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that money? Incumbents and front-runners obviously have more cash, but they

only spend a lot of it when they stand a legitimate chance of losing; otherwise,

why dip into a war chest that might be more useful later on, when a more

formidable opponent appears?

Now picture two candidates, one intrinsically appealing and the other not so.

The appealing candidate raises much more money and wins easily. But was it the

money that won him the votes, or was it his appeal that won the votes and the

money?

That’s a crucial question but a very hard one to answer. Voter appeal, after all,

isn’t easy to quantify. How can it be measured?

It can’t, really—except in one special case. The key is to measure a candidate

against…himself. That is, Candidate A today is likely to be similar to Candidate

A two or four years hence. The same could be said for Candidate B. If only

Candidate A ran against Candidate B in two consecutive elections but in each

case spent different amounts of money. Then, with the candidates’ appeal more

or less constant, we could measure the money’s impact.

As it turns out, the same two candidates run against each other in consecutive

elections all the time—indeed, in nearly a thousand U.S. congressional races

since 1972. What do the numbers have to say about such cases?

Here’s the surprise: the amount of money spent by the candidates hardly matters

at all. A winning candidate can cut his spending in half and lose only 1 percent of

the vote. Meanwhile, a losing candidate who doubles his spending can expect to

shift the vote in his favor by only that same 1 percent. What really matters for a

political candidate is not how much you spend; what matters is who you are.

(The same could be said—and will be said, in chapter 5—about parents.) Some

politicians are inherently attractive to voters and others simply aren’t, and no

amount of money can do much about it. (Messrs. Dean, Forbes, Huffington, and

Golisano already know this, of course.)

And what about the other half of the election truism—that the amount of money

spent on campaign finance is obscenely huge? In a typical election period that

includes campaigns for the presidency, the Senate, and the House of

Representatives, about $1 billion is spent per year—which sounds like a lot of

money, unless you care to measure it against something seemingly less

important than democratic elections.

It is the same amount, for instance, that Americans spend every year on chewing

gum.

This isn’t a book about the cost of chewing gum versus campaign spending per

se, or about disingenuous real-estate agents, or the impact of legalized abortion

on crime. It will certainly address these scenarios and dozens more, from the art

of parenting to the mechanics of cheating, from the inner workings of the Ku

Klux Klan to racial discrimination on The Weakest Link. What this book is about

is stripping a layer or two from the surface of modern life and seeing what is

happening underneath. We will ask a lot of questions, some frivolous and some

about life-and-death issues. The answers may often seem odd but, after the fact,

also rather obvious. We will seek out these answers in the data—whether those

data come in the form of schoolchildren’s test scores or New York City’s crime

statistics or a crack dealer’s financial records. (Often we will take advantage of

patterns in the data that were incidentally left behind, like an airplane’s sharp

contrail in a high sky.) It is well and good to opine or theorize about a subject, as

humankind is wont to do, but when moral posturing is replaced by an honest

assessment of the data, the result is often a new, surprising insight.

Morality, it could be argued, represents the way that people would like the

world to work—whereas economics represents how it actually does work.

Economics is above all a science of measurement. It comprises an extraordinarily

powerful and flexible set of tools that can reliably assess a thicket of information

to determine the effect of any one factor, or even the whole effect. That’s what

“the economy” is, after all: a thicket of information about jobs and real estate and

banking and investment. But the tools of economics can be just as easily applied

to subjects that are more—well, more interesting.

This book, then, has been written from a very specific worldview, based on a few

fundamental ideas:

Incentives are the cornerstone of modern

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life. And understanding them—or,

often, ferreting them out—is the key to solving just about any riddle, from

violent crime to sports cheating to online dating.

The conventional wisdom is often wrong. Crime didn’t keep soaring in the 1990s,

money alone doesn’t win elections, and—surprise—drinking eight glasses of

water a day has never actually been shown to do a thing for your health.

Conventional wisdom is often shoddily formed and devilishly difficult to see

through, but it can be done.

(高亮注释 Ritesh

2005-5-17 21:07:22

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Dramatic effects often have distant, even subtle, causes.

(高亮注释 Ritesh

2005-5-17 21:07:30

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The answer to a given

riddle is not always right in front of you. Norma McCorvey had a far greater

impact on crime than did the combined forces of gun control, a strong economy,

and innovative police strategies. So did, as we shall see, a man named Oscar

Danilo Blandon, aka the Johnny Appleseed of Crack.

“Experts”—from criminologists to real-estate agents—use their informational

advantage to serve their own agenda.

(高亮注释 Ritesh

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However, they can be beat at their own

game. And in the face of the Internet, their informational advantage is shrinking

every day—as evidenced by, among other things, the falling price of coffins and

life-insurance premiums.

Knowing what to measure and how to measure it makes a complicated world

much less so. If you learn how to look at data in the right way, you can explain

riddles that otherwise might have seemed impossible.

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Because there is nothing

like the sheer power of numbers to scrub away layers of confusion and

contradiction.

So the aim of this book is to explore the hidden side of…everything. This may

occasionally be a frustrating exercise. It may sometimes feel as if we are peering

at the world through a straw or even staring into a funhouse mirror; but the idea

is to look at many different scenarios and examine them in a way they have

rarely been examined. In some regards, this is a strange concept for a book. Most

books put forth a single theme, crisply expressed in a sentence or two, and then

tell the entire story of that theme: the history of salt; the fragility of democracy;

the use and misuse of punctuation. This book boasts no such unifying theme. We

did consider, for about six minutes, writing a book that would revolve around a

single theme—the theory and practice of applied microeconomics, anyone?—but

opted instead for a sort of treasure-hunt approach. Yes, this approach employs

the best analytical tools that economics can offer, but it also allows us to follow

whatever freakish curiosities may occur to us. Thus our invented field of study:

Freakonomics. The sort of stories told in this book are not often covered in Econ.

