Superfreakonomics: Global Cooling, Patriotic Prostitutes and Why

Suicide Bombers Should Buy Life Insurance

by Stephen Dubner and Steven Levitt

INTRODUCTION

PUTTING THE FREAK IN ECONOMICS

Many of life's decisions are hard. What kind of career should you pursue? Does your ailing mother need to be put in a nursing home? You and your spouse already have two kids; should you have a third?

Such decisions are hard for a number of reasons. For one, the stakes are high. There's also a great deal of uncertainty involved. Above all, decisions like these are rare, which means you don't get much practice making them. You've probably gotten pretty good at buying groceries, since you do it so often, but buying your first house is another thing entirely.

Some decisions, meanwhile, are really, really easy.

Imagine you've gone to a party at a friend's house. He lives only a mile away. You have a great time, perhaps because you drank four glasses of wine. Now the party is breaking up. While draining your last glass, you dig out your car keys. Abruptly you conclude this is a bad idea: you are in no condition to drive home.

For the past few decades, we've been rigorously educated about the risks of driving under the influence of alcohol. A drunk driver is thirteen times more likely to cause an accident than a sober one. And yet a lot of people still drive drunk. In the United States, more than 30 percent of all fatal crashes involve at least one driver who has been drinking. During the late-night hours, when alcohol use is greatest, that proportion rises to nearly 60 percent. Overall, 1 of every 140 miles is driven drunk, or 21 billion miles each year.

Why do so many people get behind the wheel after drinking? Maybe because - and this could be the most sobering statistic yet drunk drivers are rarely caught. There is just one arrest for every 27,000 miles driven while drunk. That means you could expect to drive all the way across the country, and then back, and then back and forth three more times, chugging beers all the while, before you got pulled over. As with most bad behaviours, drunk driving could probably be wiped out entirely if a strong-enough incentive were instituted - random roadblocks, for instance, where drunk drivers are executed on the spot - but our society probably doesn't have the appetite for that.

Meanwhile, back at your friend's party, you have made what seems to be the easiest decision in history: instead of driving home, you're going to walk. After all, it's only a mile. You find your friend, thank him for the party, and tell him the plan. He heartily applauds your good judgment.

But should he? We all know that drunk driving is terribly risky, but what about drunk walking? Is this decision so easy?

Let's look at some numbers. Each year, more than 1,000 drunk pedestrians die in traffic accidents. They step off sidewalks into city streets; they lie down to rest on country roads; they make mad dashes across busy highways. Compared with the total number of people killed in alcohol-related traffic accidents each year - about 13,000 - the number of drunk pedestrians is relatively small. But when you're choosing whether to walk or drive, the overall number isn't what counts. Here's the relevant question: on a per-mile basis, is it more dangerous to drive drunk or walk drunk?

The average American walks about a half-mile per day outside the home or workplace. There are some 237 million Americans sixteen and older; all told, that's 43 billion miles walked each year by people of driving age. If we assume that 1 of every 140 of those miles are walked drunk - the same proportion of miles that are driven drunk - then 307 million miles are walked drunk each year.

Doing the math, you find that on a per-mile basis, a drunk walker is eight times more likely to get killed than a drunk driver.

There's one important caveat: a drunk walker isn't likely to hurt or kill anyone other than her - or himself. That can't be said of a drunk driver. In fatal accidents involving alcohol, 36 percent of the victims are either passengers, pedestrians, or other drivers. Still, even after factoring in the deaths of those innocents, walking drunk leads to five times as many deaths per mile as driving drunk.

So as you leave your friend's party, the decision should be clear: driving is safer than walking. (It would be even safer, obviously, to drink less, or to call a cab.) The next time you put away four glasses of wine at a party, maybe you'll think through your decision a bit differently. Or, if you're too far gone, maybe your friend will help sort things out. Because friends don't let friends walk drunk.

If you had the option of being born anywhere in the world today, India might not be the wisest choice. Despite its vaunted progress as a major player in the global economy, the country as a whole remains excruciatingly poor. Life expectancy and literacy rates are low; pollution and corruption are high. In the rural areas where more than two-thirds of Indians live, barely half of the households have electricity and only one in four homes has a toilet.

