Econstudentlog

Superfreakonomics 2

Have completed the book now. I’ll start out with a few passages I found interesting:

1) “For decades, the rate of violent and property crimes in the United States had been steady and relatively low. But levels began to rise in the mid-50es. By 1960, the crime rate was 50 percent higher than it had been in 1950; by 1970, the rate had quadroupled. [...] In 1970, a criminal could expect to spend an astonishing 60 percent less time behind bars than he would have for the same crime committed a decade earlier.”

2) “One recent academic study found that a given disaster received an 18 percent spike in charitable aid for each seven-hundred-word newspaper article and a 13 percent spike for every sixty seconds of TV news coverage.”

I thought that sounded weird, as it would mean that two random newspaper articles about a disaster would have a greater impact on charitable giving than a minute of TV-coverage, and that just didn’t make sense to me. So I looked up the paper. Here’s what they found:

“We find that an additional minute of network television news coverage increases that day’s donations by 0.036 standard deviations from the mean, or 13.2% for the average agency. One additional story in the New York Times or the Wall Street Journal increases that day’s donations by 0.050 standard deviations from the mean, or 18.2% for the average agency.”

So the effect they mention isn’t the effect some random local newspaper is likely to have. But to me, this still seems like a huge effect. Btw, in case you haven’t read it and would like to, here’s the link to the Ramadan paper I mentioned in an earlier post also related to the book – I didn’t link to it originally because I expected it would take you less than a minute to find it on your own if you were in fact interested in reading it; the post mentioned both authors’ names as well as an easily searchable subject. Now you have no excuse for not reading it if you want to know more.

3) “If John List’s research proves anything, it’s that a question like “Are people innately altruistic?” is the wrong kind of question to ask. Pople aren’t “good” or “bad”. People are people, and they respond to incentives. They can nearly always be manipulated – for good or ill – if only you find the right levers.”

Jeg har fra tid til anden skrevet næsten nøjagtigt det samme, fratrukket første halvdel af første sætning i afsnittet, i diskussioner, jeg har deltaget i.

4) “The first successful kidney transplant was performed in 1954.”

I was really surprised by this. I had this idea that this technology had been around longer than that. Although it makes perfect sense – before antibiotics, any kind of attempted organ transplant would be plain suicide on part of the recipient, because transplant receivers have to take immunosuppressive drugs in order to avoid that their body rejects the organ. And if you take immunosuppressive drugs and you don’t have any kinds of medications that will work when you get an infection, which you will if you take immunosuppressive drugs, you’ll just die from either the infection or from your body rejecting the organ you received, whichever get you first. I’m one of those people who are very worried about the spread of resistant bacteria, a subject which recently have become newsworthy material because of the NDM-1 (you can start here). Diabetics have an increased risk of infection as it is, and there’s a significant risk that I’ll need a kidney transplant at some point due to microvascular complications. Even without resistant bacteria there’s enough to worry about because of stupid government policies:

“There are currently 80,000 people in the United States on a waiting list for a new kidney, but only some 16,000 transplants will be performed this year. This gap grows larger every year. More than 50,000 people on the list have died over the past twenty years, with at least 13,000 more falling off the list as they became too ill to have the operation.”

5) “Nearly 40,000 people died in U.S. traffic accidents in 1950. [...] The rate of death per mile driven was five times higher in 1950 than it is today. [...] Seat belts reduce the risk of death by as much as 70 percent; since 1975 they have saved roughly 250,000 lives.”

Yes, there’s probably a reason they didn’t start counting the lives saved before 75 – before that, almost nobody wore seatbelts. Around 1980, it was still only 11 percent of all drivers that used seatbelts. 20 years ago, in 1990, it was still only half of all drivers (49 %) that wore seatbelts in the US.

6) “In the United States alone, more than 100,000 coal miners died on the job over the past century, with another estimated 200,000 dying later from black lung disease [I've actually linked to that specific article before in a wikipedia links post].” [...] at least 3,000 Chinese coal miners die on the job each year.”

7) I liked this passage: “Although economists are trained to be cold-blooded enough to sit around and calmly discuss the trade-offs involved in global catastrophe, the rest of us are a bit more exitable [many economists are quite exitable too, I would add]. And most people respond to uncertainty with more emotion – fear, blame, paralysis – than might be advisable. Uncertainty also has a nasty way of making us conjure up the very worst possibilities. [...] With global warming, the worst possibilities are downright biblical: rising seas, hellish temperatures, plague upon plague, a planet in chaos.
It is understandable, therefore, that the movement to stop global warming has taken on a feel of a religion. The core belief is that humankind inherited a pristine Eden, has sinned greatly by polluting it, and must now suffer lest we all perish in a fiery apocalypse.”

As the authors note in that chapter, the worst scenario is not the most likely scenario and maybe there’s a cheap fix. They spend quite a bit of time in that chapter talking about geoengineering.

The second part of the book was not as interesting to me as the first, primarily because I knew at least part of a lot of the stuff already. There was some basic behavioral economics I already knew about, and some related game theory and the results of some classical games (the ultimatum/dictator games, how outcomes can change given different setups/incentives, the Milgram experiment); Iran’s transplant policy and how it differs from that of the US – and some of the consequenses of those policy differences; Semmelweis’ story; the basic story about the development of the polio vaccine; the ‘car-seat controversy’; the climatic effects of volcano eruptions such as the eruption of Krakatoa. A lot of this was old news at least in part, but of course there was a lot of good data as well, as I’ve hinted to in the posts.

Btw., some economists have criticized the authors for the ‘applied economics’ approach they employ – or rather that the stuff they do shouldn’t be called economics. I’d note that if you make use of an ‘economics is about incentives’ paradigm, their approach is arguably closer to ‘pure economics’ than ie. some forms of macroeconomic modelling. The fields of decision theory and economics overlap quite a bit in my mind, but what to call this kind of stuff is less important to me than the fact that this kind of work is being done by someone, and economists are in general well equipped to answer questions such as those posed in the book. Anyway, if you know someone who don’t think ‘incentives matter’ – there are a lot of those people around – this is the kind of book you should give him or her. If you’re such a person yourself, to some degree, you should of course read it yourself too. If you found the material I’ve quoted in the posts interesting, you’ll probably like the book.

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August 19, 2010 - Posted by | books, economics

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