SuperFreakonomics

SuperFreakonomics Plot Summary

Introduction

Imagine standing at a crossroads in life, facing a decision that seems impossible. The conventional wisdom pulls you in one direction, but your instincts suggest another path. This tension between what we're told to believe and what might actually be true lies at the heart of our daily existence. We constantly navigate a world shaped by hidden incentives, unspoken motivations, and counterintuitive outcomes. The fascinating journey ahead explores how economics can illuminate the darkest corners of human behavior. Not the dry, chart-filled economics of classroom textbooks, but a rogue approach that seeks to understand why people do what they do. Through surprising investigations into cheating teachers, sumo wrestlers, drug dealers, prostitutes, and even parents, we'll discover how incentives drive behavior in ways we rarely recognize. By examining data through an unconventional lens, we'll challenge assumptions about everything from parenting to terrorism, revealing that conventional wisdom often leads us astray. The world makes more sense when we understand the hidden forces guiding our choices and recognize that what seems irrational often follows a peculiar logic all its own.

Chapter 1: The Economics of Street Prostitution

In a run-down neighborhood on Chicago's South Side, a twenty-nine-year-old woman named LaSheena sits on the hood of an SUV outside a housing project. She describes four ways she makes money: shoplifting and selling the stolen goods ("boosting"), serving as a lookout for drug dealers ("roosting"), cutting hair, and turning tricks as a prostitute. When asked which job she dislikes most, she doesn't hesitate: "Turning tricks." Yet when asked if she would do more prostitution work if it paid twice as much, she answers just as quickly: "Yeah!" This straightforward response reveals the economic reality of street prostitution. Through extensive research tracking actual transactions, economists discovered that Chicago street prostitutes earn about $27 per hour, working roughly 13 hours weekly for about $350 in total income. This represents four times what these women earn from their other jobs, yet comes with significant risks – the average prostitute experiences a dozen violent incidents annually. A century ago, prostitutes earned far more. In early 1900s Chicago, streetwalkers made the equivalent of $76,000 annually in today's dollars, while high-end "butterfly girls" at the exclusive Everleigh Club could earn the modern equivalent of $430,000 per year. What changed? Basic economics: supply and demand. The sexual revolution dramatically increased the supply of free sex, driving down the market value of paid sex. When premarital sex was taboo, many men visited prostitutes for their first sexual experience (about 20% of men born between 1933-1942). By comparison, only 5% of men from later generations had their first experience with a prostitute. The researcher also discovered fascinating pricing patterns. Different sex acts have different prices, with some declining dramatically in relative cost over time. Black customers pay on average $9 less than white customers, demonstrating price discrimination. Working with a pimp actually increases earnings despite the 25% commission, as pimps bring in higher-paying customers and provide protection. The data reveals a sophisticated marketplace responding to economic principles, where even the most intimate human interactions follow predictable patterns of incentives, competition, and price sensitivity. When we understand prostitution as an economic phenomenon, we see beyond moral judgments to recognize how market forces shape even our most private decisions. This pattern of incentives driving behavior repeats across all aspects of human life, often with unexpected consequences.

Chapter 2: Terrorism's Hidden Patterns

On September 11, 2001, the world witnessed terrorism's horrifying power as nineteen men hijacked four airplanes, killed nearly 3,000 people, and caused economic losses approaching $300 billion. Beyond these immediate impacts, the attack created ripple effects throughout society. Air travel plummeted as fearful passengers avoided flying, resulting in approximately 1,000 additional traffic deaths in just the three months following the attacks as people chose to drive instead. Security measures like removing shoes at airports continue to consume millions of hours annually – the equivalent of 14 human lifetimes each year – all because of one failed shoe bomber. But who exactly becomes a terrorist? The conventional wisdom portrays terrorists as poor, uneducated men with nothing to lose. The data tells a different story. Economist Alan Krueger analyzed biographical information on 129 Hezbollah militants, finding they were actually less likely to come from poor families (28% versus 33% in the general population) and more likely to have at least a high-school education (47% versus 38%). Another study of Palestinian suicide bombers revealed only 16% came from impoverished backgrounds, while over 60% had education beyond high school, compared to just 15% of the general population. A British financial analyst (given the pseudonym Ian Horsley) discovered this pattern extends to potential terrorists' banking behaviors. Working with researchers, he analyzed banking patterns of terror suspects and developed an algorithm that could identify potential terrorists. One key finding: after accounting for demographic factors like Muslim names and age, terrorists were notably less likely to purchase life insurance. This makes perfect sense – why would a suicide bomber waste money on a policy that won't pay out for suicide? The research reveals terrorism operates on rational principles. Far from being desperate outcasts, terrorists tend to be educated, middle-class individuals motivated by political grievances rather than personal gain. They don't randomly select targets or methods but strategically maximize impact while minimizing resources. As with crime, drugs, or prostitution, understanding the economic logic behind terrorism helps us move beyond simplistic narratives to develop more effective responses. By recognizing patterns in banking activity and other behaviors, we gain unexpected tools to identify potential threats before they materialize.