It is especially unlucky to be born female, because many Indian parents express a strong 'son preference.' Only 10 percent of Indian families with two sons want another child, whereas nearly 40 percent of families with two daughters want to try again. Giving birth to a baby boy is like giving birth to a 401(k) retirement fund. He will grow up to be a wage-earning man who can provide for his parents in their sunset years and, when the time comes, light the funeral pyre. Having a baby girl, meanwhile, means relabelling the retirement fund a dowry fund. Although the dowry system has long been under assault, it is still common for a bride's parents to give the groom or his family cash, cars, or real estate. The bride's family is also expected to pay for the wedding.

The US charity Smile Train, which performs cleft-repair surgery on poor children around the world, recently spent some time in Chennai, India. When one local man was asked how many children he had, he answered 'one.' The organization later learned that the man did have a son - but he also had five daughters, who apparently didn't warrant a mention. Smile Train also learned that midwives in Chennai were sometimes paid $2.50 to smother a baby girl born with a cleft deformity - and so, putting the lure of incentives to good use, the charity began offering midwives as much as $10 for each baby girl they took to a hospital for cleft surgery.

Girls are so undervalued in India that there are roughly 35 million fewer females than males in the population. Most of these 'missing women,' as the economist Amartya Sen calls them, are presumed dead, either by indirect means (the girl's parents withheld nutrition or medical care, perhaps to the benefit of a brother), direct harm (the baby girl was killed after birth, whether by a midwife or a parent), or, increasingly, a pre-birth decision. Even in India's smallest villages, where electricity might be sporadic and clean water hard to find, a pregnant woman can pay a technician to scan her belly with an ultrasound and, if the fetus is female, have an abortion. In recent years, as these sex selective abortions have become more common, the male-female ratio in India - as well as in other son-worshipping countries like China has grown even more lopsided.

A baby Indian girl who does grow into adulthood faces inequality at nearly every turn. She will earn less money than a man, receive worse health care and less education, and perhaps be subjected to daily atrocities. In a national health survey, 51 percent of Indian men said that wife-beating is justified under certain circumstances; more surprisingly, 54 percent of women agreed - if, for instance, a wife burns dinner or leaves the house without permission. More than 100,000 young Indian women die in fires every year, many of them 'bride burnings' or other instances of domestic abuse.

Indian women also run an outsize risk of unwanted pregnancy and sexually transmitted disease, including a high rate of HIV/AIDS. One cause is that Indian men's condoms malfunction more than 15 percent of the time. Why such a high fail rate? According to the Indian Council of Medical Research, some 60 percent of Indian men have penises too small for the condoms manufactured to fit World Health Organization specs. That was the conclusion of a two-year study in which more than 1,000 Indian men had their penises measured and photographed by scientists. 'The condom,' declared one of the researchers, 'is not optimised for India.'

With such a multitude of problems, what should be done to improve the lives of Indian women, especially the majority who live in the countryside?

The government has tried to help by banning dowries and sex-selective abortions, but these laws have largely been ignored. A number of monetary interventions have also been designed for Indian women. These include Apni Beti, Apna Dhan ('My Daughter, My Pride'), a project that pays rural women not to abort female babies; a vast micro-credit industry that makes small-business loans to women; and an array of charitable programs launched by a veritable alphabet soup of international aid agencies.

The Indian government has also vowed to make smaller condoms more readily available.

Unfortunately, most of these projects have proven complicated, costly, and, at best, nominally successful.

A different sort of intervention, meanwhile, does seem to have helped. This one, like the ultrasound machine, relies on technology, but it had little to do with women per se and even less to do with baby-making. Nor was it administered by the Indian government or some multinational charity. In fact, it wasn't even designed to help anyone at all, at least not the way we normally think of 'help.' It was just a plain old entrepreneurial development, called television.

State-run broadcast TV had been around for decades, but poor reception and a dearth of programming meant there simply wasn't much reason to watch. But lately, thanks to a steep fall in the price of equipment and distribution, great swaths of India have been wired for cable and satellite TV. Between 2001 and 2006, some 150 million Indians received cable for the first time, their villages suddenly crackling with the latest game shows and soap operas, news casts and police procedurals, beamed from the big cities of India and abroad. TV gave many Indian villagers their first good look at the outside world.

