Freaky notes from Freakonomics, by Levitt and Dubner
Freaky notes from Freakonomics, Levitt and Dubner
P13 [ the book is] based on a few fundamental ideas:
- Incentives are the cornerstone of modern life. And understanding them…is the key to solving just about any riddle.
- The conventional wisdom is often wrong.
- Dramatic effects often have distant, even subtle, causes.
- “Experts” … use their informational advantage to serve their own agenda. (ala Sorting Things Out and Everything is Miscellaneous.)
- Knowing what to measure and how to measure it makes a complicated world much less so.
P66 …understood the raw power of information….once that information falls into the wrong hands (or….the right hands) much of the group’s advantage disappears.
P67 Information is a beacon, a cudgel, an olive branch, a deterrent, depending on who wields it and how. Information is so powerful that the assumption of information, even if the information does not actually exist, can have a sobering effect.
It is common for one party to a transaction to have better information than the another party…known as information asymmetry. We accept as a verity of capitalism that someone (usually an expert) knows more than someone else (usually a consumer). But information asymmetries everywhere have in fact been mortally wounded by the Internet. Information is the currency of the Internet….brilliantly efficient at shifting information from the hands of those who have it into the hands of those who do not.
P75 Words used in real estate ads with a strong positive correlation to ultimate sales price: Granite, State-of-the-art, Corian, Maple, Gourmet. Five terms correlated to a lower sales price: Fantastic, Spacious, !, Charming, Great Neighborhood.
P152 …outrage and hazard do not carry equal weight in his risk equation. “When hazard is high and outrage is low, people underreact…and when hazard is low and outrage is high, they overreact.” These statements remind me of comments from Schneier’s Beyond Fear: “p20 Differentiating between threats and risks – a threat is a potential way an attacker can attack a system. A risk takes into account both the likelihood of the threat and the seriousness of a successful attack.”
P161 Correlation is nothing more than a statistical term that indicates whether two variables move together….regression analysis is the tool that enables an economist to sort out those huge piles of data (couple hundred variables)….regression analysis cannot quite answer [does having a lot of books in your home lead your child to do well in school?], but it can answer a subtly different one: does a child with a lot of books in his home tend to do better than a child with no books? The difference between the first and second questions is the difference between causality (first) and correlation (second). A regression analysis can demonstrate correlation, but it doesn’t prove cause…X can cause Y, or Y can cause X, or some other factor could be causing both X and Y.
P211 in the Notes, “can water Aid Wight Loss” WSJ 3/16/2004…”There is no scientific basis for the recommendation [of eight glasses of water a day] and that most people get enough water through normal consumption of food and beverages.” Also coffee = water, juice = water, coke = water, ….
An interesting book showing the power of critical thinking, asking interesting questions, and fiddling with numbers. I followed this book up, strangely enough, with another book critical of ‘common knowledge,’ called Disinformation by Miniter. Another interesting read.
Entry filed under: feed my pet brain.