Chapter 3: Are We Really Altruistic?

In March 1964, a twenty-eight-year-old woman named Kitty Genovese was brutally murdered outside her apartment building in Queens, New York. According to a front-page New York Times article, thirty-eight neighbors witnessed the attack but did nothing to help. Not one called the police during the thirty-five minutes it took for the killer to stab her repeatedly and leave her to die. This story became a defining parable of urban apathy, studied more intensively than the Holocaust by social psychologists seeking to understand our apparent indifference to others' suffering. But what if this iconic story of human selfishness isn't entirely accurate? Recent investigations reveal the narrative was significantly distorted. The attack wasn't continuously visible to thirty-eight people – it occurred in stages, with much of it hidden from view. At least one neighbor did call the police. Others shouted at the attacker, causing him to temporarily flee. The "thirty-eight witnesses" figure was likely an exaggeration provided by police to a newspaper editor eager for a sensational story. This revelation connects to groundbreaking economic research on altruism. For decades, experiments like the "Dictator Game" appeared to confirm humans are innately generous. In this game, participants are given money and complete freedom to share some, all, or none with anonymous strangers. Remarkably, most people gave away substantial amounts, suggesting pure altruism. This finding contradicted traditional economic theory but aligned with our hope that humans are fundamentally good. However, economist John List suspected these laboratory findings might be misleading. Through a series of modified experiments, he demonstrated that generosity dramatically decreased when the experimental design was adjusted. When participants could take money from others instead of just giving, or when they had to work for the money rather than receiving it as a windfall, their apparent altruism largely vanished. The laboratory setting itself, with researchers observing participants' choices, created artificial pressure to appear generous. The implications extend far beyond academic interest. Consider organ donation policies built on the assumption that human altruism will meet demand. Despite desperate shortages and waiting lists of 80,000 people, American policy prohibits compensating donors. Meanwhile, Iran, which allows payment for kidneys, has eliminated its waiting list entirely. What we call pure altruism often involves mixed motives – social approval, guilt avoidance, or subtle pressure. Understanding these true motivations helps design more effective policies that align with how people actually behave, not how we wish they would.

Chapter 4: Simple Solutions to Complex Problems

It is a fact of life that people love to complain about how terrible the modern world is compared with the past. Yet on virtually every dimension – from health to income, education to safety – life today far surpasses any earlier time. Consider childbirth: a century ago, maternal death rates were fifty times higher than today. What changed? Sometimes the most profound transformations come from remarkably simple solutions. In 1847, a young Hungarian doctor named Ignatz Semmelweis confronted a terrifying mystery at Vienna General Hospital. Women were dying of puerperal fever at alarming rates – one in six mothers perished after childbirth. Strangely, women who delivered with midwives had much lower death rates than those attended by doctors. Through careful observation, Semmelweis made a shocking discovery: doctors were conducting autopsies and then examining pregnant women without washing their hands. He ordered a simple chlorine handwash between patients, and maternal deaths plummeted. This cheap, simple solution saved countless lives. Similar stories abound throughout history. For centuries, cities struggled with horse manure polluting streets and spreading disease. The solution wasn't more sophisticated manure management but a technological innovation – the automobile – that eliminated the problem entirely. When polio terrorized communities in the early 20th century, the answer came not from treating symptoms but from a vaccine that cost pennies per dose. Even today's cars, despite their complexity, rely on one simple feature – seat belts – that saves more lives per dollar than any other safety innovation. Yet implementing simple solutions often proves surprisingly difficult. When Robert McNamara introduced seat belts at Ford Motor Company in the 1950s, many drivers refused to use them. A hospital administrator who discovered doctors washing their hands only 65% of the time tried various incentives before finding success with a dramatic visual aid – displaying bacterial cultures grown from doctors' unwashed hands as computer screensavers. The simple solution wasn't enough; understanding human psychology was also necessary. These stories reveal a powerful truth: progress often comes not from complex systems but from elegant, inexpensive interventions that target root causes. The challenge lies not in developing elaborate solutions but in overcoming human resistance to change. By focusing on fundamental principles rather than symptoms, and designing with human behavior in mind, we can solve seemingly intractable problems with surprising simplicity and effectiveness.