But not every village got cable TV, and those that did received it at different times. This staggered introduction produced just the kind of data - a lovely natural experiment - that economists love to exploit. The economists in this case were a pair of young Americans, Emily Oster and Robert Jensen. By measuring the changes in different villages based on whether (and when) each village got cable TV, they were able to tease out the effect of TV on Indian women.

They examined data from a government survey of 2,700 households, most of them rural. Women fifteen and older were asked about their lifestyles, preferences, and familial relationships. As it turned out, the women who recently got cable TV were significantly less willing to tolerate wife-beating, less likely to admit to having a son preference, and more likely to exercise personal autonomy. TV somehow seemed to be empowering women in a way that government interventions had not.

What caused these changes? Did rural Indian women become more autonomous after seeing cosmopolitan images on their TV sets - women who dressed as they pleased, handled their own money, and were treated as neither property nor baby-making machines? Or did such programming simply make the rural women feel embarrassed to admit to a government surveyor that they were treated so badly?

There is good reason to be sceptical of data from personal surveys. There is often a vast gulf between how people say they behave and how they actually behave. (In economist-speak, these two behaviours are known as declared preferences and revealed preferences.) Furthermore, when it costs almost nothing to fib - as in the case of a government survey like this one - a reasonable amount of fibbing is to be expected. The fibs might even be subconscious, with the subject simply saying what she expects the surveyor wants to hear.

But when you can measure the revealed preference, or the actual behaviour, then you're getting somewhere. That's where Aster and Jensen found persuasive evidence of real change. Rural Indian families who got cable TV began to have a lower birth-rate than families without TV. (In a country like India, a lower birth-rate generally means more autonomy for women and fewer health risks.) Families with TV were also more likely to keep their daughters in school, which suggests that girls were seen as more valuable, or at least deserving of equal treatment. (The enrolment rate for boys, notably, didn't change.) These hard numbers made the self-reported survey data more believable. It appears that cable TV really did empower the women of rural India, even to the point of no longer tolerating domestic abuse.

Or maybe their husbands were just too busy watching cricket.

When the world was lurching into the modern era, it grew magnificently more populous, and in a hurry. Most of this expansion took place in urban centres like London, Paris, New York, and Chicago. In the United States alone, cities grew by 30 million residents during the nineteenth century, with half of that gain in just the final twenty years.

But as this swarm of humanity moved itself, and its goods, from place to place, a problem emerged. The main mode of transportation produced a slew of the by-products that economists call negative externalities, including gridlock, high insurance costs, and far too many traffic fatalities. Crops that would have landed on a family's dinner table were sometimes converted into fuel, driving up food prices and causing shortages. Then there were the air pollutants and toxic emissions, endangering the environment as well as individuals' health.

We are talking about the automobile-aren't we?

No, we're not. We are talking about the horse.

The horse, a versatile and powerful helpmate since the days of antiquity, was put to work in many ways as modern cities expanded: pulling streetcars and private coaches, hauling construction materials, unloading freight from ships and trains, even powering the machines that churned out furniture, rope, beer, and clothing. If your young daughter took gravely ill, the doctor rushed to your home on horseback. When a fire broke out, a team of horses charged through the streets with a pumping truck. At the turn of the twentieth century, some 200,000 horses lived and worked in New York City, or 1 for every 17 people.

But oh, the troubles they caused!

Horse-drawn wagons clogged the streets terribly, and when a horse broke down, it was often put to death on the spot. This caused further delays. Many stable owners held life-insurance policies that, to guard against fraud, stipulated the animal be euthanized by a third party. This meant waiting for the police, a veterinarian, or the ASPCA to arrive. Even death didn't end the gridlock. 'Dead horses were extremely unwieldy,' writes the transportation scholar Eric Morris. 'As a result, street cleaners often waited for the corpses to putrefy so they could more easily be sawed into pieces and carted off.'

The noise from iron wagon wheels and horseshoes was so disturbing - it purportedly caused widespread nervous disorders - that some cities banned horse traffic on the streets around hospitals and other sensitive areas.

