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Posts Tagged ‘convert Conventional Wisdoms

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/

How to convert “Conventional Wisdoms” into success Freakonomics discoveries?

Conventional wisdoms are the process of flowing with what is convenient, comfortable, and comforting: They are not necessarily true in reality of life.  The smart imaginative mind has a feel of which wisdom is not true, then ask the right question, and intend to uncover the mystery in the problematic story.

Suppose the CIA calls you: It has plenty of data and it wants you to seep through the reams upon reams of data to figure out an algorithm for detecting money launderers and “terrorists”…to drone them out.

Suppose a former cyclist champion is suspicious that the current Tour de France is rife with doping, and he asks you to prove his suspicions…

Suppose a bagel salesman has gathered a lifelong data on his sales of bagel, and he wants you to have fun discovering a story behind the data…

Who could you be? What is your job? Are you a renowned scientist, a famous statistical analyst, a weird microeconomics professor, a highly educated crime investigator…?

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?  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…?

Are you curious in divulging the real stories behind cheating, corruption, and criminal behaviors and activities?

Would you like to try answering the following questions:

1) Why obstetrician in area witnessing declining birth rates perform many more cesarean-section deliveries than in growing areas?

2) Why incumbent politicians are more likely to win a re-election? Suppose you were given plenty of data since 1976, and you can compare the performance of pairs of candidates who challenged one another in successive congressional races, for example, you have 1,000 such pair-kinds… Do you think that you have a better handle for measuring the influence of money in these races and quantify the amount of money necessary to win an election?

The critical factors to uncover in any problem are:

1) What are the incentives to behaving differently?

2) What may be the effects of distant causes, and not just focusing on recent factors? For example, Norma McCorvey (Jane Row) lawsuit for obtaining an abortion had greater impact on crime rate decline than all the combined factors that crime experts put forward as explanation…

3) To what extent do large data-bases serve the agenda of institutions and experts?

4) How can you device a measuring yardstick to approaching complicated and seemingly intractable problems?

5) Do you know what to measure and how to measure? For example, the proper dependent variables that are most relevant to the problem?

Ask weird questions that people care about, and surprise people with your alternative answers.

The main advantage of developed nations is that they keep records and gather data on a continuous basis in all kinds of behaviors and activities. Scholars can dig and seep through tons of available data to tell the correct story.  You torture and beat the crap out of any data until data is forced to divulge an answer.  A side advantage: You may land a Novel Prize, looming around the bend.

Note: Article inspired by “FreakOnomics” of Steven Levitt and Stephen Dubner


adonis49

adonis49

adonis49

October 2020
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