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Freaknomics

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a rogue economist explores the hidden side of everything

Published in: Economy & Finance
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Freaknomics

  1. 1. Concepts In ‘Freakonomics’ Incentives are the corner stones of economic life The conventional wisdom is often wrong Dramatic effects often have distant, Even subtle, Causes Experts use their informational advantage to serve their own agenda Knowing what to measure and how to measure it makes life simpler
  2. 2. What we shall discuss…. Incentives ‘Snob Effect’ Information asymmetry Conventional wisdom
  3. 3. Types of incentives “Means of urging people to do more of a good thing and less of a bad thing” “Economists love incentives” Economic People respond to in a market place. Ex:-Discounts ,bonus, Fines etc Social Urge people to do things in a way tht is accepted by all Presence of friends effects productivity Moral Appealing to the sense of a person’s “right or wrong” Advertising,Donations,CSR
  4. 4. snob effect “The snob effect refers to the desire to own unusual, expensive or unique goods” These goods usually have a high economic value, but low practical value Mac users Starbucks Designer clothes Sports cars Stamps,Coins
  5. 5. Information asymmetry “One party to a transaction has relevant information where as the other do not” Buyers > Sellers Sellers > Buyers Credit market in rural India Local money lenders V/S banks
  6. 6. Correlation V/S Causation Abortion and Crime Legalizing abortion reduced crime Where all criminals have gone Olympics Medals and GDP! A university of south Australia analysis found that one gold medal typically costs a country $ 37 million in training funds. Unemployment VS Global warming “An increase in a state’s unemployment rate is associated with a decrease in the probability that residents think global warming is happening Higher unemployment rates are also associated with views that we should do less with respect to policies designed to reduce global warming.
  7. 7. Conventional wisdom “Explanations that are generally accepted as true by the public or by experts in a field” Especially around the link between legalized abortion and crime rates large drop in crime rate in the US from the 1980′s to 2000
  8. 8. What Do Schoolteachers and Sumo Wrestlers Have in Common? Who cheats? Cheating schoolteachers in Chicago. In which explore the beauty of incentives, as well as their dark side—cheating
  9. 9. How Is the Ku Klux Klan Like a Group of real-Estate Agents? Going undercover in the Ku Klux Klan… Breaking the real-estate agent code: what “well maintained” really means… What do online daters lie about? In which it is argued that nothing is more powerful than information, especially when its power is abused
  10. 10. Why do drug dealers still live with their moms? Why experts routinely make up statistics Mitch Snyder about homeless statistics 45 homeless people died each second Meant to say that 1 person died for every 45 seconds.
  11. 11. conclusion • The fact is that freakonomics-style thinking doesn’t travel in morality. • Parents matter a great deal in some regards. • A better life standard helps to bring down the crimes in to certain extend.
  12. 12. Thank you

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