And it was frighteningly easy to be struck down by a horse or wagon, neither of which is as easy to control as they appear in the movies, especially on slick, crowded city streets. In 1900, horse accidents claimed the lives of 200 New Yorkers, or 1 of every 17,000 residents. In 2007, meanwhile, 274 New Yorkers died in auto accidents, or 1 of every 30,000 residents. This means that a New Yorker was nearly twice as likely to die from a horse accident in 1900 than from a car accident today. (There are unfortunately no statistics available on drunk horse-drivers, but we can assume the number would be menacingly high.)

Worst of all was the dung. The average horse produced about 24 pounds of manure a day. With 200,000 horses, that's nearly 5 million pounds of horse manure. A day. Where did it go?

Decades earlier, when horses were less plentiful in cities, there was a smooth-functioning market for manure, with farmers buying it to truck off (via horse, of course) to their fields. But as the urban equine population exploded, there was a massive glut. In vacant lots, horse manure was piled as high as sixty feet. It lined city streets like banks of snow. In the summertime, it stank to the heavens; when the rains came, a soupy stream of horse manure flooded the crosswalks and seeped into people's basements. Today, when you admire old New York brownstones and their elegant stoops, rising from street level to the second-story parlour, keep in mind that this was a design necessity, allowing a homeowner to rise above the sea of horse manure.

All of this dung was terrifically unhealthy. It was a breeding ground for billions of flies that spread a host of deadly diseases. Rats and other vermin swarmed the mountains of manure to pick out undigested oats and other horse feed-crops that were becoming more costly for human consumption thanks to higher horse demand. No one at the time was worried about global warming, but if they had been, the horse would have been Public Enemy No. 1, for its manure emits methane, a powerful greenhouse gas.

In 1898, New York hosted the first international urban planning conference. The agenda was dominated by horse manure, because cities around the world were experiencing the same crisis. But no solution could be found. 'Stumped by the crisis,' writes Eric Morris, 'the urban planning conference declared its work fruitless and broke up in three days instead of the scheduled ten.'

The world had seemingly reached the point where its largest cities could not survive without the horse but couldn't survive with it, either.

And then the problem vanished. It was neither government fiat nor divine intervention that did the trick. City dwellers did not rise up in some mass movement of altruism or self-restraint, surrendering all the benefits of horse power. The problem was solved by technological innovation. No, not the invention of a dung-less animal. The horse was kicked to the curb by the electric streetcar and the automobile, both of which were extravagantly cleaner and far more efficient. The automobile, cheaper to own and operate than a horse-drawn vehicle, was pro, claimed 'an environmental saviour.' Cities around the world were able to take a deep breath-without holding their noses at last - and resume their march of progress.

The story, unfortunately, does not end there. The solutions that saved the twentieth century seem to have imperilled the twenty-first, because the automobile and electric streetcar carried their own negative externalities. The carbon emissions spat out over the past century by more than 1 billion cars and thousands of coal-burning power plants seem to have warmed the earth's atmosphere. Just as equine activity once threatened to stomp out civilization, there is now a fear that human activity will do the same. Martin Weitzman, an environmental economist at Harvard, argues there is a roughly 5 percent chance that global temperatures will rise enough to 'effectively destroy planet Earth as we know it.' In some quarters - the media, for instance, which never met a potential apocalypse it didn't like - the fatalism runs even stronger.

This is perhaps not very surprising. When the solution to a given problem doesn't lay right before our eyes, it is easy to assume that no solution exists. But history has shown again and again that such assumptions are wrong.

This is not to say the world is perfect. Nor that all progress is always good. Even widespread societal gains inevitably produce losses for some people. That's why the economist Joseph Schumpeter referred to capitalism as 'creative destruction.'

But humankind has a great capacity for finding technological solutions to seemingly intractable problems, and this will likely be the case for global warming. It isn't that the problem isn't potentially large. It's just that human ingenuity - when given proper incentives - is bound to be larger. Even more encouraging, technological fixes are often far simpler, and therefore cheaper, than the doomsayers could have imagined. Indeed, in the final chapter of this book we'll meet a band of renegade engineers who have developed not one but three global-warming fixes, any of which could be bought for less than the annual sales tally of all the Thoroughbred horses at Keeneland auction house in Kentucky.

