Zhou 1 Fiona Zhou AP Economics

Most people think of economics as a dry subject matter concerning monetary and fiscal matters. How does Freakonomics change this definition?

In Freakanomics, the root word in economics, economy is brought into discussion straying from what most people would consider economics to be: relative to just money and the running of the economy. Unfortunately, the economy is not completely pure, nor is the world, though it may seem that it runs on morality. The book discusses the issues with incentives and how people will respond to them in order to achieve their own goal, ignoring the important principle of having morals. Its true that a very high incentive in society today, especially with the earlier economy downfall and its now recovering stature, is financial incentive. Therefore, many people can easily relate the idea of the economy and money to economics since its rarely spoken about the other incentives. However, in Freakanomics, the authors are able to discuss the incentives that would initially gain response first, and it will almost always tie back into the financial incentive. But, in several cases described in the book, the economy may not be the core to the cases that would otherwise seem likewise if looked at from an outsiders perspective. The problem discussed initially started with the question of how the crime rate plummeted in the last century. Many would immediately point to the possibility of the strong economy and the availability of jobs. However, it is pointed out that this would only affect those with financial problems in opposition to more violent crimes (120). In retrospect, some explanations didnt even have any correlation to the falls, but just happened to be related to another possibility, like the increased number of policemen of which explained the increasing of criminals. In essence, the outsiders unfamiliar to the works of an economist would dictate that all criminals have only the financial incentive in mind when committing crimes. However it was the growing use of contraceptives along with abortions that helped tone down the crime rates. A moral and social incentive of sorts, the mothers wont even have the minimal amount of time to pay attention to their newborns, and often grow up with a poor education, having to tend to their child, thus a very hard life. At times, the family is run with a single parent with a part-time job, barely supporting her life, if not her child. So, the child will grow to understand the hardships in life, never knowing what it may have been like to be born to a well-off family. Essentially, childhood poverty and a single-parent household, as mentioned, would be high indicators of a life in crime (139). Such factors pushed women to get abortions in belief that her child would not be able to live or grow comfortably with a parent who is still a child herself. Another example is the bustling economy of illegalized selling of cocaine. Expensive, and a short-lasting high, cocaine became the target of many potential buyers, many who in society would have been frowned down upon if caught using it. The crack dealers had financial

Zhou 2 incentives in mind, yes, but if so, economists ask why many still lived in the gang-ridden neighborhoods, more than likely their birthplaces. An experiment performed by a college-economist dictates the point of view from the perspectives of the gang leader, foot soldiers, officers, and the policemen that patrol the neighborhood. If a neighborhood would potentially have crack dealing, one would suspect there to be higher patrolling; however, many of these officers were paid to lay down low with the money earned from the crack itself. Not only were they allowed lazing around and allowing the crime go unheard, they were rewarded for doing so. The incentives here would be financial, of course, but moral and social incentives had been ignored, surprising for the crime-fighters. The officers were much closer to the top than those of the foot soldiers, and they continued their line of work in hopes to someday pay the gang members, instead of being the ones paid to. They envy the work of their gang leader who controls the crack dealings, but they risk not rising any higher in fear of becoming a rivaling dealer. For the foot soldiers, their incentives lie only socially. They make very little money, have the highest risk of being killed in the circle of jobs, and hold the position for the most dangerous job in America. All three lower positions have their own incentives, but the gang leader, with the most successful job and richer than the average American, still lives with his mother. His incentive is not financial reasoning, but rather he wishes to lay low away from the eyes of the government. He could easily buy a nice home, several cars, and bring the service everywhere, but he chooses not to out of fear of being caught for dealing with drugs. From personal observations, people with monetary incentives often have several other reasons to pursue something, and will usually have more motive than financial reasons. In example, students who work hard in high school recognize that by doing so, they will be able to get into a good college. However, college may seem like the most important schooling one will be able to commit to, why pay attention to high school anyways? Although many people will take the opportunity in college as their chance to shine over high school, the college degree and the name of the college are very important to the job offers. On a different level, one can assume that by getting into a well-known college, they will immediately work with a high-paying salary, keeping in mind their financial incentive. However, students coming straight from college (community college is still in the college pool) do not necessarily earn the highest paying salary right off the bat. At times, extra schooling and experience is needed before one can make money that high. Why continue doing well in high school then? Students often work off one another; competition is at its prime during high school. Each risk taking the hardest classes, but with the most incentive being that extra GPA point on their transcript that may or may not make the difference in college applications. On another note, a student will take into consideration that by taking that class and passing that test, theyll be able to void out from retaking the class in college. There are still several sides to cases that only financial incentive may seem to apply. However, the job of the economist begins through realizing that the world works in a much more different way underneath the surface. And Freakanomics scratches just the surface of it.