Monday, September 13, 2010

Takeaways from Freakonomics, Part I

I finally got around to finishing the popular economics book Freakonomics, where "a rogue economist explores the hidden side of everything". You can read their current writing at the Freakonomics blog. Here is Part I of my takeaways, mostly the economics parts:

The book itself was created by an unlikely duo, willing to work together. Is this how you create something truly unique?

As computers get better at doing things humans used to do (play chess, marketing, copilots) will they ever write our non-fiction for us?

Economics begins (with Adam Smith) at the same time capitalism begins. The two are intertwined.

An idea from Adam Smith: Man's morality comes from our ability to think as an objective third party.

If morality attempts to explain a perfect world, economics attempts to explain the real world.

An incentive is something small that changes something big.

There are three kinds of incentives: economic, social, and moral. All impact each other.

Real estate agents keep their own homes on the market for 10 days longer than average at a profit of 3% above average.

How to tell if what you're buying is really worth it. Are the descriptions vague and hard to prove or are they actually descriptive of the quality of the product.

Most drug dealers aren't rich. I've posted about this Freakonomics research before.

There are four meanful factors to job pay:
1) Number of other workers (available labor)
2) Number of possible workers (skills needed)
3) Unpleasantness of a job
4) Demand for the services provided

In 1987 when the IRS required the listing of social security numbers, not just names, of dependents, suddenly there were 7 million less children in America (1/10 of the total number of children).

Others' happiness makes us happy. So why don't I spend more time trying to make people happy?

Information is powerful. The KKK was partially taken from power by exposing the stupid secrets and privileges they enjoyed.

The lack of information produces fear.

Most people fear the unknown small danger more than the known large danger. Compare our fear of guns to our fear of swimming pools (3X as many children die in pools).

Good economic questions are unusual when proposed and obvious when explained.

Popular economics is figuring out what individuals have already figured out, just in reverse.


  1. I'm glad you read Freakonomics! Did you love it? These are great takeaways.

  2. I'd started it a long time ago, but never finished it. The first half was definitely better than the second. Overall I really enjoyed it. So far I'm liking SuperFreakonomics (just started it) more.

  3. Yes, that's how I was. Superfreakonomics is definitely superior! I love the chapter on prostitutes. Fascinating stuff!

  4. Fascinating video blog that you might enjoy...

  5. I've posted some of those before, but the blog itself looks interesting. Thanks.

  6. Oh nice! Sorry I missed that the first time. Great find!


You are the reason why I do not write privately. I would love to hear your thoughts, whether you agree or not.