The value of horse manure, incidentally, has rebounded, so much so that the owners of one Massachusetts farm recently called the police to stop a neighbour from hauling it away. The neighbour claimed there was a misunderstanding, that he'd been given permission by the farm's previous owner. But the current owner wouldn't back down, demanding $600 for the manure.

Who was this manure-loving neighbour? None other than Martin Weitzman, the economist with the grave global-warming prediction.

'Congratulations,' one colleague wrote to Weitzman when the story hit the papers. 'Most economists I know are net exporters of horses hit. And you are, it seems, a net importer.'

The vanquishing of horse manure . . . the unintended consequences of cable TV . . . the perils of walking while drunk: what does any of this have to do with economics?

Instead of thinking of such stories as 'economics,' it is better to see them as illustrating 'the economic approach.' That's a phrase made popular by Gary Becker, the long-time University of Chicago economist who was awarded a Nobel Prize in 1992. In his acceptance lecture, he explained that the economic approach 'does not assume that individuals are motivated solely by selfishness or gain. It is a method of analysis, not an assumption about particular motivations . . . Behaviour is driven by a much richer set of values and preferences.'

Becker started his career studying topics that weren't typically germane to economics: crime and punishment, drug addiction, the allocation of time, and the costs and benefits of marriage, child rearing, and divorce. Most of his colleagues wouldn't go anywhere near such stuff.

'For a long time,' he recalled, 'my type of work was either ignored or strongly disliked by most of the leading economists. I was considered way out and perhaps not really an economist.'

Well, if what Gary Becker was doing was 'not really economics,' then we want to do it too. Truth be told, what Becker was doing was actually freakonomics - marrying the economic approach to a rogue, freakish curiosity - but the word hadn't yet been invented.

In his Nobel address, Becker suggested that the economic approach is not a subject matter, nor is it a mathematical means of explaining 'the economy.' Rather, it is a decision to examine the world a bit differently. It is a systematic means of describing how people make decisions and how they change their minds; how they choose someone to love and marry, someone perhaps to hate and even kill; whether, coming upon a pile of money, they will steal from it, leave it alone, or even add to it; why they may fear one thing and yearn for something only slightly different; why they'll punish one sort of behaviour while rewarding a similar one.

How do economists describe such decisions? It usually begins by accumulating data, great gobs of it, which may have been generated on purpose or perhaps left behind by accident. A good set of data can go a long way toward describing human behaviour as long as the proper questions are asked of it. Our job in this book is to come up with such questions. This will allow us to describe, for instance, how the typical oncologist or terrorist or college student behaves in a given situation, and why.

Some people may feel uneasy about reducing the vagaries of human behaviour to cold numerical probabilities. Who among us wants to describe ourselves as 'typical'? If, for instance, you added up all the women and men on the planet, you would find that, on average, the typical adult human being has one breast and one testicle - and yet how many people fit that description? If your loved one was killed in a drunk-driving accident, what comfort is there in knowing that walking drunk is more dangerous? If you are the young Indian bride who is brutalized by her husband, what cheer can be had from learning that cable TV has empowered the typical Indian bride?

These objections are good and true. But while there are exceptions to every rule, it's also good to know the rule. In a complex world where people can be atypical in an infinite number of ways, there is great value in discovering the baseline. And knowing what happens on average is a good place to start. By so doing, we insulate ourselves from the tendency to build our thinking - our daily decisions, our laws, our governance - on exceptions and anomalies rather than on reality.

Cast an eye back for a moment to the summer months of 2001, which in the United States came to be known as the Summer of the Shark. The media brought us chilling tales of rampant shark carnage. The prime example was the story of Jessie Arbogast, an eight-year-old boy who was playing in the warm, shallow Gulf waves of Pensacola, Florida, when a bull shark ripped off his right arm and gorged a big piece of his thigh as well. Time magazine ran a cover package about shark attacks. Here is the lead of the main article:

Sharks come silently, without warning. There are three ways they strike: the hit-and-run, the bump-and-bite and the sneak attack. The hit-and-run is the most common. The shark may see the sole of a swimmer's foot, think it's a fish and take a bite before realizing this isn't its usual prey.

Scared yet?

A reasonable person might never go near the ocean again. But how many shark attacks do you think actually happened that year?

