Freakonomics Introduction The Hidden Side of Everything

Crime Rate There was a huge crime rate in the United States during the early 1990’s. Experts and predictors expected that the rate would keep increasing. However in the middle of the decade the crime rate surprisingly decreased to very low levels, and the “experts” did not know why.

Abortion In 1970 Norma McCorvey became pregnant and wanted to have an abortion. However, abortion was illegal in Texas and she became apart of an important lawsuit to legalize abortion. The case made it to the Supreme Court, and ruled in favor of Ms. McCorvey, allowing legalized abortion throughout the country.

Correlation Children born into an adverse family environment is far more likely than other children to become a criminal. When poor, unmarried, teenage mothers became able to have an abortion, less children were born. These unborn children, who would have entered their criminal primes did not get the chance.

Real Estate A real estate agent works very hard to try and maximize the houses value. On a sale of a $300,000 house, a typical 6% agent fee yields $18,000. If this was her house, however, the price could possibly be $325,000.

Real Estate An agent with a house selling already selling for $300,000 may be able to increase the price. The reason she doesn’t is that in trying to raise the value, she spends a lot of time and effort It may not be worth her while to raise the price of the house, because her extra profit would virtually infinitesimal.

X, Y, & Z Election data shows that the candidate that spends more money in a campaign usually wins. However, is money the cause of the victory? A correlation simply means that a relationship exists between X & Y. It’s possible that X causes Y, Y causes X, or that X & Y are caused by some other factor Z.

Votes Money Appeal Picture two candidates, one intrinsically appealing and the other not so much. The appealing candidate raises much more money and wins easily. Is it the money that won him the votes or was it his appeal that won his votes and the money? This is hard to answer because voter appeal is not easy to quantify. How can it be measured?

Candidates A & B It can only be measured in one special case; when a candidate runs against… himself. That is, Candidate A today is probably similar to Candidate A four years later. The same for Candidate B. If Candidate A ran against Candidate B in two consecutive elections, but in each case spent different amounts of money, we could measure the moneys impact.

Correlation A candidate that won the previous election can cut his spending in half and lose only one percent of the vote, while the losing candidate can double his spending and only gain that same one percent. It would seem that the amount of money a candidate spends on his election would effect the number of votes, however this is not true. In reality money does not effect the outcome.