Whither Freakonomics?
The book spawned a cottage industry. But did it change the study of economics?
The Economist article titled “Why ‘Freakonomics’ failed to transform economics” does very little to answer the titular question.
Freakonomics was a hit. It ranked just below Harry Potter in the bestseller lists. Much like Marvel comics, it spawned an expanded universe: New York Times columns, podcasts and sequels, as well as imitators and critics, determined to tear down its arguments. It was at the apex of a wave of books that promised a quirky—yet rigorous—analysis of things that the conventional wisdom had missed.
While still a thriving enterprise—the book has been a bestseller through multiple editions now and co-authors Steven Dubner hosts a popular long-running podcast by that name and other co-author Steve Levitt has yet another podcast under the brand’s umbrella—one of the most famous findings in the original book was embarrassingly wrong:
The book’s most controversial chapter argued that America’s nationwide legalisation of abortion in 1973 had led to a fall in crime in the 1990s, because more unwanted babies were aborted before they could grow into delinquent teenagers. It was a classic of the clever-dick genre: an unflinching social scientist using data to come to a counterintuitive conclusion, and not shying away from offence. It was, however, wrong. Later researchers found a coding error and pointed out that Mr Levitt had used the total number of arrests, which depends on the size of a population, and not the arrest rate, which does not. Others pointed out that the fall in homicide started among women. No-fault divorce, rather than legalised abortion, may have played a bigger role.
Many critics of the approach of using social science methodologies to explore “the hidden side of everything” found it trivial or “cute.” The article concludes,
The credibility revolution ate its own children: subsequent papers often overturned results, even if, as in the case of those popularised by Freakonomics, they had an afterlife as cocktail-party anecdotes. The problem has spread to the rest of the profession, too. A recent study by economists at the Federal Reserve found that less than half of the published papers they examined could be replicated, even when given help from the original authors. Mr Levitt’s counterintuitive results have fallen out of fashion and economists in general have become more sceptical.
Yet Mr Heckman’s favoured approaches have problems of their own. Structural models require assumptions that can be as implausible as any quirky quasi-experiment. Sadly, much contemporary research uses vast amounts of data and the techniques of the “credibility revolution” to come to obvious conclusions. The centuries-old questions of economics are as interesting as they always were. The tools to investigate them remain a work in progress.
None of which really explains why the Freakonomics approach didn’t catch on or, indeed, demonstrates that it didn’t. Certainly, the behavioral economics it helped popularize is having a moment, including spawning some Nobel Prize winners.
The most interesting thing I learned from the article is that Levitt announced his retirement from academia, at the ripe old age of 57, earlier this month. Timothy Taylor offers some tidbits from an interview explaining why. Two caught my attention.
First, on the process that led to the first edition of the book:
Neither of us thought anybody would read a book if we did write it. But we both were kind of, prostitutes in some sense. And so, for the right amount of money, we were willing to write this book. And interestingly, the right amount of money turned out to be similar for both of us. And so much to our surprise, we got offered, I don’t know, three times that amount of money to write the book. And then the only thing that stood in the way of us writing the book is we had to figure out how to divide the profits, the payments. And Dubner, I don’t remember the exact numbers, but Dubner came to me and he said, “Hey, I know it’s uncomfortable to talk about this, but we need to decide to split.” And he said, “I was thinking 60 /40.” And I said, “I was actually thinking 2 /3, 1 /3.” And he said, “Oh, I’m just not willing to write this book for 1 /3.” And I said, “No, no, I was thinking 2 /3 for you and 1 /3 for me.” And he said, I was thinking 60 % for you and 40 % for me. So, it’s the easiest negotiation ever. We settled on 50 /50, we both felt like we got a lot of surplus and we’ve had a great relationship ever since.
I love it when a plan comes together!
Second, on the retirement decision:
I think two different forces at work here. The first one is that maybe between five and 10 years ago, I worked on three or four projects that I was just incredibly excited about that I felt were some of the best research that I’d ever done … [T]hese were four papers that I was really excited about and collectively they had zero impact. They didn’t publish well by and large, nobody cared about them and I remember looking at one point at the citations and seeing that collectively they had six citations. I thought, my god, what am I doing? I just spent the last two years of my life and nobody cares about it. And I really think it’s true that the way I approached economic problems, without a fashion, without a vogue, and for better or worse, probably the profession is better for having a different set of standards than I was used to meeting up with. And that was really discouraging to me. And you combine that with the idea, with the fact that along with Stephen Dubner, we’ve got this media franchise where Dubner’s podcast Freakonomics Radio gets a couple million downloads a month. And if I want to get a message out, I can get millions of people through a different medium. It just didn’t make sense to me to keep on puttering around, doing all this work, spending years to write papers that no one cared about when I had other ways of getting my ideas out. And really my interests were elsewhere. I didn’t get any thrill. … The question I should ask myself is why didn’t I retire a long time ago? It made no sense. I’ve just been, I’ve thought, I’ve known for years, it’s the wrong place for me to be. And it just took me a long time to figure out how to extricate myself from academics. And I’m so glad I’m doing it. It’s good for everyone. It doesn’t make any sense to, it feels to me awful to be in a place where I’m not excited and where I’m not contributing materially. So, for me, it feels like a breath of fresh air to be saying, “Hey, I’m not going to be an academic anymore. I’m going to be doing what I really love to do.
