2. Concepts In ‘Freakonomics’
Incentives are the corner stones of economic life
The conventional wisdom is often wrong
Dramatic effects often have distant, Even subtle, Causes
Experts use their informational advantage to serve their
own agenda
Knowing what to measure and how to measure it makes
life simpler
3. What we shall discuss….
Incentives
‘Snob Effect’
Information asymmetry
Conventional wisdom
4. Types of incentives
“Means of urging people to do more of a good thing and less of a bad thing”
“Economists love incentives”
Economic
People respond to in a market place.
Ex:-Discounts ,bonus, Fines etc
Social
Urge people to do things in a way tht is accepted by all
Presence of friends effects productivity
Moral
Appealing to the sense of a person’s “right or wrong”
Advertising,Donations,CSR
5. snob effect
“The snob effect refers to the desire to own unusual, expensive or
unique goods”
These goods usually have a high economic value, but low practical value
Mac users
Starbucks
Designer clothes
Sports cars
Stamps,Coins
6. Information asymmetry
“One party to a transaction has relevant information where as the
other do not”
Buyers > Sellers
Sellers > Buyers
Credit market in rural India
Local money lenders V/S banks
7. Correlation V/S Causation
Abortion and Crime
Legalizing abortion reduced crime
Where all criminals have gone
Olympics Medals and GDP!
A university of south Australia analysis found that one gold medal typically costs a
country $ 37 million in training funds.
Unemployment VS Global warming
“An increase in a state’s unemployment rate is associated with a decrease in the
probability that residents think global warming is happening
Higher unemployment rates are also associated with views that we should do less
with respect to policies designed to reduce global warming.
8. Conventional wisdom
“Explanations that are generally accepted as true by the public or by
experts in a field”
Especially around the link between legalized abortion and crime
rates
large drop in crime rate in the US from the 1980′s to 2000
9. What Do Schoolteachers and Sumo
Wrestlers Have in Common?
Who cheats?
Cheating schoolteachers in Chicago.
In which explore the beauty of incentives, as well as their dark
side—cheating
10. How Is the Ku Klux Klan Like a
Group of real-Estate Agents?
Going undercover in the Ku Klux Klan…
Breaking the real-estate agent code: what “well maintained”
really means…
What do online daters lie about?
In which it is argued that nothing is more powerful than information,
especially when its power is abused
11. Why do drug dealers still live
with their moms?
Why experts routinely make up statistics
Mitch Snyder about homeless statistics
45 homeless people died each second
Meant to say that 1 person died for every 45 seconds.
12. conclusion
• The fact is that freakonomics-style thinking
doesn’t travel in morality.
• Parents matter a great deal in some regards.
• A better life standard helps to bring down the
crimes in to certain extend.