Tuesday, October 27

A review of Superfreakonomics

It's not every week a high-profile economics book hits the market, so I decided to forgo some studying over the weekend to read Superfreakonomics, by Steven Levitt and Stephen Dubner. It's the sequel to Freakonomics, probably the most well-known economics book designed for mass consumption.

This is the Seinfeld of economics books: it truly is a book about nothing. Sure, there are chapters which seem to have a unifying theme. But the book itself does not have a concept behind it.

That's not to say it's boring. The first chapter, How is a street prostitute like a department-store Santa?, is vintage Freakonomics. It's a fun look at how people respond to incentives and offers insight into prostitution, which as a black market tends to escape attention from economists.

The third chapter, Unbelieveable stories about apathy and altruism, is a superb look at rationality and self-interest. It shines the spotlight on John List, a promising young Chicago-school experimental economist (who, coincidentally enough, recently co-authored a paper with my supervisor at the University of Victoria, Daniel Rondeau).

I was also delighted to see Superfreakonomics pay tribute to Gary Becker numerous times. For those who don't know him, he's a Nobel Prize-winning economist who pioneered the concept of applying economic principles to non-market topics, which is the premise behind the Freakonomics series. Becker is my favourite economist and someone I really look up to.

Superfreakonomics also has a fun epilogue about economic experiments run on capuchin monkeys. Unfortunately, print doesn't do this topic justice and you should really watch the documentary if you're interested in this kind of tomfoolery.

While I maintain this is a book about nothing, the authors argue that "the topics we do write about [book's emphasis], while not directly connected to 'the economy,' may give some insights into actual human behavior." But that explanation simply doesn't hold true for the fourth and fifth chapters, which are the book's weakest.

The fourth chapter is a preachy lesson about the benefits of seat belts and the uselessness of child car seats, which has absolutely nothing to do with human behaviour or incentives.

The fifth and final chapter, meanwhile, is the chapter on global warming, which has become hotly debated around the economics blogosphere. Critics such as Paul Krugman and Yoram Bauman (better known as the Standup Economist) slam the book for its take on global warming. Some have insinuated the book denies climate change.

After reading the chapter, I don't think it denied climate change. It clearly argued that global temperatures have been rising. But the chapter did seem somewhat dismissive of global warming, noting a big fuss was made in the '70s about global cooling.

My beef with the global warming chapter is that it seemed like a giant advertisement for Intellectual Ventures, a Seattle firm run by former Microsoft executive Nathan Myhrvold. The majority of the chapter focuses on the firm's arguments with climate science and their very imaginative ideas for combatting global warming.

There was some basic discussion of externalities, and an extremely awkward effort to tie global warming to circumcisions as a method of combatting AIDS, but the substance of the chapter was a giant promo for Intellectual Ventures which had nothing to do whatsoever with the book's promise of examining human behaviour. The chapter was interesting, but I don't think it had any place in a book purporting to be about economics or human behaviour.

All in all, Superfreakonomics is a fun read, and if you enjoyed the first book, you'll enjoy this one. But I don't think it measures up to the original. I also found the lack of a unifying theme somewhat jolting.

I much prefer the popular economic writings of Malcolm Gladwell, who has a phenomenal knack for tieing together seemingly unrelated stories with a unifying economic thesis. I picked up his latest, What the Dog Saw, at the same time as Superfreakonomics so I'll let you know what I think once I get through it.