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October 29, 2006
David Warsh, Proprietor


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CSI: Economics

A friend asked at lunch the other day what I thought accounted for the phenomenal success of  Freakonomics. A good question. The book appeared in April 2005; only last week did it fall off The New York Times best seller list for the first time. It has sold more the 2 million copies in the United States alone (there are 30 foreign editions published or in the works). That’s three times as many copies sold in 18 months as Milton Friedman’s Capitalism and Freedom has sold since 1962. How come?

My first thought was simply that it had been an especially good collaboration. Stephen J. Dubner, 43, is a talented magazine writer whose largely autobiographical 2003 book, Confessions of a Hero-Worshiper, described his pursuit as an adult of his childhood idol, Pittsburgh Steeler running back Franco Harris. Levitt, 39, is an unusually accomplished economist at the University of Chicago. Dubner and Levitt were made for each other. The jacket logo, the orange slice cut from what appears to be an apple, is as brilliant as it is hauntingly familiar.

Then, too, it seemed to me that that the book’s success had much to do with The New York Times Sunday Magazine. Its editors assigned Dubner to do a story in 2003, after Levitt won the John Bates Clark Medal, which is awarded every couple of years the American economist under 40 deemed to be the most promising. The article on which the book is based first appeared there as “The Probability that a Real Estate Agent is Cheating You (and Other Riddles of Modern Life.)”

It was the Times Magazine, after all, that turned James Gleick’s Chaos: Making a New Science into a best-seller fifteen years ago. The similarities of the two books are impossible to ignore:  a talented journalist telling the story of star investigators whose results purport to undermine all that had gone before. Gleick, a Times science reporter, had physicist Mitchell Feigenbaum, mathematician Stephen Smale and maverick-for-all-seasons Benoit Mandelbrot.  Dubner had Levitt and his collaborators, economist Roland Fryer and ethnologist Sudahir Venkatesh. The themes are the same –weird science for normal people. The titles reflect both books’ underlying premise that familiar things aren’t what they seem.

Freakonomics even invokes the entomological star of Chaos — “the proverbial butterfly that flaps its wings on one continent and eventually causes a hurricane on another”– in order to illuminate the conjecture for which Levitt is best known:  that, by making abortion widely available after 1973, Roe v. Wade “help[ed] trigger, a generation later, the greatest crime drop in recorded history.”  (Naturally, not everyone is convinced!)

When I took the book down off the shelf, though, and read through it again, a more satisfying interpretation of the Freakonomics phenomenon occurred. It was to view the book as a promotion for economics generally; for empirical, fact-finding economics in particular — a stimulating overture to any text, portal to any classroom, an attractive front porch designed to tempt the interested passer-by to sit for an hour or two before moving on or, just possibly, entering into economics proper. No wonder, then, as my friend reports, that economics classrooms are full of undergraduates who have read the book, full of enthusiasm for what they can learn.

Freakonomics doesn’t deliver learning at any depth. But then that is precisely its charm. It’s a remarkable evocation of the excitement of being smart, young and on a roll; of the power of economic methods, too. (“Levitt wasn’t a human slide rule…. He seemed to look at things not so much as an academic but as a smart and curious explorer — a documentary filmmaker, perhaps, or a forensic investigator, or a bookie whose markets ranged from sports to crime to pop culture…stripping away a layer or two from the surface of modern life and seeing what is happening underneath.”)

The book, then, is “CSI: Economics,” in the manner of the current hit series on US network television, in which sexy Crime Scene Investigation specialists reveal their clever secrets week after week: (No fewer than three versions are running concurrently:  the original, Miami and New York.) What about that cheating real estate agent? Misaligned incentives. How to roll up the Ku Klux Klan?  Publish their asymmetric information.  How do you spot a sumo wrestler who is throwing his match? The same way Levitt caught Chicago teachers who were changing students’ answers on standardized tests in order to make themselves look good:  reason through the incentives, and then look for evidence in the data. In the latter case, it was a superabundance of consecutive correct answer strings by many students; in the former, an unusually high incidence of victories for the underdog in swing sumo tournament matches where the winner had nothing to lose.

What about those crack cocaine foot soldiers in Chicago whom Levitt’s colleague Venkatesh befriended (after they decided not to kill him in that stairwell)? Why do they work long hours for an estimated wage of $3.30 an hour? Their dangerous jobs are organized as a tournament, much the same as associate lawyers, NFL draftees and movie actors.  A few lucky winners will be promoted to high salaries. All the rest eventually will go on to work at something else.  What about the sudden appearance of distinctly “black” names — Imani and Shanice, DeShawn and Darnell? Levitt’s student Fryer locates the decision in the parents’ expectations of their child’s chances of success — and backs it up with statistical analysis of class and income. . And so it goes, a series of fast-moving episodes designed to showcase Levitt and associates’ capacity to “quantify culture.”

