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Freakonomics Student Guide

June 4, 2010

I am not sure about the quality of this guide.  For example, on page 8 section 3 (of the pdf) the argument is made about supply and demand of information affecting quantity of information consumed, and it is demonstrated through the diagram I have cut from the guide and pasted below. The argument is that as the internet arrives, the supply line for information moves to the right, resulting in an increase in quantity consumed (and a lowering of price P1 to P2).  But it seems to me that this argument rests solely on the premise that the demand line D1 is static.  Would it not also increase, moving to the right as the supply of information increased?  Then the price of the information would reach equilibrium at a level higher than P2.

I have the revised and expanded edition of the orginal work, and I can’t find any diagrams in it.  Perhaps the guide is making its own interpretations, and like all secondary sources, must be evaluated differently than a primary source. Was that the point of giving us this reading to examine?

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2 Comments
  1. Ken, I did not read the original book, but this student guide did nothing to make me want to. One example they discuss is the daycare centre in Haifa. The argument claims that as soon as an extra fee was imposed for parents arriving late, the incidence of parent lateness increased.

    Now this conclusion may be properly supported in the book, but I see no demonstrated causality between the late penalty and the increased incidence of lateness. There is a claim that parents feel that the late penalty takes precedence over and reduces the moral duty to arrive on time but there is no evidence to support that.

    Maybe the book actually does make a proper case to support this?
    -John

  2. deadvocate permalink

    Hello John. Thanks for your comment. I had a look at the portion of the book regarding the daycare centre. It is actually their opening example in chapter one. The observation of increased lateness (a doubling) is based on an empirical study.

    What they conclude is that the fee was too small to prohibit lateness as it appeared that the parents were willing to pay this small amount to be late. They also conclude that for this small fee, the parents could buy off the guilt they felt about being late when there was no fee. The suggestion is made that if the fee were higher the parents might not pay it, but there is no data on that.

    Their argument centres on incentives, and they are arguing that there are moral as well as economic incentives (plus social), and that in this case the $3 economic disincentive was less than the moral disincentive to show up late so they were willing to pay it.

    However, the lateness doubled, meaning that there were late parents even before the imposition of the fine, and there is no data about whether some of them stopped being late after the fine was imposed. So I think their conclusions, while possible, are not necessarily absolutely valid. Plus their initial assumption is that moral disincentives caused parents to show up on time. I don’t see any data in support of that premise. Perhaps there were other factors involved.

    My conclusion is that the book is a good example of the type of writing that appeals to a mass best-seller audience: short on detail, long on sensationalism.

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