It’s simple economics! One imagines Levitt makes more money from his side hustle than from his day job. So, if he’s not enjoying the latter, it’s a really poor use of his time.
It’s noteworthy that, while Levitt is mostly known for the Freakonomics franchise, he was a superstar in the field first. Indeed, the reason Dubner interviewed him to begin with was because he’d just won the John Bates Clark Medal, the second most prestigious award in economics short of the Nobel itself.
But, for whatever reason, most of his articles from the last few years have a handful of citations, whereas his very-highly-cited works are mostly from 1995 through 2007. Indeed, the only exceptions appear to be foreign translations of Freakonomics.
There is a tiresome thing that experts in specialty fields do that really grinds my gears. Whether it be classical music, classical economics, or classical literature, whenever someone in the field suddenly generates lots of interest from the general public, they rush in and in condescending and faux concerned tones set to explaining to the plebes whey this isn’t actually any good. The message is clear: This thing that got you interested in our area is atypical and you won’t find any more of it. When you previously thought to yourself, ‘I don’t like that area’, you were right. Now go away and leave us alone.
I don’t know if Levitt has more or fewer irreproducible studies than the average in his industry, although I expect anything he does come up with gets much more scrutiny than things from his less famous counterparts. And I don’t know how often those less famous colleagues have flaws in a paper that is later found and corrected or adjusted for and how that compares to his average. What I do know is that Levitt popularized a data driven, let-the-facts-speak-for-themselves mindset to many millions of people who otherwise wouldn’t have been exposed to it.
I’m not quite clear on what exactly “the Freakonomics approach” actually is. Is it a difference in methods, or in the questions one applies the methods to? The expansion of microeconomics to include analyses of marriage markets, drug addiction, criminal enterprise, sports performance, etc. happened long before these authors joined the fray.
Overhyped, to be sure.
I studied and got my BA in Economics in college decades ago.
In recent years I’ve enjoyed the ‘Freakonomics’ take on things, but was it new and innovative?
Not exactly. It seems to me that it is another way into the study microecnomics, which it’s heart, is the study of the effects of individual behavior and individual decisions in the economic realm. In the end I think ‘Freakonomics’ brought more consideration of social and psychological items into the discussion of decision making in economics. And that was and is a good thing.
I thought there was some value to Freakonomics. It made economic ideas accessible and understandable to those who had never studied economics. Took some of the mystery out of th e issue. If you read current econ papers they are so heavily invested in jargon, often, they they are near unreadable. Sort of like what Neil degrasse-Tyson has done for astronomy/physics.
Steve
Freakonomics, to me, is like the popular psychology of economics.
The irony is that economics is just trying to turn human behavior into math. The “laws” of economics are entirely dependent on human nature, and individual and collective human psychology and behavior. It is, fundamentally, a behavioral “science,” so the term “behavioral economics” is redundant, IMO.
This is the primary reason why the economics profession is so terrible at forecasting. Predicting what humans will do in the future is fundamentally very difficult.
@Andy points out:
I don’t mind being different or feeling like a bit of a loner. But sometimes it is nice to know that someone whose reasoning process I respect comes to a similar conclusion. I don’t know anything about Heckman, but I have some idea how Andy approaches things.
My step has been pepped for a few minutes.
@steve: Specialist literature is generally a hard slog for the non-specialist, particularly maths and statistics heavy literature. Nothing particularly specific in economics. It is probably structurally impossible to have such specialisations and keep it in the vulgate.
@Andy:
It isn’t at all redundant although it may be partially redundant for micro-economics but not particularly for macro and notably financial. Behavioural economics has indeed a specific focus that is different or brings a different insight set.
The primary reason is that Economics is essentially like Climate Science and is not Weather Forecasting, although certain economists and most of the wider population do not quite understand this.
Climate science is not particularly good at predicting weather, but is structurally useful for medium-long-term structural change. If you start by understanding that economics is not weather but climate, then you start to understand where the utility lies (and doesn’t lie).
@Andy:
Very true! Especially when you consider how easy it is to predict what they will do in the past!
(Sorry, couldn’t resist)
Psychological and behavioral scientists often roll their eyes at some of the core assumptions of economics. These include assumptions* that people have clear and consistent preferences, prefer outcomes over changes, are self-interested in a narrow sense, are utility maximizers, etc.
I don’t necessarily blame economists for this. They are just people. And all people are armchair psychologists.
*Funny thing is, these same (unrealistic) assumptions are often displayed in discussions about one’s political adversaries.
@Mimai:
Ha! I roll my eyes at all of you and the economists! I win that contest! 😉