, and the bursting of the crack bubble. All of these reasons seem to make sense, and all are backed by the data researched. The others I thought would have been factors in lowering crime, especially innovative policing strategies, but I guess I wasn't looking at the big picture.
I thought it was interesting when the book showed the chart on how many weeks of pay an employee was compensated for when they damaged or lost a body part. It's interesting to see how companies few how important a certain body part is. But how do you value a body part? It is very difficult and varies among different people. This coincides with punitive damages: How much money should you get above and beyond compensatory damages for being injured by the defendant? Sometimes the punitive damages are TOO much ($1 million for a scratched arm).
Sunday, November 25, 2007
Chapter 3
Just got done reading Chapter 3, and I'm noticing the theme of strange questions being asked in each chapter and then going into detail about answering the questions.
The whole story about the Black Gangster Disciple Nation and drug dealing was very interesting. The fact that Sudhir Venkatesh would go into those dangerous conditions to find that information was very courageous and showed that he was very interested in the topic. He did gather some very valuable information that few would venture to gather. If I was the teacher sending him into those conditions, I would feel very bad if anything happened to him.
I thought the whole ranking of the drug dealing business was interesting. The whole drug dealing propaganda is much more complicated and thought-out than I thought it was. There is actually a business-like structure to it. The amount of money that is brought in by drug dealing blew me away! J.T., the gang leader, was making $100,000 a year! I guess I can see why some would be tempted to come to the "dark side." J.T. had a college degree and still went to drug dealing. I suppose this works for people with a large hunger for money. I feel most people would not want to deal with the risk or guilt involved in this dangerous "profession."
I was wondering why anyone would actually want to deal drugs, as the threat of violence, jail time, or even death was very real. But it made sense after I read that those in the business are trying to work they're way up in a competitive industry made sense. The example of a high-school football player waking up at 5 a.m. to lift weights was a good one. It shows that even though, in both cases, the chances of making it to the top of the pyramid is low, the chance that it could happen drives those involved to continue what they are doing. It keeps them highly motivated. Perhaps that is why we are all in the MBA program: we are highly motivated in a competitive industry, and we want to separate ourselves from the pack. It is hard work, but in the end it is worth it.
Wednesday, November 14, 2007
Chapter 2
I've gotten a bit behind on Freakonomics, but none-the-less, I am here posting on Chapter 2.
Chapter 2's main focus was on information asymmetry - when one party knows more about a product than the other party. Being in the MBA program, we all know much about this topic. Businesses use information asymmetry to gain a profit. An example from the book was selling houses. Sellers will use certain words in newspaper ads to hide the condition of a house; they will use words like "fantastic" or an exclamation point to build up the house to be better than it actually is. In these cases, there are things about the house that the seller wants to hide.
Another interesting topic in the chapter was the prices of term life insurance. I don't know much about term life insurance or insurance in general, but what was described in the chapter made sense. Since term life insurance is usually a constant price, as opposed to health or dental insurance, term life insurance would go down when information asymmetry is evened out due to the Internet.
This is similar to auto insurance dealers like Geico and State Farm. Auto insurance dealers used to make offers to customers and they had little information about competing prices from other insurance dealers. Customers had to either accept the offer or decline it and move on to another dealer. Now, customers can go on the Internet, go to each auto insurance Website, and view each dealers' prices. Sites now have their own prices and the prices of competing companies so that they can compare prices all on one site. In my opinion, the competing prices might not be the most accurate, as the insurance companies want to make their prices look the best, so they probably manipulate the others prices in one way or another. Just my opinion....
One problem with the Internet is that you don't see items right there in front of you, in black and white (figuratively). You see it across a computer screen. You can't see and touch that car or TV right in front of you that you want to purchase. You have to take pictures as an honest representation of. By the time it gets to you, it could be changed or manipulated from when you saw it over you Internet connection. You could argue, but the seller could make something up, and sometimes it may not be worth your time to argue.
Information asymmetry is prevalent in Internet sites such as Ebay. When a seller is selling an item on Ebay, they could describe the item so that it makes it seem the item is in better condition than it really is. Ebay has combated this by using feedback from buyers and sellers to keep people honest, and if a user gets enough negative feedback, they can get their account temporarily or permanently suspended.
