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Selected Materials from Book - Freakonomics by Steven D. Levitt and Stephen J. Dubner

Freakonomics by Steven D. Levitt and Stephen J. Dubner October 17, 2007

Here is a book about some facts found in our society and backed by analytical statistics. I learned a good amount of information here. In this book, the authors carefully differentiate the casualty from correlation, what matters and what does not.


Quote A. “Incentives are the cornerstone of modern life.”


Quote B. “Dramatic effects often have distant, even subtle, causes.”


Quote C. “’Experts’ – from criminologist to real-estate agents – use their informational advantage to serve their own agenda.” – Information Asymmetry


Quote D. “Knowing what to measure and how to measure it makes a complicated world much less so.”


W.C Fields: “a thing worth having is a thing worth cheating for.”


Statistically proven, abortion, legalized on Jan 22, 1973, started with a 21 years old woman in Dallas named Norma McCorvey, had a powerful cause to the drop of crime rates far more influential than gun controls, strong economy, or new polices, but far from credited by the media and experts. The unborn babies dramatically shrunk the pool of potential criminals.

Statistically proven, real-estate agents are much likely to keep their own properties on the market longer to yield max sale price; whereas, they would sell client’s properties at immediate offer for quick close and commission. The agent’s own stake of average 1.5% of the 6% commission at differences of $20,000 in sale prices is merely $300, which agents do not think worth of their extra efforts.


Statistically proven, because of incentives, Chicago school teachers cheat to raise student’s grades, Japanese SUMO, which considered number one sports in Japan valued upon honesty and integrity, the wrestlers cheat.


Ku Kulx Klan founded in the immediate aftermath of Civil War by 6 former Confederate soldiers in Pulaski, Tennessee. They see themselves as like-minded, thus chose name “kuklux”, a mangling of kuklos, the Greek word for “circle.” KKK was dormant between 1900 and 1909, and then had 8 millions of members in 1920s, with major activities in Atlanta. Stetson Kennedy infiltrated KKK and wrote the book “The Klan Unmasked.”

Real Estate: 5 terms correlated to higher sales prices: Granite, state-of-art, Corian, Maple, Gourmet; 5 terms correlated to lower sale prices: Fantastic, Spacious, “!”, Charming, Great Neighborhood.


Online dating, women lie about looks and weights, men lie about incomes. Respectively, these misinformation in fact increase their responses.


Drug dealers operate like corporation and base on incentives, only ringer leader makes money, not the foot soldiers. The first set of financial data and report into Black Disciples gangs is attributed by Sudhir Venkatesh.


Coke: Cocaine is pure and too expensive to dominate in ghetto. But Crack created by mixing powdered cocaine with baking powder and water, then cook off the liquid (this makes crackling sound, hence crack) was much cheaper, powerful to reach brain in a few seconds then fade fast, make users wanting for more.


Parenting: Children are affected by what parents ARE instead what they DO.


IRS mission statement: “The IRS role is to help the large majority of compliant taxpayers with the tax law, while ensuring that the minority who are unwilling to comply pay their fair share.”

Tax: average of $1000 cheated by every person in US in 2001 but depend on occupations, such as wage earner or restaurateur, the percentage of cheating found in each group is significantly different, again because of incentives.

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