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Steven D. Levitt and Stephen J. Dubner are at fault for the global financial crisis.
See, back in 2005, they wrote “Freakonomics,” a wildly successful book brimming with interesting stories of how incentives matter and actions have unintended consequences. Indeed, incentives do matter, and actions (or books) do have unintended consequences: Their book made economists around the world more inclined to come up with cute little analyses of the business of being a drug dealer or the impact of a first name on a child’s success. And that distracted them, so they didn’t notice the giant housing and credit bubbles that in hindsight were plain to see. A global collapse ensued.
That’s all nonsense, of course. The forces that led to the current economic troubles were far too big for any one book, or even one current of economic thought, to have caused it.
The argument that the Freakonomics guys are to blame for the crisis is provocative and clever and sounds vaguely plausible. It may even contain a kernel of truth. But it fundamentally defies any clearheaded look at reality.
In other words, it’s just like many of the anecdotes that fill “Superfreakonomics,” the sequel to the authors’ original best-seller. The new volume includes sections on the economics of being a prostitute, how the mining of bank data can identify terrorists and an interesting argument that car seats may not actually make older children safer than seat belts.
But more than a few parts of the book seem designed to distort reality rather than illuminate it, to elevate the provocative over the true.
Take the chapter that covers prostitution, for example. It spins a nice yarn about Allie, a clever, vivacious woman who went into the world’s oldest profession in Chicago for fully rational – and lucrative – reasons. Good for her, but it doesn’t have much of anything to do with the fundamental reality of much prostitution in the world, in which coercion, violence and desperate addiction to drugs frequently play a larger role in becoming a hooker than does cost-benefit analysis.
In another section, the authors theorize that it is more dangerous for a tipsy person to walk any given distance than it is to drive. That would be interesting, if true, and certainly useful information for anyone who has ever stumbled out of a downtown Washington bar a few blocks from home.
The problem is that Levitt and Dubner don’t actually have the foggiest idea whether it’s safer to drive drunk than walk drunk, as they claim. As my colleague Ezra Klein has pointed out, they don’t have any data on how many miles are walked under the influence and so just assume that people walk drunk in the same proportion that people drive drunk.
In calculating the rate of deaths from walking drunk, then, they have the numerator (the number of drunk pedestrians killed each year) but not the denominator (the number of miles walked drunk).
Both of those are mild problems compared with the ones in the penultimate chapter, in which the authors bring their oh-so-clever approach to the great climate debate. The standard approach to preventing potentially catastrophic global warming, advanced by an overwhelming consensus of climate scientists and environmental economists, is to put in place policies to reduce the amount of carbon dioxide mankind emits.
That’s apparently too conventional for Levitt and Dubner, who spend the vast majority of their chapter (with time taken out for potshots at Al Gore) exploring the work of scientist/entrepreneur Nathan Myhrvhold’s crew, a group that is exploring the idea of pumping sulfur into the upper atmosphere and other neat tricks that just may be cheaper, easier ways to combat global warming.
It would be great if one of these schemes turns out to work. Fantastic, even. But Levitt and Dubner seem to simply presume that because one of these might work, Al Gore, et al., are foolish to push to reduce emissions. It is like a family declining to save for college because their 10-year-old Little Leaguer with a decent arm may just end up getting a full baseball scholarship.
“Superfreaknomics” is, like the first book, written in a sprightly, easy-to-digest manner. A reasonably quick reader could finish the book on a coast-to-coast flight, with time left to watch a movie.
But the feeling at the end is about like the one after reading a Dan Brown novel or eating a bag of Cheetos. You finished the whole thing but didn’t walk away feeling particularly proud of yourself.
To understand the reason why, compare the Freakonomics franchise with the work of Malcolm Gladwell, the author of “The Tipping Point” and “Blink.” Like Gladwell, the Freakonomists craft books based on research from a wide range of fields – economics, psychology, biology, you name it – that are intoxicatingly readable best-sellers.
Gladwell has been accused of offering distorted interpretations of various studies to make them fit his broader arguments. But Levitt and Dubner take Gladwellism to its logical extreme. “Superfreakonomics” doesn’t really have a broader argument; the authors acknowledge in the opening pages that their book has no unifying theme, beyond the banality that “people respond to incentives.”
So instead of offering up a bunch of quirky stories of questionable reliability to make an argument that feels coherent, they offer up contrarianism for its own sake.
Just what you’d expect from two guys who caused the financial crisis.
