Steven D. Levitt and Stephen J. Dubner are to blame for the global financial crisis.
See, back in 2005, they wrote “Freakonomics,” a wildly successful book brimming with interesting stories about why incentives matter and how actions have unintended consequences. Indeed, incentives do matter, and actions (or publications) do have unintended consequences: Their book made economists around the world more inclined to come up with cute little analyses of the business of being a drug dealer or the impact of a first name on a child’s success. And that distracted them, so they didn’t notice the giant housing and credit bubbles that in hindsight were plain to see. A global collapse ensued.
That’s all nonsense, of course. The forces that led to the current economic troubles were far too big for any one book, or even one current of economic thought, to have caused them. The argument that the Freakonomics guys are to blame for the crisis is provocative and clever and sounds vaguely plausible. It may even contain a kernel of truth. But it fundamentally defies any clear-headed look at reality.
In other words, it’s just like many of the anecdotes that fill “Superfreakonomics,” the sequel to the original bestseller.
This is the Washington Post book review by Neil Irwin. I think this review just edges out Elizabeth Kolbert’s, but it’s close. In particular, Irwin covers the U.S. economy and the Federal Reserve for the paper, not climate, so he hits some other parts of the book, like “Patriotic Prostitutes” and drunk walking:
Take the chapter that covers prostitution, for example. It spins a nice yarn about Allie, a clever, vivacious woman who went into the world’s oldest profession in Chicago for fully rational — and lucrative — reasons. Good for her, but this doesn’t have much of anything to do with the fundamental reality of most prostitution, in which coercion, violence and desperate addiction to drugs frequently play larger roles than does cost-benefit analysis.
In another section, the authors theorize that it is more dangerous for a tipsy person to walk any given distance than it is for that person to drive. That would be interesting, if true, and certainly useful information for anyone who has ever stumbled out of a downtown Washington bar a few blocks from home.
The problem is that Levitt and Dubner don’t actually have the foggiest idea whether it’s safer to drive drunk than walk drunk, as they claim. As my colleague Ezra Klein has pointed out, they don’t have data on how many miles are walked under the influence, and so they just assume that people walk drunk in the same proportion that people drive drunk. In calculating the rate of deaths from walking drunk, then, they have the numerator (the number of drunk pedestrians killed each year) but not the denominator (the number of miles walked drunk).
And then he does take on the “Global Cooling” chapter:
Both of those problems are mild compared with the ones in the penultimate chapter, in which the authors bring their oh-so-clever approach to the climate debate. The standard strategy for preventing potentially catastrophic global warming, one advanced by an overwhelming consensus of climate scientists and environmental economists, is to put in place policies to reduce the amount of carbon dioxide humankind emits. That’s apparently too conventional for Levitt and Dubner, who spend the vast majority of their chapter (with time taken out for potshots at Al Gore) examining the work of scientist/entrepreneur Nathan Myhrvhold’s crew, a group that is exploring the idea of pumping sulfur into the upper atmosphere and other neat tricks that just may be cheaper, easier ways to combat global warming.
It would be great if one of those schemes turned out to work. Fantastic, even. But Levitt and Dubner seem to simply presume that because one of them might work, Gore et al. are foolish to push to reduce emissions. It is like a family declining to save for college because their 10-year-old Little Leaguer with a decent arm may end up getting a full baseball scholarship.
“Superfreakonomics” doesn’t really have a broader argument. The authors acknowledge in the opening pages that their book has no unifying theme, beyond the banality that “people respond to incentives.”So instead of offering up a bunch of quirky stories of questionable reliability to make an argument that feels coherent, they offer up contrarianism for its own sake.
Just what you’d expect from two guys who caused the financial crisis.