‘Freakonomics’

Steven Levitt and Stephen Dubner, the authors of “Freakonomics,” meld pop culture with economics. They study daily life data rather than stock exchange data.

There are very interesting examples in the book. In 1984 Paul Feldman started a bagel company in which he delivered boxes full of bagels to different businesses each morning (I guess there is no such job today). There was also a collection box at each locale, meaning payment was on the honor system. At the end of each day, Feldman collected the boxes and money. The overall payment rate was 87 percent. Small company employees paid more consistently because stealing is easier to detect in close-knit environments. Interestingly, the payment rate of the top executives of a given company was less than for the regular employees. Businesses in which the employees knew and liked Feldman also stole less frequently than those that did not. The most common type of theft was to take bagels without paying. It was very rare for someone to steal the collection box. People cheated more often during bad weather and around stressful holidays like Christmas, Thanksgiving and Valentine’s Day. “Free holidays” like Independence Day and Presidents Day produced the opposite behavior. Morale thus strongly influenced stealing.

Another topic covered by Levitt and Dubner is cheating by teachers. Teachers are alternatively rewarded or punished based on whether their students do well or poorly on standardized tests. There is therefore an incentive for teachers to cheat on these tests, and there are a variety of means for doing so. Teachers will try to cheat standardized tests by privately altering the written answers given by their students. Such a teacher would maximize the effect of their cheating efforts by focusing on changing the answers to the hardest questions, which the largest number of students probably got wrong. This would create an odd score distribution in which a surprising proportion of the hardest questions were “answered” correctly while a seemingly large share of easy questions were answered incorrectly. Students in the cheating teacher’s class would also have unusually high test scores when compared with past and future academic years. The Chicago public school system instituted high-stakes testing in 1996 and found that some student cohorts experienced suspicious one-year gains in scores at various points during their academic careers. Upon the re-testing of the suspect students along with re-testing of a control group of other students for comparison, it was observed that the results were statistically anomalous and a dozen teachers were fired for cheating.

One of the most intriguing studies in the book is about the socioeconomic patterns for naming children. Parent socioeconomic status and education level correlate with the name choices for children. For instance “Taylor,” “Madison” and “Cody” are perfect examples of white names. A set of names (like Taylor and Cody) is preferred among rich whites, and a different set is preferred among poor whites. Names cycle through periods of popularity and disuse. New names continuously enter into the mix and sometimes gain currency. Once a name is popularized among rich parents, lower socioeconomic status parents whose children are born, let’s say, 20 years later, take it up because they associate such a name with success and they want success for their own children. However, this is not the case because someone never becomes successful just because of his/her name. It is more about socioeconomic structure and background. Once the name becomes common, the rich drop it and find a replacement.

In 1958, a New York City father named Robert Lane decided to call his baby son Winner. Three years later, the Lanes had another baby boy. Robert decided to name this boy Loser. Loser Lane did in fact succeed. He went to prep school on a scholarship, graduated from Lafayette College in Pennsylvania and joined the New York Police Department, where he made detective and eventually sergeant. Although he never hid his name, many people were uncomfortable using it. To his police colleagues today, he is known as Lou. The most noteworthy achievement of Winner Lane, on the other hand, now in his late 40s, is the sheer length of his criminal record: more than 30 arrests for burglary, domestic violence, trespassing, resisting arrest and other mayhem