The 6 Moment Ebook Summary of Superfreakonomics by Steven Levitt And Stephen Dubner

by eyewash

Executive Summary

This book is about two authors who picked a few topics and researched them.  They proved how economics, is not just something we learned because we had to learn in it school.  This book shows how economics in involved in every part of our lives.  It showed how humans are not altruistic, but greedy people who respond to incentives.  It showed how men respond better than women do.  This book studied the economics of the prostitution ring in Chicago, and how it differed from the 1800-1900.  It explained how the women’s movement lowered the income of said prostitutes.  It explained to a pimps services are exponentially greater than a realtor is.  

It also explained how, using algorithms banks can help the police find terrorist, why having your birthday at the beginning of the year, increases your potential for talent and to succeed.  It takes statistics and shows you things you will not think was true, but is.  For instance, more soldiers are killed in peacetime, than they do during war times.

            It explains how humans are not apathic towards other humans needs, like the Genovese murder, but that the reporters are the problem.  They changed the details and reported misinformation.  The author also shows that cable TV leads to more crime. 

            The book explains and shows how huge problems that cause billions of dollars worth of damage, can be easily solved with simple and relatively cheap solutions.  For instance, hurricanes cause millions of dollars, but with a simple tube thrown in the ocean can weaken the hurricane (will be explained more later)

            Global warming is a problem that threatens to bring humanity to its feet.This book, explains how congress wants to propose trillions of dollars to stop it, when a simple solution to it is around the corner, that cost a fraction of a fraction of a fraction of a,   you get the point.  Congress wants to cut out things that would impede our living confronts, while this solution would allow us to live how we live currently.

            Really, this book is just a collection of stories, centered on the basic concept that expensive is not better.  That numbers can lie, but are needed in our everyday life.  The simple solutions are usually better than the most complicated solutions.  In addition, that humans are altruistic to a point.  This is a book that everyone should read, and would enjoy reading, even if it is about economics.

The Ten Things Managers Need to Know fromSuperfreakonomics

1.            More expensive is not better.

2.            Complicated solutions are not always best.

3.            Humans act in their own self-interest.  Offer customers incentives.

4.            Study the data, and find out what they mean.  Numbers may say something but may not mean that.

5.            Changing a person’s behavior is hard, find ways to give incentives to them.

6.            Incentives are the easiest and best way to influence a person, and “bribe” them.

7.            Women are not treated equal in the work place, but are more qualified than males.  Do not fall into that category, use them, do not discriminate.

8.            Don’t take a great idea and hoard it for yourself.  It may help other people more than you know, and make you more money.

9.            Data is key in life.  Without data, millions of people would be dead.

10.            There is always going to be people telling you it will not work or is a terrible idea.  Ignore them and test your idea before you do it.

Full Summary of SuperFreakonomics.

Introduction: Putting the Freak in Freakonomics

            Freakonomics is the marrying the economic approach to a rogue, freakish curiosity.  In the introduction, the authors tell some stories about statistics.  For example, you are statistically more likely to die walking drunk, than driving drunk.  You could statically, drive across the US several times plastered and not get caught. There is an estimated twenty one billion miles driven drunk each year.  There is one arrest for every twenty-seven thousand miles.  That makes you think about driving now, huh? 

            The authors, also explain in this chapter, how cable TV liberated the women of India, (while later on in the book explains how cable TV causes more crime.) Cable was introduced to India in different segments.  In the areas where cable was introduced first, the women were treated more equally, and the husbands did not beat their wives as much.  While the women who did not have cable, where still thinking the old way, they still thought they deserved the beatings.

            Turns out, the media is an evil of today’s society.  They report what they want, and how they want.  For instance, every summer the news media, reports about abnormally high shark attacks, etc, etc, etc.   Over the past decade, there is on average 60 shark attacks per year, with an average of five deaths.  While every year, there is an average of 200 deaths caused by elephants, cute little elephants named dumbo.  This shows how the media blows things way, way out of proportion.

How is a street prostitute like a department store Santa?

This chapter explains how women have way worse salaries than their male counter parts. It explains how, the profession of prostitution has evolved over the years, while decreasing the salary of it.  It explains how money is a better motivator for men than for women.

