SUPERFREAKONOMICS - INTRODUCTION

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  • According to the author, some decisions are easy to make, such as what groceries to buy, because it's a habit, but others, such as buying your first house or planning for a baby, are complicated because of the uncertainties involved.
  • When discussing decision making Levitt presents us with the example of driving to a friend's house a mile away from yours and having a few drinks. Because drunk drivers are thirteen times more likely to cause an accident than sober drivers, you decide to walk, but did you consider the risk of drunk walking? 
  • Data has revealed that compared to drunk drivers, drunk walkers are five times more likely to get killed on a per-mile basis. 
  • The discussion shifts to India, stating that it might not be the best country to be reborn due to its poverty, low life expectancy, literacy rates, pollution, and corruption.
  • Females are especially unlucky since many Indian parents express a strong preference for sons.
  • It is considered great luck to have a son, as he will earn for the family while having a girl means renaming the retirement fund a dowry fund.
  • It is estimated that there are 35 million fewer females than males in India because girls are so undervalued. It is presumed that most of these "missing women" have died, as Amartya Sen, an economist puts it.
  • It is nearly impossible for an Indian baby girl growing up to become an adult without facing a lot of inequality. 
  • A high rate of HIV/AIDS and unwanted pregnancies also plague Indian women. The reason for this is that more than 15% of Indian men's condoms malfunction. The reason - 60% of Indian men have penises that are too small for condoms manufactured by the World Health Organization. "The condom isn't optimized for India," said one of the researchers.
  • Despite the government's efforts, sex-selective abortions and dowries remain illegal. Sadly, most of these projects have been complicated, expensive, and marginally successful at best. 
  • However, a different sort of intervention did seem to have a positive effect.
  • Between 2001 and 2006, some 150 million Indians received cable for the first time. 
  • Indians saw the outside world for the first time through television.
  • Emily Oster and Robert Jensen, a pair of young economists, were able to measure the effects of TV on Indian women. A government survey of 2,700 households, mostly in rural areas, provided the data. The women who had recently received cable TV were less likely to tolerate wife-beating, less likely to admit to favouring sons, and more likely to assert their autonomy. There was a sense that television was empowering women in a way that government interventions weren't.
  • The Author moves on to a new economic situation that occurred during the modern era when the human population was on the rise. Humanity and its goods moved from place to place, but a problem emerged. By-products of transportation, which economists refer to as negative externalities, were plentiful.
  •  We are talking about the horses, not the automobile.
  • Throughout the history of modern cities, horses have been used in many ways, including pulling streetcars, hauling construction materials, unloading freight from ships etc.
  • In contrast, horses were often killed on the spot when they broke down, and horse-drawn wagons clogged up the streets horribly. It's said that the noise from wagon wheels and horseshoes caused widespread nervous disorders. There was also the scary possibility of being struck by a horse or wagon and being killed. 
  • Among the worst things was the dung. An average horse produces 24 pounds of manure a day. The amount of horse manure produced by 200,000 horses was almost 5 million pounds. 
  • Millions of flies breed in this dung, spreading deadly diseases. In 1898, global warming was not a concern, but if it had, then the horse would have been the main cause as its manure emits a greenhouse gas called methane.
  • But the problem vanished without a trace as horses were replaced by electric streetcars and automobiles, both of which were cleaner and more efficient than horses. 
  • Sadly, the story didn't have a happy ending. The solution that saved the twentieth century seems to have jeopardized the 21st. It appears that the earth's atmosphere has been warmed by the carbon emissions from millions of cars and coal-burning power plants over the past century.
  •  Levitt mentions that in the absence of a solution to a given problem, it is easy to assume there is none. Such assumptions have been proven wrong time and time again throughout history. There is no such thing as a perfect world. There is also no guarantee that all progress will be positive. Some people inevitably lose out even when societal gains are widespread. The reason, economist, Joseph Schumpeter cited capitalism as “creative destruction.” 
  •  He then asks the question - What do any of these topics discussed above have to do with economics? Gary Becker, an economist at Chicago University mentioned the phrase "instead of thinking of such stories as 'economics,' it is better to see them as illustrating 'the economic approach.'” 
  • Becker suggests that economics isn't just a field of study, but rather an entirely different way of looking at life itself - examining the human mind's processes to understand what makes us who we are.
  • How do economists approach this type of decision-making? They usually begin by collecting a lot of data, huge bits of it, from all sorts of sources. A good set of data can tell you about human behaviour if you ask the right questions - so you need to keep looking for new sources.
  • These objections are both true and good but there are exceptions to every rule. It is always good to know the rules. There are countless types of people out there in this complicated world, and each one is different in its way. So it would be wise for us to find the generalizations about these people- how they act on average- so we will not live a life based on those who do things differently than most.
  •  The goal of the economic approach is to analyze topics without bias, siding with neither numbers nor people.
  • The financial approach is not meant to give the reader an idea of how they may wish, fear, or pray for this world; instead, serve as an explanation of what it stands for.

Economics is a fascinating subject because it touches on almost every aspect of life. This makes it a very broad field, but also a very challenging one. If you want to get a good understanding of economics, then you'll need to spend some time reading about it. You can start by looking at these book summaries and recommendations.

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