Freakonomics: a Reflective Analysis on an Eye-opening Read

Freakonomics. What kind of name is that for an entrepreneurship book? It sounds like a joke. I chose this book for the same reason I chose the other two I have written essays about: I received it as a gift. Unfortunately, this was the last book that I received as a gift and was also on the book list.

This book came as a pleasant surprise, I was expecting a puerile and simple book, similar to Tribes. My expectations were blown out of the water and I’m glad for that. The book starts with a small introduction to the world of economics and why and how can economics explain everything that is happening in the world. This is the overall premise of book and the rest of it is dedicated to showing the numbers to prove how much economy determines our lives. First, we have the example of school teachers and sumo-wrestlers, where the idea of cheating is explored. After that, we learn how important information is with the example of the Ku Klux Klan (I love how the authors picked zainy examples, it helps to keep you hooked) and then talk a bit about perspective and how the “common sense” is just a fabrication based on convenience. Chapter 4 is a really powerful one because it portrays a really powerful idea: The cause of an effect can be completely different than what we think it is, more on that later. The last two chapters are dedicated to social determinism and how successful your name makes you (which was an amazing premise). In the end, we are brought back to earth with a few examples of data versus randomness and how much it is out of our control.

It might not be fair, but I will be comparing this book to Tribes, by Seth Godin. It is miles ahead in terms of content and ideas, although a bit lacking in the readability section. What “Freakonomics” does very well is present data: from graphics presenting each year from 2006 to 2011 to links to actual studies where they mention the sample size. What is actually the best part is that they interpret those results in unexpected ways, just like they did with the baby names example. There are however pacing issues, where you feel the chapters are disjointed from each other, giving a one-up to “Tribes” in the structure area. The language used in Steven’s book is pretty easy to understand and to follow but is nothing compared to how easy Seth Godin’s is, making it a tad bit harder to pick up for new readers. Overall, “Freakonomics” is a superior book and should be treated as such. While reading it, you should take notes, understand the underlying circumstances, like the time-frame and population in those years.

One example that struck me as really powerful was the case of Ceausescu and his abortion rules. In 1966, just one year after he took power, Nicolae Ceausescu declared abortion illegal, saying that “anyone who avoids having children is a deserter who abandons the laws of the national community” (which is of course BS). He wanted to create the perfect race, the New Socialist Man, and increase the productivity in the agriculture sector with this policy. Women were often given pregnancy tests at work and if they repeatedly failed to conceive they were forced to pay a “celibacy tax”. That is madness! What the hell was wrong with us? His idea was eventually his doom, the generation he created being the one who took him down. The protesters all over the country were between 13 and 20 years old, practically, the generation he created, the one that grew up in way harsher conditions. This not only shows that what goes around comes around but that also, without foresight on your decision, you end up creating the problem.

Steven Levitt also talks about the phenomenon of crack cocaine dealers still living with their mothers. He talks about a student at Columbia University who moved to the projects in order to learn more about how gangs work from an economic point of view. The big question is: “If drug dealers make so much money, why do they still live with their mothers?” The answer was simple: because the crack cocaine business works just like McDonald’s. So the ones at the top of the pyramid actually make the high wages (which in the case of the gang was 7 people) and the rest feed on the scraps (meaning over 6500 foot-soldiers). It’s a cruel life out there…

I believe this book is a great way to see things from a different perspective and understand the power of information. The authors are always making a point on how important is to collect data and then interpret it, actually blowing out of the water the idea of the book “Tribes”. Each time the authors present a problem you thought you knew they show you the real face of what happened. In the case of Ceausescu, I just thought the population had enough, that it was something natural when in actuality the revolution was heralded by the ones that the dictator actually created *mind=blown*. Or in the case of cocaine dealers, where I thought the real reason why they still live with their mothers is to maximize profits and keep a low profile. It turns out they just don’t have any other choice.

What I took from this book were a few good practices: accumulate data and then interpret it. I started watching the social media accounts of the companies I run and tracked the numbers of people visiting the page, saw where they clicked. I installed a Facebook pixel tracker and Google AdWords on my main site to track activity and understand the flow of each client entering our website. I also watched carefully our sign up form and changed it accordingly. “Just because a question has never been asked doesn’t make it a good one”. This quote from the book literally deleted half of my sign-up form, so thank you, Steven! I think this is book was actually one amazing trip into the reality of numbers and the unpredictability of human life.

In conclusion, Freakonomics is one heck of a good book, useful in understanding the information behind an apparently subjective decision, helping you see beyond your own ignorance. I started reading this book with very low expectations and that's maybe one consequence of me thinking it is that good, but I stand by it. This, just as Matsushita Leadership, should be a mandatory book in high school because it changes your approach in general towards every piece of information you see. What I took from this book were a few good practices: accumulate data and then interpret it. I started watching the social media accounts of the companies I run and tracked the numbers of people visiting the page, saw where they clicked. I installed a Facebook pixel tracker and Google AdWords on my main site to track activity and understand the flow of each client entering our website. I also what I took from this book was a few good practices: accumulate data and then interpret it. I started watching the social media accounts of the companies I run and tracked the numbers of people visiting the page, saw where they clicked. I installed a Facebook pixel tracker and Gooatched carefully our sign up form and changed it accordingly.