            Women’s salaries, for the most part, are paid less than men.  The gap is in every occupation.  Some statistics show that one reason may because women love kids.  The average woman takes time off work to bear children, and to mother them.  When their kid is sick, the mother stays home.  This causes men to gain more experience and better evaluations.  The amount of time a woman takes off of work, gives her a negative image in the eyes of her boss.  Another reason why women take off is when it is that special time of the month.  Many women take off for those days, which add up.  By the age of 45 men have around 6 months more working time than a woman because of that.

            Another issue is that whenever a woman has a good job, a man comes in and takes it away, if there is money involves.  In the WNBA, started off with mainly female coaches, but now there is only four or so women coaches.  Men have taken over a woman-dominated sport.  When prostitution first started women were the pimps.  They controlled the brothels, and made the most money.  Men saw that and took over.  Now almost every pimp is a man.  Rightly so now, with the amount of violence that happens to the prostitutes. 

The salary of prostitutes has decreased dramatically over the years.  In the 1800-1900, the wages of prostitutes were high for the period.  With the women’s movement, they became more likely to have sex before marriage, thus decreasing the demand of hookers.  With the demand down, their wages went down.  An interesting fact is that oral sex cost more in the old days because it was taboo.  Men paid a lot extra for it. Now with women are doing oral sex to protect their “virginity”, the taboo-ness went away.  On average for the Chicago streets, the amount for oral sex is around 40 dollars.

Actually, pimps are a good thing for hookers.  With a pimp, hookers make more money per week and do less “tricks” per week, than without a pimp.  The pimp is usually the one who negotiated and finds the johns looking for sex.  In addition, with a pimp the chances of a john attacking/hurting a hooker decrease, for fear of the pimp.  A prostitute is better off with a pimp, even though she has to give him a cut.

            Men are easily more influenced by money than women are.  That is one of the reasons men make more money.  Women love children like men love money.    Women are more likely to take off work for a child than men are.  Women are still influence by money though.  In Chicago, around the 4th of July, the demand for prostitutes increases.  Women, who normally do not walk the streets, pick it up, like a holiday Santa only works at Christmas.  They increase their prices due to demand and make more money than normally.

Why Should Suicide Bombers Buy Life Insurance

In an England bank, there is a position that his only job is to create algorithms to hunt for terrorist.  The algorithm goes through all their accounts to find people who have traits for terrorism.  Say a person deposits a large amount of money in checking, withdraws it out in chunks, does not have a savings account, and does not have life insurance.  Those are some of the traits for a terrorist.  There are more but this is a simple example.  This chapter is about certain aspects of death and life.  It examines why people born certain months are lucky and why death is not always cut and dry.

             Certain months are better for a person to be born in than other months.  For instance, it is better for an athlete to be born earlier in the year than later.  The early they are born, the bigger they are for sports season. The leagues are usually separated by age differences.   The coaches have a natural tendency to coach and train the bigger people than the smaller, runts.  The majority of professional athletes have their birthday in the first couple of months.  Of course, it works out the opposite way for some people.  If your are born a certain month and you are Muslim, you have a greater chance of birth defects and learning defects.  This is because of the holiday, Ramadan.  Even pregnant mothers fast during the day, causing the babies to suffer. 

            When looking for a doctor, their report cards are not always the best thing to look at.  Great doctors, tend to have high death rate in their patients.  This is usually because; they get the sickest patients who have the most chances for death anyway.  In addition, if you are looking for a doctor, the reviews from their peers mean nothing.  Just because other doctors say great things about another doctor, does not mean they are.  They generally have mediocre report.  Women are the best doctors; they have a slightly lower death rate than men do.  In addition, doctors that spend more money on test do not have any higher survival rates than their colleges who spend less.

            In fact, a large chunk of the Medicare budget is from chemotherapy. The thing is chemotherapy is not as great as it seems.  Usually the most it does is extend the life of the patient by a few months.  People generally can choose when they die.  When a foreign country did away with the inheritance tax, there was an abnormally high death rate, the following two weeks of the act.  Avoiding taxes can make a person livelonger it seems.

Unbelievable Stories about Apathy and Altruism

People give a lot of their income to charities.  Why do they do it? Are people generally good hearted? Kitty Genovese was murdered outside her apartment while 38 people watch.  No one called the police.  Crime rates soared in the 50s and 60s why did that happen.  What about Iran makes it “better” than the US?  Are people really as good as they seem?

