Thinking Beyond Science

A real-estate agent is a different breed of expert than a criminologist, but she is every bit the expert. That is, she knows her field far better than the layman on whose behalf she is acting. She is better informed about the house’s value, the state of the housing market, even the buyer’s frame of mind. You depend on her for this information. That, in fact, is why you hired an expert.

A study of California auto mechanics found they often passed up a small repair bill by letting failing cars pass emissions inspections–the reason being that lenient mechanics are rewarded with repeat business. But in a different case, an expert’s incentives may work against you. In a medical study, it turned out that obstetricians in areas with declining birth rates are much more likely to perform cesarean-section deliveries than obstetricians in growing areas suggesting that, when business is tough, doctors try to ring up more expensive procedures.

We all learn to respond to incentives, negative and positive, from the outset of life. If you toddle over to the hot stove and touch it, you burn a finger. But if you bring home straight As from school, you get a new bike. If you are spotted picking your nose in class, you get ridiculed. But if you make the basketball team, you move up the social ladder. If you break curfew, you get grounded. But if you ace your SATs, you get to go to a good college. If you flunk out of law school, you have to go to work at your father’s insurance company.

For every clever person who goes to the trouble of creating an incentive scheme, there is an army of people, clever and otherwise, who will inevitably spend even more time trying to beat it. Cheating may or may not be human nature, but it is certainly a prominent feature in just about every human endeavor.

Information is a beacon, a cudgel, an olive branch, a deterrent-all depending on who wields it and how. Information is so powerful that the assumption of information, even if the information does not actually exist, can have a sobering effect.

Information is the currency of the Internet. As a medium, the Internet is brilliantly efficient at shifting information from the hands of those who have it into the hands of those who do not.

Often, as in the case of term life insurance prices, the information existed but in a woefully scattered way. (In such instances, the Internet acts like a gigantic horseshoe magnet waved over an endless sea of haystacks, plucking the needle out of each one.) The Internet has accomplished what even the most fervent consumer advocates usually cannot: it has vastly shrunk the gap between the experts and the public.

No one is more susceptible to an expert’s fearmongering than a parent. Fear is in fact a major component of the act of parenting. A parent, after all, is the steward of another creature’s life, a creature who in the beginning is more helpless than the newborn of nearly any other species. This leads a lot of parents to spend a lot of their parenting energy simply being scared.

The likelihood of any given person being killed in a terrorist attack is far smaller than the likelihood that the same person will clog up his arteries with fatty food and die of heart disease. But a terrorist attack happens now; death by heart disease is some distant, quiet catastrophe. Terrorist acts lie beyond our control; French fries do not.

A child who had a low birthweight tends to do poorly in school. It may be that being born prematurely is simply hurtful to a child’s overall well-being. It may also be that low birthweight is a strong forecaster of poor parenting, since a mother who smokes or drinks or otherwise mistreats her baby in utero isn’t likely to turn things around just because the baby is born.

Studies have shown that a child’s academic abilities are far more influenced by the IQs of his biological parents than the IQs of his adoptive parents, and mothers who offer up their children for adoption tend to have significantly lower IQs than the people who are doing the adopting.

Source : Freakonomics : A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt, Stephen J. Dubner

Goodreads : https://www.goodreads.com/book/show/1202.Freakonomics