Why Freakonomics Is The Worst Book I’ve Ever Read

FreakonomicsI just finished reading Freakonomics and I’ve never been as disgusted with a “nonfiction” book as I am right now. It seems to violate every fundamental principle of any organized school of rational thought – and yet somehow it’s a best seller.

At every single turn throughout the book, Levitt and Dubner attempt to apply seemingly unrelated explanations to natural phenomena under the premise of “a different approach to economics.” Yet even trivial internet investigation can indicate that in fact there are much more direct explanations for every major point discussed in the book. Sadly, this is just an attempt to turn the authors’ academic papers (which are of questionable repute but a very controversial nature) into mass market popularity, without actually standing for real fundamental principles.

Take the most “controversial” premise in the book, the portion that tries to tie the 1973 legalization of abortion to the drop in crime in the 1990s. The general claim here is that crime was cleaned up due to fewer undesirables on the streets. In fact, if you look at a curve of crack cocaine usage in the United States over the last fifty years or so, it almost directly matches the levels of crime in the United States, with usage rising wildly through the 1970s and 1980s and falling in the 1990s. And this directly matches the increase in sophistication of drug cartels in the 1970s and 1980s and the increase in sophistication in the war on drugs in the 1990s. What about the “sudden” change in the legalization of abortion? Please. Many doctors were performing abortions illegally prior to 1973, and many doctors didn’t suddenly begin doing them after Roe. Also, the sophistication of the South American drug cartels in the 1970s had no connection to judgements on abortion in the United States (outside of chaos theory). So, using 1973 as a strong demarcation is foolish.

In an issue closer to personal finance, another faulty argument from Freakonomics is the implication that Chicago real estate agents bilk their clients because the homes of the real estate agent sell at a higher average price than those of their clients. What wasn’t considered, and is utterly vital to the picture, is the mentality of the two sellers: the “client” home seller is often under the gun to sell due to a move or a major change in their situation, whereas many sales from real estate agents are due to a desire to “upgrade.” This means that a real estate agent can allow their house to wait around for the right buyer before selling, whereas an average client often cannot afford to wait. This common sense answer was ignored by Levitt and Dubner so that they could make a “shocking” but bogus conclusion.

What does this all have to do with personal finance, you’re probably asking. The problems with Freakonomics are the same problems that exist with financial gurus and charlatans: they prescribe solutions that are far too complex (and usually flawed), when much simpler and direct solutions exist for almost every problem. If you want passive income, for example, don’t follow a get rich quick scheme – save and invest your money and it will happen.

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7 thoughts on “Why Freakonomics Is The Worst Book I’ve Ever Read

  1. jake says:

    I know a lot of close friends who swear by this book, and would have a fit if they read this review :P I have not read it myself, though I do plan to.

    I can only say that I believe it has gained a big following probably from the fact that it is so radical in the way that it approaches economics and how it relates to the world.

    After I read it I’ll come back with my own personal opinion, and to see if I agree or disagree with you and why.

  2. Ted Valentine says:

    This book was 100% for shock value. My hackles were up from the very beginning. When I read the introduction that goes on and on about how smart the author is, and then ever chapter lead in repeats that, I know I’m trying to be had. Res ipsa loquitur — If he’s that smart, I don’t need to be told.

    To expound on your review, Trent: The part about the KKK was awful. Stetson Kennedy did not take down the Klan just because he fed their secrets to a kid’s radio show. It took a lot more than that from the Federal Government and a lot of changes in our country’s laws. Also, the author’s presumption that lynchings were the primary form of Klan violence and that KKK violence decreased as membership rose was irresponsible and a flat out lie. Hello church bombings?!?!?

    As an engineer, I’ve taken a LOT of math in school and used it for decades. I know what someone can do with data through massaging and data mining. (Anything you want). Levitt is like a modern day magician. You can’t really make the Statue of Liberty disappear. But you can fool a lot of people into believing you did with illusions and deception.

    The book makes for very interesting after dinner conversation, but very little real substance. For that reason it was an entertaining read, but it still had a lot of B.S. in it.

  3. Kim says:

    I actually liked the book, but not because I agree with it. I found it funny, and was very intrigued by the creativity it takes to come up with most of the stuff in the book. I found it really interesting to watch how all of the stats were spun and applied to situations where there was no real cause and effect relationship. Like Ted, I took a degree with a math-heavy course load (chemistry, math minor) and was not only impressed by how the stats were used, but also how they were presented. Some people without a lot of knowledge in cause-effect relationships may fall into a trap (and based on the fact that its a best seller, it looks like a lot of people did)
    Kim

  4. John Boon says:

    I have just read 25 pages of Freakonomics, and I know already that it is a bad book, and not worth reading through to the end, but I shall probably do so anyway….Why do I keep making the same mistake of reading those little tags alongside the books in the bookshop “This book will shock you and make you think, etc, etc…” and then buying the book thinking that it will be as good as it is made out to be? I guess I am swayed bypublic opinion, but I should realise by now that I do not share conventional American Values on such things as neo-liberalism, gun-culture, behaviourism, religion, war-politics, and so on, and therefore I am unlikely to respond in the same way as most Americans to abook like this one, which is truly American and truly awful.

  5. Steve says:

    Every chapter seemed to follow the pattern
    “Phenomenon X has increased/decreased/etc. People say it is cause Y but it is not. We say it is cause Z. If it were cause Z we would see the following in the data: z1, z2, z3.” That’s the flaw there – they assert but do not prove z1, z2, z3, etc.

  6. Hatch says:

    “… if you look at a curve of crack cocaine usage in the United States over the last fifty years or so, it almost directly matches the levels of crime in the United States…”

    Correlation does not imply causation.

  7. Caroline says:

    Doesn’t this book at the very least encourage some original thoughts? I like it for that purpose. I am too economically uneducated to comment on how true the explanations are. I liked the names chapter a great deal.

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