            Kitty Genovese was killed outside her apartment at night, while supposedly 38 people watched and did nothing.  Why did they do nothing?  Did they enjoy watching her die?  The media reported on this issue and made Americans doubt the human race.  Turns out, the media, once again, took some liberties in the story.  The crime happened at 3:30 in the morning.  Only a few people saw anything.  One person saw it, and yelled to the couple “fighting” to shut the &$ #* up.  He told his dad, and his dad did call the cops, only he reported it as a domestic issue.  No one knew she was being murdered.  They assumed it was a lover’s quarrel.  People are not as bad as they seem.

What about the crime rate?  Why did the crime soar?  The answer can be linked to cable TV. Cable TV was introduced at different times in the nation.  The cities without cable, their crime stayed the same, while the cities with cable, had significantly worse crime.  Cable TV can be a blessing, like in India, but it also has its draw back.

            Why is Iran better than the US?  Iran does not have a waiting list for kidney transplants.  Iran allowed the selling of kidneys, and people responded.  Money can influence a person to give up body parts.  People do not usually volunteer to give away kidneys unless they are close to a person.  This shows that people care some, but money can make people care a lot more.

            When in lab experiments to learn about altruism, people give different answers to questions than they would normally because they are being watched.  People do not want to seem like a bad person if front of other people.  When people are in experiments that they do not know about, people give radically different answers.  People are more likely to steal and cheat.  Money is the biggest incentive for people.  They are willing to steal and cheat for it, as long as they do not know they are being watched.

The Fix is in—And It’s Cheap and Simple

            You can do things cheaply and simple or you can do things overly complex and expensive as all get out. This chapter talks about have something as simple as washing your hands can save lives, how hoarding an idea kills.  It also talks about ways to prevent hurricanes, and about seatbelts and child seats, the truth.

            During the old days, women had way lower life expectancy than men did.  The cause of death for many women was childbirth.  The women and the children had worse rates of death if they delivered at hospitals.  Ignatz Semmelweis was determining to find out.  He realized what was going on when a surgeon who was helping an intern got sick and died, like the mothers who gave birth, after the intern nicked the surgeons finger with the scalpel as they were dissecting a cadaver.   He realized that all the doctors played with cadavers before they went to work for practice.  He implemented a rule, which doctors had to wash their hands before giving birth.  The death rate plummeted.  Something as simple as that saved millions of lives.

            The inventor of the forceps kept the instrument to himself.  He past the device down in his family practice and prevented anyone from having the instrument. He because of this selfishness many preventable deaths happened.  Something as simple as forceps could have saved many lives.

            The way hurricanes work is that warm waters cause them to get stronger.  A simple device, like an inner tube that goes down several hundred feet could be the solution.  The waves would crash over the tube, because the warm water goes down to the cooler bottom.  This would lower the surface temperature of the water causing the hurricane to lose strength.  Something like this has been invented and would only cost a fraction of the annual money spent on repairs caused by hurricanes.  It is currently being tested.

            The accident death rate back in the 40s and the 50s was really high for the amount of miles driven.  Robert McNamara researched why and found out that most deaths happened because of trauma to the head from the steering wheel and dash.  He figured that since airplanes had seatbelts why could not cars.  He included them in Fords cars and the death rate stayed the same.  People would not wear the device.  The government got involved and started enforcing it, death rate decline.  Seat belt is extremely cheap to include in the car.  Simple, cheap devices saving lives.

            Seat belts are designed for adults to use.  That is why car seats were invented.  80% of car seats are installed incorrectly.  Studies have shown that when a child (2 and older) was just using seat belts, their death rate was slightly less (.01%) and a correctly strapped in car seat.  Car seats are enforced by the government.  This is an instance of where something complicated does more harm than good. (Although it does, give parents the peace of mind.)

What do Al Gore and Mount Pinatubo have in Common?

What do Al Gore and Mount Pinatubo have in common?  They have to do with global warming.  Al Gore tried to help by incorporating government intervention and act restricting green house gas emission. Gore wants trillions of dollars to be spent to help the earth. On the other hand, Mt Pinatubo actually decreases the temperature of the earth.

            Mt Pinatubo erupted in 1990ish and release an extremely large amount of sulfur dioxide. It sent the sulphur dioxide to the stratosphere.  What that did was create a “sun screen” around the earth cause some of the sun’s rays to be reflected away.  It lowered the surface temperature by 2 degrees.

