“Freakonomics” by Steven D. Levitt and Stephen J. Dubner Essay

Freakonomics, by St point D. Levitt and Stephen J. Dubner, is record that non your typical economist would write it was co- origined in 2005 and if morality represents how we would like the mankind to work, then political economy represent how it in truth does work in this award-winning book. Steven D. Levitt is a not your typical economist. He is a untold-heralded scholar who studies the riddles of e realday life- from get laiding and horror to sports and youngster rise up and whose conclusions turn the conventional wisdom on its head (freakonomics.com). Stephen J. Dubner is an award-winning author and journalist (freakonomics.com). These two authors team up to create a very insightful groundbreaking collaboration.They set out to to explore the inner kit and boodle of a crack gang, the truth about real acres agents, the secrets of the Ku Klux Klan, and much much. Through much story telling and insightful k promptlyledge, they show that political economy is at the root, the study of inducings (freakonomics.com). There is not wizard underlying cornerstone the book, Freakonomics, is built around, but there argon some(prenominal) reoccurring themes throughout. The three major themes that I found occur throughout the book atomic number 18 convinced(p) vs. prescriptive digest, inducements atomic number 18 the cornerstone of modern life, and the idea of tournament behavior markets, winner decl are all.Freakonomics is a brilliant, provocative investigation into motives what be they, how they can be changed, and how they affect what people do. It is alike a deceptively easy read its style is very humorous and really grips the contributor throughout the book. Freakonomics tackles some of our most basic assumptions about the way people, and society, work. I intrust that Freakonomics demonstrates the basic frugal principles. I will defend this statement through the underlying themes of Freakonomics.Positive vs. normative analysis is one of the many underlying themes of Freakonomics. The conclusions derived from each chapter will often surprise the reader. These conclusions may overly not agree with your in-person beliefs, but that is the basis of positive vs. normative analysis. Positive economics is objective and fact bases, while normative economics is subjective andvalue based. Positive economic analysis statements do not always have to be true, but in order to be considered a positive analysis you must be able to ladder and prove or disprove the statement. normative analyses are opinion based, so they cannot be proved or disproved. This basic economic principle is not always easy to understand beca commit the consumer is unremarkably very value based. state-supported policies are typically revolved around normative economic statements importation the disagreements carry on because neither side can prove that is flush or incorrect.There are many shells of positive vs. normative analysis throughout Freakon omics, in chapter four, on crime and abortion, the authors brought forth the have it off of how crime rates relate to abortion and backed it up with the statistical information. This is an example of positive analysis because the statistical information supports the issue being argued. Normative analysis of the issue between crime and abortion would be that they are not correlated to one an another(prenominal) because it pledges the fidelity to notions of the way the world should be. Also, in chapter five, the coauthors believe that a kids academic winner does not come from parental efforts and they explained this through the data presented in the book. unmatched would think a parental figure would help a childs development in the classroom, but in reality its other external factors that does. This all the way illustrates the difference between an analytical approach that considers the world, as it is (positive analysis) and an analytical approach that is based on how the world should be (normative analysis).Incentives are the cornerstone for modern life, people respond to incentives. An understanding of incentives is the key to clearly understanding any human behavior. Incentives are a thing that motivates or encourages one to do something. Incentives are everywhere in the world in particular in economics. Corporations are often given tax incentives for hiring more employees. Incentives are a payment or concession to stimulate greater sidetrack or investment. In Freakonomics, Levitt and Dubner believe incentives equivalent to the study of economics. In chapter one, Dubner and Levitt verbalize that incentives come in three varieties moral incentives, social incentives, and economic incentives. chaste incentives are which one acts out of conscience or conviction. Social incentives are by which actionsare related to shame or glory.Economic incentives are causing people to act in their own personal financial interest. In chapter one, we saw the example o f a day care content in Haifa, Israel, in which a fine was levied for parents picking up their child late from day care. Once the fine was implemented, we started seeing parents showing up late because it allowed more personal free time. Once this economic incentive was levied parents found that the free time outweighed the economic incentive. Parents were only picking up their child on time because there was somewhat of an incentive socially and morally. They morally or socially believed they had to pick up their child on time, but now that an economic incentive was implemented they did not smell out morally responsible to be on time and just paying(a) the fine. Also in chapter one, we saw the incentive for teachers and their students to do well on standardized testing for more school funding or even to keep their job, so teachers act out irrationally and help students cheat on standardizing testing.Incentives are found in ordinary life they are in every situation depending on ones personal beliefs, which also can relate back to normative vs. positive analysis. In chapter two, real estate agents dont have moral incentive to get the best price for their customers house being sold. Getting the best price on a house and time consuming. Since real estate agents make 3 to 6% commission on houses they have pocketable incentive to put more work in then postulate for a small amount of gold more. They feel their time is more valuable then putting forth more effort in selling a house knowing they can sell it high-velocity at a cheaper price. There are many examples throughout the book of incentives, but the one I found most interesting was the issue of drug dealers still living at blank space in chapter three.Levitt and Dubner use dealing crack cocaine as an example of an incentive to split yourself and make money through harsh working environments, but it is also an example of a basic economic principle called tournament lawsuit markets. They strategicall y use the example of dealing crack cocaine as a tournament type market by convincing the reader this is a winner take all field of work. Street-level drug salesman usually are motivated by the idea of getting promoted in the drug business, so they ultimately try to maximize the gangs profits. high ranker officials however are more interested in making money since they are already in a position of high status. general in this market there are many players, butone by one they are eliminated. At the end, a victor emerges and takes home the prize or money. As stated in the book, the top cxx managers in the Black disciples gang represented just 2.2 percent of the fledged gang membership, but took home well more than half the money. This is a tournament style market because these managers emerged from all the other competitors and are now high ranking, they won the tournament in essence.Overall I believe Freakonomics illustrates basic economic principles. Levitt and Dubner lay out many underlying themes in the book, Freakonomics, but there are many reoccurring themes throughout. The three major themes that I found throughout the book are positive vs. normative analysis, incentives are the cornerstone of modern life, and the idea of tournament style markets, winner take all. These three basic economic principles are just a few of the major themes in the book, but I believe are enough license to convinced the reader that Freakonomics does cover major economic principles and is a book of economics. In all, Freakonomics is a brilliant book that incorporates everyday ideas into economic ones. It truly is a book about economics and the evidence given proves this.Works CitedFreakonomics. Freakonomics RSS. N.p., n.d. Web. 17 June 2014. Levitt, Steven D., and Stephen J. Dubner. Freakonomics A Rogue Economist Explores the vague Side of Everything. New York William Morrow, 2005. Print.