101, but that may change. Since the science of economics is primarily a set of

tools, as opposed to a subject matter, then no subject, however offbeat, need be

beyond its reach.

It is worth remembering that Adam Smith, the founder of classical economics,

was first and foremost a philosopher. He strove to be a moralist and, in doing so,

became an economist. When he published The Theory of Moral Sentiments in

1759, modern capitalism was just getting under way. Smith was entranced by the

sweeping changes wrought by this new force, but it wasn’t only the numbers

that interested him. It was the human effect, the fact that economic forces were

vastly changing the way a person thought and behaved in a given situation.

What might lead one person to cheat or steal while another didn’t? How would

one person’s seemingly innocuous choice, good or bad, affect a great number of

people down the line? In Smith’s era, cause and effect had begun to wildly

accelerate; incentives were magnified tenfold. The gravity and shock of these

changes were as overwhelming to the citizens of his time as the gravity and

shock of modern life seem to us today.

Smith’s true subject was the friction between individual desire and societal

norms. The economic historian Robert Heilbroner, writing in The Worldly

Philosophers, wondered how Smith was able to separate the doings of man, a

creature of self-interest, from the greater moral plane in which man operated.

“Smith held that the answer lay in our ability to put ourselves in the position of a

third person, an impartial observer,” Heilbroner wrote, “and in this way to form

a notion of the objective…merits of a case.”

Consider yourself, then, in the company of a third person—or, if you will, a pair

of third people—eager to explore the objective merits of interesting cases. These

explorations generally begin with the asking of a simple unasked question. Such

as: what do schoolteachers and sumo wrestlers have in common?

“I’d like to put together a set of tools that let us catch terrorists,” Levitt said. “I

don’t necessarily know yet how I’d go about it. But given the right data, I have

little doubt that I could figure out the answer.”

It might seem absurd for an economist to dream of catching terrorists. Just as it

must have seemed absurd if you were a Chicago schoolteacher, called into an

office and told that, ahem, the algorithms designed by that skinny man with

thick glasses had determined that you are a cheater. And that you are being fired.

Steven Levitt may not fully believe in himself, but he does believe in this:

teachers and criminals and real-estate agents may lie, and politicians, and even

CIA analysts. But numbers don’t.

—THE N EW Y ORK T IMES M AGAZINE, AUGUST 3, 2003

1

What Do Schoolteachers and Sumo Wrestlers

Have in Common?

Imagine for a moment that you are the manager of a day-care center. You have a

clearly stated policy that children are supposed to be picked up by 4 p.m. But

very often parents are late. The result: at day’s end, you have some anxious

children and at least one teacher who must wait around for the parents to arrive.

What to do?

A pair of economists who heard of this dilemma—it turned out to be a rather

common one—offered a solution: fine the tardy parents. Why, after all, should

the day-care center take care of these kids for free?

The economists decided to test their solution by conducting a study of ten day-

care centers in Haifa, Israel. The study lasted twenty weeks, but the fine was not

introduced immediately. For the first four weeks, the economists simply kept

track of the number of parents who came late; there were, on average, eight late

pickups per week per day-care center. In the fifth week, the fine was enacted. It

was announced that any parent arriving more than ten minutes late would pay

$3 per child for each incident. The fee would be added to the parents’ monthly

bill, which was roughly $380.

After the fine was enacted, the number of late pickups promptly went…up.

Before long there were twenty late pickups per week, more than double the

original average. The incentive had plainly backfired.

Economics is, at root, the study of incentives: how people get what they want, or

need, especially when other people want or need the same thing. Economists

love incentives. They love to dream them up and enact them, study them and

tinker with them. The typical economist believes the world has not yet invented a

problem that he cannot fix if given a free hand to design the proper incentive

scheme. His solution may not always be pretty—it may involve coercion or

exorbitant penalties or the violation of civil liberties—but the original problem,

rest assured, will be fixed. An incentive is a bullet, a lever, a key: an often tiny

object with astonishing power to change a situation.

We all learn to respond to incentives, negative and positive, from the outset of

life. If you toddle over to the hot stove and touch it, you burn a finger. But if you

bring home straight A’s from school, you get a new bike. If you are spotted

picking your nose in class, you get ridiculed. But if you make the basketball

team, you move up the social ladder. If you break curfew, you get grounded. But

if you ace your SATs, you get to go to a good college. If you flunk out of law

school, you have to go to work at your father’s insurance company. But if you

perform so well that a rival company comes calling, you become a vice president

and no longer have to work for your father. If you become so excited about your

new vice president job that you drive home at eighty mph, you get pulled over

by the police and fined $100. But if you hit your sales projections and collect a

year-end bonus, you not only aren’t worried about the $100 ticket but can also

afford to buy that Viking range you’ve always wanted—and on which your

toddler can now burn her own finger.

An incentive is simply a means of urging people to do more of a good thing and

less of a bad thing. But most incentives don’t come about organically. Someone—

an economist or a politician or a parent—has to invent them. Your three-year-old

eats all her vegetables for a week? She wins a trip to the toy store. A big

steelmaker belches too much smoke into the air? The company is fined for each

cubic foot of pollutants over the legal limit. Too many Americans aren’t paying

their share of income tax? It was the economist Milton Friedman who helped

come up with a solution to this one: automatic tax withholding from employees’

paychecks.

There are three basic flavors of incentive: economic, social, and moral. Very often

a single incentive scheme will include all three varieties. Think about the anti-