            A company called Intellectual Ventures (IV), has a solution to the global warming.  They want to inject Sulfur Dioxide (a chemical that is already released every day into the ozone in the millions of tons) directly into the stratosphere.   The Sulfur dioxide is usually trapped in the troposphere but does not really help.  Mt Pinatubo did the same thing.  The amount of sulfur dioxide does not have to be large, because the amount that is in the stratosphere is exponentially more helpful than the amount stuck in the troposphere.   This operation would cost 150 million to start, with operating cost of 100 million a year.  This has been tested and should work, but they have not moved ahead with the project because of critics like Gore. 

The Video Lounge

http://www.youtube.com/watch?v=S9WPgucGnC0

This is a video of the authors of the book, explaining what the book is about.

Personal Insights

Why I think:

The author is one of the most brilliant people around…or is full of $ %, because:

I think the authors are brilliant people.  They have the guts to take controversial topics and just use data and common sense to learn the truth.  This book teaches you to find the problems and study the data behind it.  There is probably a simple and cost effective solution to it.

Then, all of the following bullet-items are mandatory to write about:

If I were the author of the book, I would have done these three things differently:

1.            If I were the author, I would have included more graphs and numbers.  I think it would have made it slightly more authoritive.

2.            The second thing would be to not jump around so much.  They would tell a story, then tell a side story, then return to the original story.

3.            Since this book was about economics, I would have incorporated more economic terms.  They used a few, but it could have used more.

Reading this book made me think differently about the topic in these ways:

1.            This book made me think a lot.  It made me consider global warming as a real thing. 

2.            If I ever get drunk, I’m calling a taxi.  Drunk walking is dangerous too.

3.            Humans act in their own self-interest.  Nothing more, nothing less.

I’ll apply what I’ve learned in this book in my career by:

1.            Even the most complex things, can have the simplest solution.  The most expensive solution is not the best.

2.            I learned that humans are only interested in their personal gain.  Use that to get customers, offer incentives.

3.            Study data, it can and will show you things that you may not see otherwise.

Here is a sampling of what others have said about the book and its author:

http://www.amazon.com/SuperFreakonomics-Cooling-Patriotic-Prostitutes-Insurance/dp/0060889578

Economist Levitt and journalist Dubner capitalize on their mega selling Freakonomics with another effort to make the dismal science go gonzo.Freaky topics include the oldest profession (hookers charge less nowadays because the sexual revolution has produced so much free competition), money-hungry monkeys (yep, that involves prostitution, too) and the dunderheadedness of Al Gore.There is not much substance to the authors’ project of applying economics to all of life.Their method is to notice some contrarian statistic (adult seat belts are as effective as child-safety seats in preventing car-crash fatalities in children older than two), turn it into economics by tacking on a perfunctory cost-benefit analysis (seat belts are cheaper and more convenient) and append a libertarian sermonette (governments tend to prefer the costly-and-cumbersome route).The point of these lessons is to bolster the economist’s view of people as rational actors, altruism as an illusion and government regulation as a folly of unintended consequences.The intellectual content is pretty thin, but it’s spiked with the crowd-pleasing provocations—’A pimp’s services are considerably more valuable than a realtor’s’ —that spell bestseller.(Nov.)

http://blogs.wsj.com/financial-adviser/2009/10/22/the-secrets-of-superfreakonomics/

“SuperFreakonomics,” by the economist Steven Levitt and writer Stephen Dubner, is not only a book with mind-blowing ideas, innovative research and quality investigative journalism, it’s also a story about creativity and what it takes to get the mindset to turn conventional concepts upside down. The authors have found their stride with “SuperFreakonomics.” As good as the first “Freakonomics” was, I found this read much more enjoyable and interesting.

Here is the formula for a book with “freakonomics” in the title:

First, find about a dozen or so mind-blowing topics. The topics have to be either extremely controversial (a new take on global warming, for instance), very sexy (spend a few months following around prostitutes and then write about the economics of prostitution), or a completely new and controversial look at a historical event (the Kitty Genovese murder, where all of her neighbors supposedly watched and nobody called the police. Look at the event, do thorough investigative research, and demonstrate how events did not occur as the media for 40 years claimed they occurred).

