Adonis Diaries

Archive for November 13th, 2011

Micro-economics freak, Freakonomics…: Who is Steven Levitt

Seven  D. Levitt made himself famous by focusing on micro-economics phenomena that macro-economics scholars would not touch with a long pole.

The macro-economists theorize about mathematical monetary issues, but Levitt says: “I don’t pretend to know very much about the field of economics, I am poor in econometrics (mathematical set of equations with an objective equation and a set of constraint equations), I don’t know how to do theory. It would be a total fake on my part if I claim that I know how the stock market moves, or if the economy is shrinking, or if deflation is bad or good…”

Levitt’s point of view is that economics is a science with excellent tools for gaining insights, but it lacks  and is short on interesting questions to ponder upon.

Steven love to ask freaky questions and get on with the task of torturing data-bases in order to discovering trends and correlations among the various factors.

For example, you ask a question that interest you, and you discover the story behind the problem, such as:

1) Why most drug dealers still live with their mothers?

2) Which is more dangerous: Having a gun at home or a private swimming pool?

3) Why crime rate plunged dramatically in the last two decades and is still witnessing a steady decline, though population increased and the economy has its feet flailing up?

4) Why your real estate agent sells his own home at a higher price and stay longer on the market?

5) Does your stock broker has your best interest in mind?

6) Why black parents give their children names that they know may hurt their career prospects…?

7) Do school teacher cheat to meet high-stakes testing standards?

8) Why police departments distort crime data and eliminate cases from the records…?

Do you believe that the problems of this modern world are not impenetrable, and can be resolved, if the right questions are asked, and people are dedicated in uncovering the real story?

Are you curious in divulging the real stories behind cheating, corruption, and criminal behaviors and activities? Levitt just love to play the economist investigator to questions that are related to criminal behaviors.

Levitt drives an aging green Chevy Cavalier with a window that does not shut close, and the car produces a dull roar at highway speed. Levitt notices a homeless guy and says: “He had nice headphones, nicer than mines. Otherwise, it doesn’t look like he has many assets…”

Levitt had an interview for the Society of Fellows, a Harvard clubhouse that pays young scholars to do their own work, for three years, with no commitments attached. Levitt was on fire and his wit crackled. A scholar member asked Steven:

“Do you have a unifying theme of your work? I’m having hard time seeing one underlying theme…” The scholars volunteered offering what they thought could be a unifying theme, and Steven found himself agreeing with every alternative theme.

Finally, philosopher Robert Nozick interrupted saying: “He is 26 year-old. Why does Steven need to have a unifying theme at such a young age? A talented person take a question and he’ll just answer it, and he’ll be fine.”  Steven was awarded the grant.

Steven Levitt has contributed in giving micro-economics and edge over macro-economics or “homo economics” and this behavioral perspective has called into doubt many claims of mankind rational decision-making tendencies.

Real world problems demand to get immersed into various fields of knowledge such as psychology, criminology, sociology, neurology… in order to overcome mathematical theoretical shortcoming.

At 36 of age, Levitt is a full professor at the Univ. of Chicago’s economics department, and received tenure two years after starting to teach. He is an editor of “The Journal of Political Economy”

Note 1: Stephen J. Dubner, co-author of “Freakonomics”, covered the biography of Steven D. Levitt in a special chapter called “Bonus matter”

Note 2:  I have published 5 posts on chapters of Freakonomics and you may have a head start with https://adonis49.wordpress.com/2011/10/26/how-to-convert-conventional-wisdoms-into-success-freakonomics-discoveries/

Hey, mom. Where did you fetch my name from?

A variety of motives are at work when parents consider a name for their child.  

For example, parents may decide to select from traditional names, bohemian, unique, or perfectly trendy names are shuffled around or one parents is adamant on naming after a descendant, or affixing Junior one, two, three…as with the Bushes.

For example, where do lower-end families (economically and in social status…) go name shopping?

Parents try hard to signal something with a name, mostly to send a strong message of their own expectation: How successful their child will be…

Evidently, a name isn’t likely to make a shard of difference, but don’t try to kill the grain of hope in parents wishing to feel better trying to do their best.

Detailed data-bases, extending continuously for decades, have not shown that names are selected based on current celebrities: Names of celebrities of the famous and glamorous are generally symptoms, but not the cause for picking names to newborn.  

Usually, names are borrowed from families, a few blocks over (but never from neighbors), with the biggest car, the most luxurious house, the most educated and rather well-to-do…

The kinds of families that were the first to call their daughters Amber or Heather and now are calling them Lauren or Madison. Or names of boys going from Justin or Brandon to Alexander or Benjamin…

In general, as a high-end name is adopted in mass, high-end families begin to abandon their previous choices of names: It is eventually considered so common that even lower-end parents may no longer want it!

A name send idiosyncratic messages in the community.  