I will be back soon with Chapter 3!
Chapter 2's main focus was on information asymmetry - when one party knows more about a product than the other party. Being in the MBA program, we all know much about this topic. Businesses use information asymmetry to gain a profit. An example from the book was selling houses. Sellers will use certain words in newspaper ads to hide the condition of a house; they will use words like "fantastic" or an exclamation point to build up the house to be better than it actually is. In these cases, there are things about the house that the seller wants to hide.
Another interesting topic in the chapter was the prices of term life insurance. I don't know much about term life insurance or insurance in general, but what was described in the chapter made sense. Since term life insurance is usually a constant price, as opposed to health or dental insurance, term life insurance would go down when information asymmetry is evened out due to the Internet.
This is similar to auto insurance dealers like Geico and State Farm. Auto insurance dealers used to make offers to customers and they had little information about competing prices from other insurance dealers. Customers had to either accept the offer or decline it and move on to another dealer. Now, customers can go on the Internet, go to each auto insurance Website, and view each dealers' prices. Sites now have their own prices and the prices of competing companies so that they can compare prices all on one site. In my opinion, the competing prices might not be the most accurate, as the insurance companies want to make their prices look the best, so they probably manipulate the others prices in one way or another. Just my opinion....
One problem with the Internet is that you don't see items right there in front of you, in black and white (figuratively). You see it across a computer screen. You can't see and touch that car or TV right in front of you that you want to purchase. You have to take pictures as an honest representation of. By the time it gets to you, it could be changed or manipulated from when you saw it over you Internet connection. You could argue, but the seller could make something up, and sometimes it may not be worth your time to argue.
Information asymmetry is prevalent in Internet sites such as Ebay. When a seller is selling an item on Ebay, they could describe the item so that it makes it seem the item is in better condition than it really is. Ebay has combated this by using feedback from buyers and sellers to keep people honest, and if a user gets enough negative feedback, they can get their account temporarily or permanently suspended.
I will be back soon with Chapter 3!
Tuesday, October 9, 2007
Chapter 1
I just got done reading chapter 1 of Freakonomics and I must say, I can't wait to continue reading the rest of the book. The book is very easy to read and uses economics in very interesting ways. It discusses real world problems in ways that are unconventional.
One part of the chapter I thought very interesting was the reason for lowered crime rates. I never thought that legalizing abortion would be a legitimate reason to this statistic, but it made perfect sense. Perhaps if those that are against abortion think about it in this way, they may change their minds about it.
Another part I enjoyed reading was the cheating of teachers. It makes sense that some people will try to cheat as the benefits become greater, particularly if it is hard to get caught. In sports, it happens all the time. As a big sports fan, I know players will try to cheat to get a competitive advantage, and sometimes they get away with it. Referees are not perfect, and they will miss some calls, which is what the players are hoping for. However, I never thought about the reasons teachers would cheat. It made sense after reading the chapter. If the stakes are high for teachers to cheat, such as losing their job or getting a big bonus, they will go to new lengths to make sure these happen. For teachers, if this means cheating to make their students look better, some will go to those lengths, even at the disposal of the students' education.
The sumo wrestling part was interesting in the fact that since it is such a big part of the culture, wrestlers will still throw matches for different reasons, such as bribes.
One part of the chapter I thought very interesting was the reason for lowered crime rates. I never thought that legalizing abortion would be a legitimate reason to this statistic, but it made perfect sense. Perhaps if those that are against abortion think about it in this way, they may change their minds about it.
Another part I enjoyed reading was the cheating of teachers. It makes sense that some people will try to cheat as the benefits become greater, particularly if it is hard to get caught. In sports, it happens all the time. As a big sports fan, I know players will try to cheat to get a competitive advantage, and sometimes they get away with it. Referees are not perfect, and they will miss some calls, which is what the players are hoping for. However, I never thought about the reasons teachers would cheat. It made sense after reading the chapter. If the stakes are high for teachers to cheat, such as losing their job or getting a big bonus, they will go to new lengths to make sure these happen. For teachers, if this means cheating to make their students look better, some will go to those lengths, even at the disposal of the students' education.
The sumo wrestling part was interesting in the fact that since it is such a big part of the culture, wrestlers will still throw matches for different reasons, such as bribes.
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