Second, populate the topic with the characters. To make an economics book a “freakonomics” book (or even a “SuperFreakonomics” book ) a controversial topic has more than just data and research but people with motivations and arcs to their stories that make the book more about the quest for knowledge than the final pieces of data that are the culmination of that quest. Find a few of the people involved with the topic. Either a scientist like Nathan Myhrvold, formerly a resident genius at Microsoft and now a pioneering inventor and patent scavenger, or a police officer from the Kitty Genovese scene, or a statistician tracking down the unusual characteristics that all terrorists share. Then give us their “secret origins.” What deep, dark secrets from their childhoods made them who they are today. Made them the secret heroes who track down terrorists, try to prevent hurricanes, spend all their days researching prostitutes and gang members.

Third, give us the “aha” moment. Take an already fascinating topic: like teaching monkeys how to value and use cash, and show them coming up with the not so subtle innovation of using this newfound knowledge (and newfound cash) for paying for sex with other monkeys.

Here’s the problem. I’ve tried to write such a book and I’ve failed miserably. It’s hard to find the topics, for one thing. In addition to the new research that Levitt and Dubner have spent hours on since the last book came out, they have their pick of the litter as people now approach “those freakonomics guys” with idea after idea. Then it’s hard to make sure that the data doesn’t override the story itself.

“Super Freakonomics” is more a story about people than about new ideas.  What drives the people behind these ideas to take conventional wisdom and turn it completely on its head. My conclusion after reading the book: optimism. Conventional wisdom tends to be littered with pessimism: the belief that the planet is on the verge of collapse from global warming, for instance. Or that the 1964 killing of Kitty Genovese and the apathy of her neighbors demonstrates that humans are “brutally selfish animals.” Levitt and Dubner systematically find new twists in the data to add to the ongoing, sometimes decade-long discussions that provide the backdrop for the book.  As they state in the beginning of chapter 4: ““It is a fact of life that people love to complain, particularly about how terrible the modern world is compared with the past.

They are nearly always wrong. On just about any dimension you can think of – warfare, crime, income, education, transportation, worker safety, health – the twenty-first century is far more hospitable to the average human than any earlier time. “

In particular, the global warming debate that the book sparks up has already engendered attacks from several blogs since the book’s release in just the past few days. As the authors state: ”We are trying to start a conversation, not have the last word. Which means you may find a few things in the following pages to quarrel with. In fact, we’d be disappointed if you didn’t.”

I must admit I’m biased. I’ve known Stephen Dubner for years and we’re in the middle of a five-year, fight to the death, backgammon match that is almost completely even despite repeated attempts by either side to pull ahead. Stephen also wrote the forward for my last book, The Forever Portfolio. I’ve always been impressed with his curiosity and his willingness to explore unconventional approaches to topics people take for granted (for instance, the safety of children’s car seats).

I only wish he wouldn’t accept the doubling cube so much during our matches. Just give up every once in awhile!

This book took economics and make it interesting.  It took controversial topics and looked at the data and facts of the issue.  It abstained from involving morality to the debate, which is something many people have difficulty doing.  Most of the topics are about things that pertain to people in today’s worlds, and the data will more than likely shock you.  I would absolutely recommend this book to anybody and everybody.   My girlfriend’s father is the first in line to read it.  He is going to take the book’s idea of using simple solutions to complex problems, in his new business.

Bibliography

Altucher, J.(n.d.).The secrets of superfreakonomics.Retrieved from http://blogs.wsj.com/financial-adviser/2009/10/22/the-secrets-of-superfreakonomics/

From publishers weekly.(n.d.).Retrieved from http://www.amazon.com/SuperFreakonomics-Cooling-Patriotic-Prostitutes-Insurance/dp/0060889578

Levitt, S, & Dubner, S. (2009). Superfreakonomics: global cooling, patriotic prostitutes, and why suicide bombers should buy life insurance. New York, Ny: William Morrow.

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Contact Info: To contact the author of this “Summary and Review of Superfreakonomics,” please email w0305047@gmail.com.

Biography

David C. Wyld (dwyld.kwu@gmail.com) is the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a management consultant, researcher/writer, and executive educator. His blog, Wyld About Business, can be viewed at http://wyld-business.blogspot.com/. He also serves as the Director of the Reverse Auction Research Center (http://reverseauctionresearch.blogspot.com/), a hub of research and news in the expanding world of competitive bidding. Dr. Wyld also maintains compilations of works he has helped his students to turn into editorially-reviewed publications at the following sites:

Management Concepts (http://toptenmanagement.blogspot.com/)

Book Reviews (http://wyld-about-books.blogspot.com/) and

Travel and International Foods (http://wyld-about-food.blogspot.com/).                

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