Chapter 5: Climate Change: Unexpected Approaches

When it comes to global warming, opinions polarize quickly. Environmentalists warn of catastrophic consequences unless we radically reduce emissions. Skeptics question the data or the proposed solutions. Meanwhile, the world continues heating up – the average global temperature has risen 1.3 degrees Fahrenheit over the past century, with acceleration in recent decades. The conventional approach calls for massive reductions in carbon emissions through changed behaviors, renewable energy, and international agreements. But what if there were cheaper, simpler alternatives? A group of unconventional thinkers gathered at Intellectual Ventures, a think tank near Seattle founded by former Microsoft executive Nathan Myhrvold. These scientists, engineers, and inventors tackled climate change with fresh eyes. While acknowledging the reality of warming, they questioned whether proposed solutions like cap-and-trade, wind farms, or even hybrid cars could meaningfully address the problem. Carbon dioxide already in the atmosphere remains there for about 100 years, so even immediate, dramatic reductions would take generations to affect temperatures. Instead, they drew inspiration from a natural event: the 1991 eruption of Mount Pinatubo in the Philippines. This volcano ejected 20 million tons of sulfur dioxide into the stratosphere, forming a haze that cooled the entire planet by nearly 1 degree Fahrenheit for two years. What if humans could mimic this effect? The team developed a concept called "stratospheric aerosol geoengineering" – essentially a thin hose extending 18 miles into the sky, spraying sulfur dioxide particles that would reflect sunlight away from Earth. Their calculations suggested this system could counteract a century of warming for about $250 million – roughly 0.02% of what economist Nicholas Stern proposed spending annually on emissions reduction. Another team member, climate scientist Ken Caldeira, initially opposed geoengineering as dangerous tinkering with nature. But his computer models confirmed the approach could work. Other alternatives emerged: boats that spray seawater mist to brighten clouds and reflect sunlight, or enhanced smokestack designs that direct power plant emissions to the stratosphere where they actually cool rather than warm the planet. These controversial approaches provoke strong reactions. Al Gore dismissed geoengineering as "nuts," while others fear moral hazard – that easy technical fixes might reduce motivation to address root causes. Yet as climate dangers grow and traditional solutions progress slowly, these creative approaches offer an insurance policy against worst-case scenarios. They remind us that human ingenuity, when freed from conventional thinking, can develop unexpected solutions to our most daunting challenges.

Chapter 6: When Monkeys Use Money

What would happen if monkeys could use money? This question might seem absurd, but Yale economist Keith Chen decided to find out. He and his colleagues introduced a small silver disc – a form of currency – to capuchin monkeys at a research lab. These small primates, about the size of a one-year-old child, initially had no interest in the discs. But researchers patiently demonstrated that trading a disc earned a treat. Eventually, the monkeys understood that these shiny objects had value. The researchers created a monkey economy where capuchins could trade coins for different foods from different "vendors." The results were stunning. When researchers raised the "price" of certain foods by offering fewer apple slices or Jell-O cubes per coin, the monkeys purchased less of those items. When prices fell, they bought more. These non-human primates intuitively followed the fundamental economic law that demand curves slope downward – they consumed less of goods that became relatively more expensive. The experiment revealed even more surprising parallels to human economic behavior. When researchers set up gambling games offering different risk profiles but identical average payouts, the monkeys displayed the same "loss aversion" bias that humans exhibit. They strongly preferred options that appeared to offer a bonus rather than options that might take something away, even when the mathematical outcomes were identical. This irrational tendency to feel losses more acutely than equivalent gains is so prevalent among human investors that financial economists have built entire theories around it. Then something extraordinary happened. A male monkey, Felix, suddenly gathered up several coins and ran into the communal cage. Chaos ensued as the monkeys scrambled for the wealth. As researchers tried to recover the coins, they witnessed a monkey hand a coin to a female monkey. Had they observed spontaneous altruism? No – moments later, the two monkeys were having sex. After the brief encounter, the female promptly brought the coin to a researcher to purchase food. Without any human instruction, the monkeys had invented prostitution. This remarkable experiment reveals that economic principles aren't merely human constructs but reflect deeper patterns of behavior shaped by evolution. Our supposedly sophisticated financial decisions may emerge from the same basic cognitive processes that guide our primate cousins. Markets, trading, risk assessment, and even questionable transactions aren't uniquely human inventions but extensions of behaviors that helped our ancestors survive. Perhaps economists should study not just human institutions but the fundamental nature we share with our evolutionary relatives.

Summary

Throughout this journey into unconventional economics, we've discovered how powerfully incentives shape human behavior across seemingly unrelated domains. From the pricing strategies of prostitutes to the banking patterns of terrorists, from our questionable altruism to our primate economic instincts, one principle remains constant: people respond to incentives in ways that are often predictable but rarely obvious without careful analysis. The data consistently reveals that conventional wisdom frequently misleads us, while an economic approach can illuminate surprising truths. These insights offer practical guidance for navigating our complex world. First, recognize that most human behavior, even when it appears irrational, follows understandable patterns when you identify the true incentives at work. Second, simple solutions often outperform complex ones when they properly align with how people actually behave rather than how we wish they would. Finally, creativity in problem-solving comes from questioning assumptions and examining data without preconceptions. Whether addressing climate change, reducing crime, or simply understanding our own motivations, we make better decisions when we look beyond surface explanations to uncover the hidden forces that truly drive behavior. By thinking like a rogue economist – curious, data-driven, and willing to challenge conventional wisdom – we gain not just understanding but the power to shape more effective solutions to our most pressing problems.

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Stephen J. Dubner (Narrator) Steven D. Levitt and Stephen J. Dubner (Author)

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