This document provides a summary of the key concepts and chapters from the book Freakonomics. It discusses how incentives drive human behavior and how conventional wisdom is often wrong. Specific chapters summarize how cheating can be predicted among teachers and sumo wrestlers based on incentives. It also discusses how the Ku Klux Klan was undermined by the dissemination of their secrets. Additional chapters explore why drug dealers live with their mothers and the link between legalized abortion and a drop in crime rates. The document analyzes different chapters and concepts from the book.

4. The Authors

5. Questions What do school teachers and sumo wrestlers have in common? How is the Ku-Klux Klan like a group or real-estate agents? Why do drug dealers still live with their moms? Which is more dangerous, a gun or a swimming pool?

6. Freakonomics concepts Incentives are the cornerstone 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

7. Freakonomics book summaryChapter 1-What Do Schoolteachers and Sumo Wrestlers have in Common? Economics defined as a study of incentives and how they are pursued? How do we profit by what we do and what incentives are so attractive that they compel us to act unethically? Cheating can be predicted Eg. School teachers helped children cheat on standardized tests Analysis of standardized test answer patterns helped identify groups of correct answers Retest administered to find the offenders By comparing the performances of the wrestlers in matches with different stakes and potential consequences, the author found that cheating does often take place in the sport

8. Chapter 2- Why is the Ku Klux Klan like a group of real estate agents? How individuals, organizations, and businesses often exploit their access to information at the expense of others Entire industries attain great success and many significant historical events transpire as a result of an imbalance in the flow of information

9. Eg. a man helped cripple the racist Ku Klux Klan simply by widely disseminating their secrets He infiltrated the group and documented the secret rituals and codes of the organization He gave the records and reports to Hollywood writers, who used the information to create a long-running story Children across the USA imitated the shows in their schoolyard games, and gradually, the mystery and influence of the group were diminished Real estate agents when selling their own houses may not always have their clients’ best interests at heart

10. Chapter 3- Why do drug dealers still live with their moms? The author compares the organizational structure of drug dealer gang to McDonalds He explains how very few executives and upper level managers prosper from the work of 1000′s of minimum wage or low wage workers He even found that most street drug dealers made less than minimum wage Therefore the common notion that all drug dealers are rich proved to be incorrect

11. Chapter 4- Where have all thecriminals gone? Research showed of a link between legalization of abortion in 1973 and drop in violent crimes in 1990s The author claims that many of the additional children who would have been born annually if abortion had remained illegal would have been at high risk for engaging in violent crime The authors conclude that women with the right to choose abortion tend to make good decisions

12. Chapter 5- Which is more dangerous, a gun or a swimming pool? What makes a good parent? Research found that when allowing children to play in swimming pools, they were more than 100 times more likely to die in a swimming pool than playing with a gun “good” or “positive parenting outcomes” on their children are connected more strongly to factors such as socioeconomic status and the education of parents more than any specific parenting practices

13. Chapter 6- Would a Roshanda by any other name smell as sweet? The focus of the final chapter is on economic implications of children’s names The author says that having a distinctively “black name” was linked to lower attainment, less education, less income, and overall less success in life

14. Epilogue-Two Paths to Harvard The life paths of two Harvard graduates who may have seemed to be locked into divergent patterns of achievement based on their backgrounds

15. There are limits to the ability of economic analysis to predict every possible outcome