Take a guess-and then cut your guess in half, and now cut it in half a few more times. During the entire year of 2001, around the world there were just 68 shark attacks, of which 4 were fatal.

Not only are these numbers far lower than the media hysteria implied; they were also no higher than in earlier years or in the years to follow. Between 1995 and 2005, there were on average 60.3 worldwide shark attacks each year, with a high of 79 and a low of 46. There were on average 5.9 fatalities per year, with a high of 11 and a low of 3. In other words, the headlines during the summer of 2001 might just as easily have read 'Shark Attacks About Average This Year.' But that probably wouldn't have sold many magazines.

So for a moment, instead of thinking about poor Jessie Arbogast and the tragedy he and his family faced, think of this: in a world with more than 6 billion people, only 4 of them died in 2001 from shark attacks. More people are probably run over each year by TV news vans.

Elephants, meanwhile, kill at least 200 people every year. So why aren't we petrified of them? Probably because most of their victims live in places far from the world's media centres. It may also have something to do with the perceptions we glean from the movies. Friendly, entertaining elephants are a staple of children's films (think Babar and Dumbo); sharks, meanwhile, are inevitably typecast as villains. If sharks had any legal connections whatsoever, they surely would have sued for an injunction against Jaws.

And yet the shark scare played out so relentlessly that summer of 2001, with such full-throated horror, that it didn't quiet down until the terrorist attacks on September 11 at the World Trade Center and the Pentagon. Nearly 3,000 people were killed that day - some 2,500 more than have died from shark attacks since the first records were kept, in the late sixteenth century.

So despite its shortcomings, thinking in terms of the typical does have its advantages. We have therefore done our best to tell stories in this book that rely on accumulated data rather than on individual anecdotes, glaring anomalies, personal opinions, emotional outbursts, or moral leanings. Some people may argue that statistics can be made to say anything, to defend indefensible causes or tell pet lies. But the economic approach aims for the opposite: to address a given topic with neither fear nor favour, letting numbers speak the truth. We don't take sides. The introduction of TV, for instance, has substantially helped the women of rural India. This doesn't mean we accept the power of TV as unerringly positive. As you will read in chapter 3, the introduction of TV in the United States produced a devastating societal change.

The economic approach isn't meant to describe the world as anyone of us might want it to be, or fear that it is, or pray that it becomes - but rather to explain what it actually is. Most of us want to fix or change the world in some fashion. But to change the world, you first have to understand it.

As of this writing, we are roughly one year into a financial crisis that began with a sub-prime-mortgage binge in the United States and spread, like an extremely communicable disease, around the world. There will be hundreds, if not thousands, of books published on the topic.

This is not one of them.

Why? Mainly because the macro-economy and its multitude of complex, moving parts is simply not our domain. After recent events, one might wonder if the macro-economy is the domain of any economist. Most economists the public encounters are presented as oracles who can tell you, with alluring certainty, where the stock market or inflation or interest rates are heading. But as we've seen lately, such predictions are generally worthless. Economists have a hard enough time explaining the past, much less predicting the future. (They are still arguing over whether Franklin Delano Roosevelt's policy moves quelled the Great Depression or exacerbated it!) They are not alone, of course. It seems to be part of the human condition to believe in our own predictive abilities - and, just as well, to quickly forget how bad our predictions turned out to be.

So we have practically nothing to say in this book about what people call 'the economy.' Our best defence (slim as it may be) is that the topics we do write about, while not directly connected to 'the economy,' may give some insights into actual human behaviour. Believe it or not, if you can understand the incentives that lead a schoolteacher or a sumo wrestler to cheat, you can understand how the sub-prime-mortgage bubble came to pass.

The stories you will read are set in many realms, from the rarefied corridors of academia to the grimiest street corners. Many are based on Levitt's recent academic research; others have been inspired by fellow economists as well as engineers and astrophysicists, psychotic killers and emergency-room doctors, amateur historians and transgender neuroscientists.* Most of the stories fall into one of two categories: things you always thought you knew but didn't; and things you never knew you wanted to know but do.

Many of our findings may not be all that useful, or even conclusive. But that's all right. We are trying to start a conversation, not have the last word. Which means you may find a few things in the following pages to quarrel with.

In fact, we'd be disappointed if you didn't.

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