For example, you send two identical CV to an employer with different names such as DeShawn Williams and Jake Williams.  The odds are much higher that Jake will get a call, regardless if the employer is White, Black, or Hispanic. The employer does not want anything to do with a “potentially troubled” individual who lived in bad neighborhood and raised by poor and uneducated parents…

Roland G. Fryer Jr (see note) collected data from the California civil status registers, millions of pieces of data gathered since 1960. Fryer claims that he was interested in “Why mothers give particular names to their child, weird names…” The registers offered valuable bonus of where the mother was born.

Why focus on mothers?

I guess it stand to reason that, most probably, in low-end families, fathers are nowhere to be found when a baby is born?  What if many babies are born of single mothers, and who are not in the age of obtaining a driving license?

Fryer listed 20 most popular names for girls and boys for every decade, and it looks as names can cycle in and out very quickly: Barely three names on the 20 hottest names remain in the next decade list of “hottest names”

I do suspect that this economics professor had a “hidden agenda” and the “name research” was a collateral paper or a smokescreen excuse for undertaking this tedious research.

What do you think could be your real agenda, if you had to spend years pondering on this huge amount of data, and be funded to go all the way through?

I read this Tuesday, May 15, 2012 that Sofia is the most common female name in the US, while Jacob is still the first among the males for the third consecutive year. Isabella was displaced to the second rank after being the first for two consecutive years.

Note: This article was inspired by a chapter in “Freakonomics” by Steven Levitt, and this chapter was written by Roland G. Fryer Jr.

Fryer came from a broken poor family: The mother abandoned the child with the father who turned alcoholic and violent. At the Univ. of Texas at Arlington, on an athletic scholarship, Roland quickly realized that he is not an NFL or NBA material, and focused on academic achievement.

He was hired by Harvard as economics professor at the age of 25.

Where have all the criminals gone?

In the first half century, incidence of violent crimes in the USA was fairly steady. Why?

Infantile mortality was very high due to lack of vaccination and treatments for curable diseases.  All those unwanted children from single parent families died prematurely. and the pool of potential criminals living in poor and uneducated families and in poor neighborhoods was manageable.

Mind you that million died of the “Spanish” flu after soldiers returned from WWI front, and this contagious disease lasted for years. Tuberculosis had no vaccine yet, as many other diseases commonly contracted in early years….

By 1960, violent crime rate increased steadily, so did the economy and the employment rates.

During the period of the civil rights movement, the 60’s and early 70’s, conviction rates declined, as were sentences duration for most of the crimes committed. Why? Judges and political climate didn’t want to be labeled racist or believing in apartheid (fear of being viewed as racist and backward) since more crimes, proportionally, were committed by Blacks and Hispanics living in poor neighborhoods.

Between 1980-2000, the period witnessed a 15-fold increase in the number of convicts on drug charges, and sentence duration increased accordingly.

By 2000, the US prison system had more than 2 million convicts, a 4-fold increase as of 1972.

Mind you that a prisoner costs $25,000 per year to keeping him behind bars and away from the streets…

As of early 1990, crime rates of all categories, especially violent crimes, started to decline sharply and steadily. Criminology experts had warned that crime epidemics will get out of control, and they needed so time to realize that it was the opposite trend that was taking its steady course.

Between 1991 and 2001, crime experts extended many explanations for this aberrant trend of crime decline. Here are a few of the explanations with frequency of citations in the media:

1. Innovative policing strategies:  52 citations

2. Increased reliance on prison: 47

3. Changes in crack and other drug markets: 33

4. Aging population: 32

5. Tougher gun-control laws: 32

6. Strong economy: 28

7. Increased number of police force: 26

8. Increase use of capital punishment: 24

9. Concealed-weapon laws

10. Gun buybacks policies

Only 3 of the above 10 explanations had significant effects on crime decline, mainly factors 2, 3, and 7.

There are strong correlation, if not causative explanation, among the trends of increased reliance on prison, prison duration, increase conviction rates and the number of law and order effective in order to round-up, capture, process, and prosecute criminals.  Consequently, it can be said that the increase in police forces was associated with a political policy of increasing conviction rates and expanding the prison system. These factors accounted for almost one-third of the crime drop.

In that period, cocaine and heroine prices dropped, and it was no longer worth sacrificing years in prison for small returns on crimes…

The main factor that was behind the decline and accounted for two-third was never mentioned or even contemplated.  This factor needed about 17 years of incubation (gestation) before it generated its powerful effect, and it is the legalized abortion law that took effect in 1973 in all US States. A few large cities in States such as New York, Illinois, California… that had legal abortion laws before 1973, all had witnessed decline in crime rates before all other States.

All those unwanted children, born from single mothers or living in single families in poor neighborhoods and uneducated parents, were not born and had not to be raised to emulate their predecessors, as highly potential criminals in the waiting and the making.

That is what the analysis of Steven Levitt showed from torturing huge data-bases on the subject. Read Freakonomis.


adonis49

adonis49

adonis49

November 2011
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