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All 16 learnings · one per slide
Freako-
nomics
Steven D. Levitt and Stephen J. Dubner, in bytes
16 key learnings on the hidden side of everything, through incentives and data.
16 learnings · ~40 sec eachSwipe →
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Freakonomics, in bytes
16 key learnings from Steven Levitt and Stephen Dubner's book using economics and data to answer surprising questions. Each takes about 40 seconds to read. Swipe, use the arrows, or your keyboard.
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Learning 1 · Introduction
The Hidden Side of Everything
The idea
Levitt uses data to answer odd questions, finding that incentives explain much of human behaviour.
Approach
Question conventional wisdom and follow the numbers.
Takeaway
Ask: what are people really rewarded for?
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Learning 2 · Chapter 1
Three Kinds of Incentive
The idea
Incentives can be economic (money), social (reputation) or moral (conscience).
Example
Shoplifting is discouraged by fines, shame and guilt together.
Try this
Name the three incentives behind a choice you made today.
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Learning 3 · Chapter 1
The Day-Care Late Fee
The study
Israeli day-care centres introduced a small fine for late pick-ups. Late pick-ups increased.
Why
The fine replaced a moral incentive (guilt) with a cheap price.
Takeaway
Small incentives can backfire.
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Learning 4 · Chapter 1
Cheating Teachers
The study
Data from Chicago schools revealed patterns suggesting some teachers changed students' answers on high-stakes tests.
Why
Test scores affected teachers' pay and jobs.
Takeaway
High-stakes incentives invite cheating.
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Learning 5 · Chapter 1
Sumo Wrestlers
The study
Wrestlers with 7–7 records won final-day bouts against 8–6 rivals far more often than expected.
Why
The eighth win mattered more to them; favours were likely traded.
Takeaway
Look where incentives are unequal.
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Learning 6 · Chapter 1
The Bagel Man
The story
Paul Feldman sold bagels in offices using an honour-system cash box and tracked who paid.
The finding
Most people paid, though less in large offices and stressful times.
Takeaway
Most people are more honest than economists assume.
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Learning 7 · Chapter 2
Real Estate Agents
The study
Agents kept their own homes on the market longer and sold them for more than clients' homes.
Why
On a client's house, a bit more money earns the agent little.
Takeaway
Ask whose interests an expert serves.
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Learning 8 · Chapter 2
Information Is Power
The idea
Experts often use information others don't have to their advantage.
Example
The internet reduced that advantage, such as in term life insurance prices.
Takeaway
Close the information gap before buying.
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Learning 9 · Chapter 2
The Ku Klux Klan
The story
Stetson Kennedy infiltrated the Klan and passed its secrets to the makers of the Superman radio show, which mocked them.
The lesson
Exposing secret information undermined its power.
Takeaway
Secrecy can be a weakness once revealed.
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Learning 10 · Chapter 3
Why Drug Dealers Live with Their Moms
The study
Sociologist Sudhir Venkatesh's data on a Chicago gang showed most dealers earned very little.
Why
Like many tournaments, a few at the top earn most of the money.
Takeaway
Look past the glamour at the average outcome.
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Learning 11 · Chapter 3
Conventional Wisdom
The idea
Popular beliefs are often convenient rather than true, Galbraith noted.
Example
Experts invent statistics that spread widely without being checked.
Takeaway
Ask who benefits from a common belief.
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Learning 12 · Chapter 4
Where Did the Criminals Go?
The claim
Levitt argues the 1990s US crime drop was partly linked to the legalisation of abortion after Roe v. Wade.
Worth noting
This claim is widely contested by other researchers.
Takeaway
Big effects can have unexpected causes.
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Learning 13 · Chapter 5
Pools vs Guns
The example
A child is far more likely to die in a swimming pool at a home than by a gun at a home.
Why
We fear vivid, uncontrollable risks more than common ones.
Takeaway
Fear isn't a good guide to risk.
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Learning 14 · Chapter 5
What Makes a Perfect Parent?
The finding
Data suggested who parents are mattered more than what they do.
Example
Having many books at home correlated with test scores; reading to children every day did not, in that data.
Takeaway
Correlation isn't causation.
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Learning 15 · Chapter 6
A Name and a Destiny
The study
Levitt and Roland Fryer found a child's name didn't itself affect outcomes; it reflected parents' circumstances.
Example
The story of brothers named Winner and Loser Lane, whose lives went the opposite way.
Takeaway
Names are signals, not causes.
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Learning 16 · Epilogue
Thinking Like an Economist
The idea
Measure what matters, question assumptions and look for incentives.
Example
Every chapter starts with a strange question and follows the data.
Try this
Ask a 'freaky' question about your own work.
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All 16 learnings complete
That’s all 16 learnings.
Incentives explain a lot. What incentive is shaping your behaviour right now?
Abhay Kumar JaiswalFCA · PMP® · Workday Financeabhayjaiswal.com
Summaries in my own words. Read the book for the full stories.
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Summaries are written in my own words for learning. Read Freakonomics by Steven D. Levitt and Stephen J. Dubner (2005) for the full stories. Some of the book's claims, especially on crime and abortion, are disputed by other researchers. More Books in Bytes