In contrast, Tim Harford’s The Undercover Economist:  Exposing Why the Rich Are Rich, the Poor Are Poor — and Why You Can Never Buy a Decent Used Car seeks to cover the waterfront.  It appeared just six months after Freakonomics. Despite the jaunty title and tone, it is a veritable microeconomics textbook, a solid success, but nowhere near the best-seller that Freakonomics has become. There are many others, including Steven Landsburg’s The Armchair Economist: Economics and Everyday Experience (“Most of economics can be summarized in four words: People respond to incentives”),  David Friedman’s Hidden Order: the Economics of Everyday Life, and Daniel Hamermesh’s excellent little Economics Is Everywhere. But for a certain kind of reader, Dubner and Levitt have cornered the market.

The problem, if there is one, is the dilemma that Freakonomics poses for The New York Times. The newspaper’s public editor, Byron Calame, noted recently that the Times had increasing portions of the paper over to special sections that operate more like magazines, in hopes of “generating increased advertising revenue to ward off cutbacks in the daily sections’ core news coverage.” These magazine sections feature coverage that is often fluffy or “soft,” in the vernacular of the newsroom. They include lifestyle sections such as Style, Escapes, Travel, and Dining, but none is more profitable than the Sunday magazine (which is said to contribute more than $50 million in pretax profit to the paper, a tenth or more of the Times‘ operating earnings).

True, the Sunday Magazine has been there for a century, while the other sections range in age from thirty years to one. True, too, that the magazine has contained some of the best journalism in the paper. It has also contained some of the worst. And in its quest for the elusive quality of “edge,” the Sunday Magazine sometimes undermines the tough-minded and well-modulated point of view, once described at “informed and tolerant,” that has been the Times’s most admirable characteristic over the years. In due course, the relative lightheadedness of these magazine sections eventually could threaten the integrity of the paper’s “core news report,” Calame warned, and Times editor Bill Keller promised continued vigilance.

The question, then, is one of balance. If Levitt were writing a monthly “Economic Scene” column for the business section, as part of the rotation that includes the University of California at Berkeley’s Hal Varian, Cornell’s Robert Frank and Chicago’s Austan Goolsbee, nothing would seem out of place, for the point of that rotation is to offer different but roughly comparable angles of vision. But the column that he and Dubner write regularly for the magazine gives the duo a disproportionate voice. It probably also insulates them to some extent from the kind of arms-length coverage of economics itself to which the Times aspires.

Levitt’s landmark study (with Yale’s John J. Donohue III) of the link between abortion and crime-prevention has generated considerable criticism since it was first published in 2001 — including bitter quarrels with colleagues and peers. In a balanced and ahead-of-the-curve story in the Times’ now-defunct Arts and Idea section in April 2001, Columbia University journalism professor Alexander Stille described what was then the state of play. (“… [A]s other experts have had their first chance to scrutinize the research in detail, almost every aspect of the theory has been attacked, from its assumptions to its conclusion that abortion and crime are connected, not separate trends that happened to surface at the same time. Indeed, given all the influences on the crime rate — including the economy, the availability of guns and drugs, and policing strategies — some critics doubt whether it is ever possible to figure out the precise relationship between the two, let alone to assert that abortion might be responsible for a 50 percent drop in crime. ‘My instinct was nothing in the social sciences accounts for 50 percent of anything,’ said Ted Joyce, an economist who has examined Mr. Donohue and Mr. Levitt’s data and is now about to publish his own counterstudy.”) Since then, the controversy has only escalated. The Wall Street Journal and The Economist have reported on the most recent aspects of it, but in the eighteen months since Freakonomics appeared, the contretemps has yet to be covered in the Times. “Knowing what to measure and how to measure it makes a complicated world less so,” assert Dubner and Levitt in their book.  So who was right?  Stille and core news report? Or the Sunday Magazine, which simply ignored the misgivings?  

The impression Freakonomics gives is that Levitt is truly nonpareil. At one point, California Institute of Technology economist Colin Camerer (who is himself no slouch) tells Dubner, “Levitt is considered a demigod, one of the most creative people in economics and maybe in all social science.  He represents something everyone thinks they will be when they go to grad school in econ but usually they have the creative spark bored out of them by endless math — namely, a kind of intellectual detective trying to figure stuff out.”  

In fact there are many empiricists of his generation who have figured out clever ways to use “natural experiments” to gauge the effects of things previously considered unmeasurable — MIT’s Daron Acemoglu (political and legal institutions) and Josh Angrist (family size), Berkeley’s David Card (immigration), Princeton’s Alan Krueger (wages), Harvard’s Caroline Hoxby (education) and Lawrence Summers (unemployment), to name just a few. And of course there are many clever economists who are not empiricists.

Certainly Steve Levitt has reinvigorated interest within the profession in the economics of crime; without, he has sold more than two million books. Eventually, Dubner’s appreciation of Levitt will find a place on the shelf with biographies of many other economists, just as the earlier book about his obsession with Franco Harris sits in the library between books about owner George Halas, coaches Woody Hayes and John W. Heisman and running back Paul Hornung. Levitt is a star economist, for sure; Dubner is a dandy writer: there is something greatly appealing about the inside-out explanations that they have contrived.  But Freakonomics is no better a guide to our changing times than “Chaos” was to atmospheric science.  The influence of that butterfly’s wings has been exaggerated.

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