Book Review: 'Super Freakonomics' -- a lesson in incentives

For anyone who thinks economics is boring, the authors of Super Freakonomics turn that idea on its head.

With tales of how people respond to incentives, and digging up various statistics to highlight points you've probably never thought of before, the follow-up book to Freakonomics by Steven D. Levitt and Stephen J. Dubner again shows how economics touches our daily lives.
Here are some of the topics the new book covers, which is set for national release Oct. 20:

• Walking drunk is much more deadly than driving drunk.
• How pimps are like Realtors.
• Why suicide bombers should buy life insurance.
• How Iran uses incentives, and not altruism, to get kidney donors.
• Children who watch a lot of TV are more likely to engage in crime when they get older.
• The profit motive encourages doctors to administer chemotherapy, even though it's not effective in saving more lives.
• The Endangered Species Act has perverse incentives for landowners, causing them to clear habitat.
• Buying locally produced food increases greenhouse-gas emissions.
• You're more likely to solve global warming by throwing sulfur dioxide into the air than through any incentives Al Gore has in mind for getting people to use less energy.
• Monkeys can learn the value of money, but don't let them go too far or they'll be having sex every minute.

Readers of the New York Times Freakonomics blog might remember some of these topics. Some of the subjects for the books come from the blog, which often points out incentives, economic and otherwise, that people respond to.

Here's a video of an incentive to get people to use the stairs more, as noted recently on the Freakonomics blog:




It's a simple incentive: Climb the stairs by playing the piano as you step up or down, providing exercise and fun at the same time."Super Freakonomics" is full of incentives and economic discussions of why people do what they do. It's like taking a sociology class and economics class from your favorite college professors. The first book was so popular that a "Freakonomics" study guide has been published.

The first chapter of Super Freakonomics, "How is a street prostitute like a department-store Santa," is a great example of how the book combines statistics with personal interviews. I won't spoil the Santa comparison, but it points out something I hadn't thought of before: How a pimp and Realtor are the same.

"A Realtor and a pimp perform the same primary service: marketing your product to potential customers," the chapter reads. "...the Internet is proving to be a pretty powerful substitute for the Realtor. But if you're trying to sell street prostitution, the Internet isn't very good -- not yet, at least -- at matching sellers to buyers."

"So once you consider the value you get for each of these two agents, it seems clear that a pimp's services are considerably more valuable than a Realtor's."

Anyone who has bought a house knows the feeling of getting pimped.

Street prostitutes in Chicago made more money with a pimp than working solo, according to a study cited in the book, because the pimp brings in higher paying customers and prevents a prostitute from being beaten up by a customer.

And if you're not a prostitute or a customer of one, Super Freakonomics has plenty of lessons for everyday consumers on what influences their decisions or the decisions of others.

It's a book that will get you thinking after, if not before, any decision you make based on an incentive.

Aaron Crowe is a freelance journalist in the San Francisco Bay Area. Reach him at www.AaronCrowe.net