Freakonomics Fractured-Hidden Side of the Hidden Side

Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, by Steven D. Levitt and Stephen J. Dubner. William Morrow, 242 pages. $25.95.

Freakonomics is the latest in a recent genre of nonfiction book that explains in non-stick prose how the world really works, popularizing a science or scientific insight while forever hitting the reader on the head with how damnably clever the author is. It’s the Malcolm Gladwell syndrome, signaled by a Gladwell blurb on the cover of Freakonomics stating that Steven D. Levitt has “the most interesting mind in America”-and by a peculiar typo in the publicity materials for the book referring to “Mr. Gladwell” as the author, rather than Mr. Levitt and his collaborator, Stephen J. Dubner. If you are, say, in the camp of Richard Posner in suspecting that Mr. Gladwell wouldn’t have the faintest idea of what an interesting mind is (see Mr. Posner’s elegant takedown of Blink in the Jan. 24 issue of The New Republic), this might put you off Freakonomics entirely.

That would be too bad. It’s a sloppily organized group of essays on completely unrelated topics, but it’s entertaining despite its strenuous efforts to be so. And Freakonomics may be worth the cover price in our real-estate-mad city just for matching up the adjectives in real-estate ads with higher or lower sales prices. Who knew that “granite” is correlated with higher prices and “charming” with lower? Sadly, the original research isn’t cited.

Despite its outré title and the authors’ use of amusingly unconventional case studies, there’s a grim undercurrent to Freakonomics. As they acknowledge, economics is a description of the actual, not the ideal, world, and plenty of economic data suggests that human beings are not so wonderful. For instance, on April 15, 1987, when the I.R.S. began requiring Social Security numbers for dependent children listed on income-tax returns, seven million American kids vanished overnight. Who says it’s mainly the rich who are tax cheats?

Mr. Levitt has also found that real-estate agents sell their own houses for over 3 percent more than comparable houses they represent, largely because they don’t take the first offer. They’ll encourage you to do just that-and even tell buyers that you’ll settle for less than the asking price-because waiting for a better offer isn’t worth their time: A marginally better price yields pretty much the same commission. Not quite so close to home, Mr. Levitt discovered that cheating, in the form of thrown matches, is rife in sumo wrestling, Japan’s most revered sport.

Actually, this book arrives with a minor ethics issue of its own in tow. As announced up front in an “Explanatory Note,” two years ago Mr. Dubner wrote a laudatory account of Mr. Levitt for The New York Times Magazine, which aroused publishers’ interest in the idea of a book by Mr. Levitt-who then approached Mr. Dubner about a collaboration. One doesn’t usually think, when reading a magazine profile, that the author is about to do business with the subject, “rogue economist” or not.

Mr. Levitt’s most controversial and most dismal theory is that the abrupt decline in the U.S. crime rate in the late 80′s and early 90′s is due mainly to the passage of liberalized abortion laws following the Supreme Court’s 1973 Roe v. Wade decision. “In the first year after Roe v. Wade, some 750,000 women had abortions in the United States (representing one abortion for every 4 live births). By 1980 the number of abortions reached 1.6 million (one for every 2.25 live births), where it leveled off.” The authors argue that a good many of the post- Roe abortions were performed on mothers who were poor, teenage and unmarried; on the evidence of just one study, they conclude that these children had they been born, would have been significantly more likely to grow up to become criminals.

The presentation of this issue in Freakonomics is misleading, in part because the statistics on who gets abortions are a little more complicated than Messrs. Levitt and Dubner imply. First of all, the authors elide the important difference between abortion ratio (relation of abortions to live births) and abortion rate (number of abortions per 1,000 women of childbearing age). Abortion ratio can rise because women start having fewer children, period, as they have in the U.S., even if the abortion rate stays the same. The abortion-rate statistics show an arc, but it’s one that returns nearly to pre- Roe levels: The figure in 1972 was 13 per 1,000 women of childbearing age, and 16 per 1,000 in 2000; it peaked at 25 per 1,000 in 1980. The only case where abortion ratios have performed as the authors imply is among black women, rising even as they have fallen among white women: In 1973, 420 per 1,000 live births versus 326 for white women, and in 1997, 543 per 1,000 live births versus 194 for white women.

If Messrs. Levitt and Dubner were right, crime rates would have been at their lowest around the time when the unborn children of 1980 would have been old enough to start breaking the law, but in fact the trend has been downward through the present, for both violent and nonviolent crimes.

It’s equally suspect of the authors to imply that the unborn children would have had mainly unmarried teenage mothers. Of the women who had legal abortions in 1972-before Roe made legal abortion widely available-67.4 percent were 20 or older and 29.7 percent were married. Yet in 1980, when by Mr. Levitt’s reasoning the women having legal abortions would have been younger and more likely to be single, 70.8 percent of women having abortions were 20 or older, and 23.1 percent were married-not so different, given that marriage rates had been falling at the same time.

The authors’ argument has even deeper flaws. The most impoverished, least educated young girls were the ones most likely to have their babies rather than aborting them. The birth rate among unmarried women nearly doubled in the years Messrs. Levitt and Dubner discuss. Unmarried teens from 15 to 19 had a birth rate of 22.4 per 1,000 in 1970, 27.6 in 1980, 42.5 in 1990 and 40.4 in 1999. And it’s equally probable that a lot of post- Roe abortions were performed on young girls from middle-class backgrounds who, in the absence of Roe, would have married the men who got them pregnant and raised children who would have gone on to become middle-class, law-abiding citizens.

When one begins to question Freakonomics, cracks in the logic proliferate. About those hasty real-estate agents: In how many cases, one wants to ask, did the seller have a good reason to accept the first offer (maybe because she was trying to buy another house, a terrific bargain, and wanted a quick closing)? Was the study corrected for variation in the sellers’ financial position? Presumably some sellers have their house on the market because of money problems; they may even be trying to stave off an anticipated foreclosure. The more questions one asks, the shakier the argument looks.

Perhaps Mr. Levitt is more rhetorician than economist.

The authors proudly trumpet Mr. Levitt’s “underlying belief” that “the modern world” is ” not impenetrable, is not unknowable.” But the problem with Mr. Levitt’s problems, as the abortion example shows, isn’t that the modern world is unknowable, but that there are too many factors, in many cases, to be sure what the correct explanation for something is. And this is where cleverness must retire in favor of wisdom-which is not in great supply in Freakonomics.

Ann Marlowe, author of How to Stop Time: Heroin from A to Z (Anchor), has a rarely used M.B.A. in finance; her next book will be published by Harcourt in early 2006.