Paperhouse reads: Freakonomics

freakonomics

There’s loads of surprising stuff contained in Freakonomics, Steven D Levitt and Stephen J Dubner’s romp through the application of economic principles to sociological data.  The thesis that legalised abortion leads directly to lowered crime rates – that’s pretty shocking, even if you’re someone (like me) who thinks that abortion should be legal and that one of the strongest arguments for its legality is the unhappy circumstance of unwanted children. Or the analysis of cheating by sumo, which cleverly presses the data from sumo wrestlers’ championship bouts to discover the circumstances under which a wrestler seems to be willing to hand the win to his opponent. The data are structured to account for variables, interrogated for controls, analysed – and the outcomes are often revelatory, not so much for the conclusions, but for the implicit argument that something as seemingly ineffable as human behaviour can be measured in this way.

There’s an argument, pushed by Meghan Falvey for n+1 magazine, that the book is too tightly focussed on a cost-benefit analysis and incapable of accommodating outcomes which fall outside of the financial, but I don’t think that’s a fair representation of Levitt and Dubner’s work. As a commentary on their method, it’s roughly acceptable: analysis requires that an approximate value can be set on the input and output of a transaction, and some things (money, lifespan, crime per capita) are easier to quantify than others (happiness, love, the dappling of sunshine on treetops). But Falvey’s ethical objection – that Freakonomics espouses a narrow view of human behaviour as reward-driven and rational, and so falls into the service of stakeholder-society welfare restriction – seems simply wrong.

After all, Freakonomics says that everyone from most powerful to least is influenced by calculations of self-interest: that’s an argument that recommends putting limits on activities where one person holds an advantage over another. And more than that, a lot of the behaviour described in Freakonomics barely qualifies as rational anyway. The section on baby-naming picks up on the phenomenon of names cascading down the social classes from high to low to total disuse. Levitt and Dubner argue that this demonstrates that parents tend to ‘name up’, picking a name which they associate with wealth or success and giving it to their child in the hope that the glamour of the name will be absorbed by their offspring. This is palpably irrational. The name, they argue, is a symptom of the parents’ socio-economic background, and it’s the background which determines the child’s outcome, not the name. So while the progress of names through society stems from a sort of logic, it’s not a logic that demonstrates any sort of grasp at all on what will be best for the child.

Outside of directly acting rewards and penalties (‘If I throw this fight to an opponent they’ll throw me a fight when I need it’ sort of thing) it’s really, painfully hard to discriminate the best course. The relationship between action and outcome isn’t always immediately obvious, and when you start to deal in probabilities rather than certainties, human rationality begins to strain at the seams. “The risks that scare people and the risks that kill people are very different”, says risk communications consultant Peter Sandman, quoted in Freakonomics. “When hazard is high and outrage is low, people underreact. And when hazard is low and outrage is high, they overreact.”

Statistics are the best tool we have for assessing risk and tempering outrage, and they’re a tool which very few people are able to use effectively or consistently. Why don’t we prize the analysis of numbers as highly as the analysis of words? But terms like ‘control’, ‘risk’ and ‘bell curve’ flit inconsistently through the curriculum while ‘metaphor’, ‘simile’ and ‘superlative’ get close attention from the primary curriculum on. When poor benighted Jeni Barnett says (extract taken from Sciencepunk’s transcript):

We have evidence, however much people say we don’t, we have evidence that if a child’s immune system is weak; my daughter was one of them, she was very asthmatic as a child, she could not have received that triple vaccine, she couldn’t have done it so I made a calculated decision that I didn’t want to go there.

she demonstrates pretty clearly the impossibility of making a “calculation” where you don’t have or deny yourself access to the data. And of course, it’s not just Jeni: she just happens to have stated particularly beligerantly what plenty of far more influential people (including, disappointingly, Ian Hislop and Paul Foot, as well as the  usual idiots) either believe, or used to believe, or believed to be plausible. The argument of Freakonomics isn’t that people are capable of being rational and acting consistently for the good: it’s that people might make slightly more rational choices, given the right information and possibilities of action.

7 thoughts on “Paperhouse reads: Freakonomics

  1. Thanks for that! (It’s nice to read something to really kick my brain into being after so, so very many essays and admin mechanics…)

    I read your post and I agreed, of course, but, if you don’t mind me asking, can I agree with Falvery as well? Not for all the right reasons, but my usual poles of influence are pulling me in all sorts of ‘yeah but’s….

    There’s the Foucault angle, I think, which I think your post and Falvery’s together cover. The assumptions in this book are hopelessly embroiled to a particular conception of human nature (i.e. rationalist), that can be oppressive, damaging, limiting (Falvery) but also and simultaneously can be productive and, really, not such a bad thing, when the alternative is to succumb to the irrationality that is still all too prevalent in the world (which is a gross oversimplification of what you’re saying?).

    And for me you are also right, implicitly, on the score that, regardless of how we like to see ourselves, these are the beings that we have made ourselves into. If we want to be something different, a more fundamental change is needed.

    Then there’s the (more comical) Freudian side of me, that wants to ask: but really, are we so rational? Surely such formulas are only attempts to impose reason on chaos, to control and quantify the irrationality that is human decision making?

    (Which, of course, is what Freud was trying to do himself in the first place…)

  2. I guess my take is that the Freakonomics analysis doesn’t treat every human as individually rational, but that the trends you find in the numbers show people responding fairly consistently to certain stimuli. These numbers tell you about populations, not individuals. But I think my romantic conception of self got shattered when I read Bourdieu and found myself pretty solidly pegged in his definition of middle class. I’m just a happy little bundle of signifiers these days…

  3. Ah! Signifiers! The curse of twentieth century philosophy! Those tidy little imperialists that tried to rationalise language, the unconscious, incest, ritual, religion and every other mysterious little corner of human, irrational tom-foolery!

    I hear ya.

    Still, all of this would make brilliant reading for next year’s Foucault seminars (provided they happen). People not as individuals but as populations and all that. I still say that you are talking complete sense. I like my rationalism as much as the next man, thanks. Give me one Ben Goldacre over a rabble of prayer-mumbling homeopaths anyday!

    Fight the good fight!

  4. That’s not really her argument, though. She’s saying that Levitt’s theories are based upon a theory of rational actors (that nobody other than economists believe because its bollocks – and even economists are starting to doubt it), while his theorising consists of imagining what he’d do in each of those situations. Everything else follows from those two observations.

    So for example. I can imagine that if I was a Sumo wrestler I’d be constantly worried about injuries, so I’d be disinclined to put much effort into matches that don’t matter. Is this what happens? I don’t know, and neither does Levitt. Maybe its a social convention of the sport? Maybe its a collection of complex and interrelated things. Now if I was a real researcher, rather than an economist, I might do some research and find out.

    The stuff on baby names. I mean that might be why people do it, but think back to when you picked baby names. Does it still seem plausible? Hang around a poorer neighbourhood and listen to people discuss possible names. Still convinced?

    As for rationality. People don’t make decisions rationally, or for that matter irrationally. Just not how we’re wired.

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