SuperFreakonomics

by Steven D. Levitt

  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 behavior 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 behavior 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 centers. 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 favor, 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 any one 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 subprime-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 macroeconomy and its multitude of complex, moving parts is simply not our domain. After recent events, one might wonder if the macroeconomy 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 defense (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 behavior. 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 subprime-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.

  CHAPTER 1

  HOW IS A STREET PROSTITUTE LIKE A DEPARTMENT-STORE SANTA?

  One afternoon not long ago, on a welcoming cool day toward the end of summer, a twenty-nine-year-old woman named LaSheena sat on the hood of an SUV outside the Dearborn Homes, a housing project on the South Side of Chicago. She had a beaten-down look in her eyes but otherwise seemed youthful, her pretty face framed by straightened hair. She was dressed in a baggy black-and-red tracksuit, the kind she’d worn sinc
e she was a kid. Her parents rarely had money for new clothes, so she used to get her male cousins’ hand-me-downs, and the habit stuck.

  LaSheena was talking about how she earns her living. She described four main streams of income: “boosting,” “roosting,” cutting hair, and turning tricks.

  “Boosting,” she explained, is shoplifting and selling the swag. “Roosting” means serving as a lookout for the local street gang that sells drugs. She gets $8 for a boy’s haircut and $12 for a man’s.

  Which job is the worst of the four?

  “Turning tricks,” she says, with no hesitation.

  Why?

  “’Cause I don’t really like men. I guess it bothers me mentally.”

  And what if prostitution paid twice as much?

  “Would I do it more?” she asks. “Yeah!”

  Throughout history, it has invariably been easier to be male than female. Yes, this is an overgeneralization and yes, there are exceptions, but by any important measure, women have had it rougher than men. Even though men handled most of the warfare, hunting, and brute-force labor, women had a shorter life expectancy. Some deaths were more senseless than others. Between the thirteenth and nineteenth centuries, as many as 1 million European women, most of them poor and many of them widowed, were executed for witchcraft, taking the blame for bad weather that killed crops.

  Women have finally overtaken men in life expectancy, thanks mainly to medical improvements surrounding childbirth. In many countries, however, being female remains a serious handicap even in the twenty-first century. Young women in Cameroon have their breasts “ironed”—beaten or massaged by a wooden pestle or a heated coconut shell—to make them less sexually tempting. In China, foot binding has finally been done away with (after roughly one thousand years), but females are still far more likely than males to be abandoned after birth, to be illiterate, and to commit suicide. And women in rural India, as we wrote earlier, continue to face discrimination in just about every direction.

  But especially in the world’s developed nations, women’s lives have improved dramatically. There is no comparing the prospects of a girl in twenty-first-century America or Britain or Japan with her counterpart from a century or two earlier. In any arena you look—education, legal and voting rights, career opportunities, and so on—it is far better to be a woman today than at any other point in history. In 1872, the earliest year for which such statistics are available, 21 percent of college students in the United States were female. Today, that number is 58 percent and rising. It has truly been a stunning ascendancy.

  And yet there is still a considerable economic price to pay for being a woman. For American women twenty-five and older who hold at least a bachelor’s degree and work full-time, the national median income is about $47,000. Similar men, meanwhile, make more than $66,000, a premium of 40 percent. The same is true even for women who attend the nation’s elite universities. The economists Claudia Goldin and Lawrence Katz found that women who went to Harvard earned less than half as much as the average Harvard man. Even when the analysis included only full-time, full-year employees and controlled for college major, profession, and other variables, Goldin and Katz found that the Harvard women still earned about 30 percent less than their male counterparts.

  What can possibly account for such a huge wage gap?

  There are a variety of factors. Women are more likely to leave the workforce or downshift their careers to raise a family. Even within high-paying occupations like medicine and law, women tend to choose specialties that pay less (general practitioner, for instance, or in-house counsel). And there is likely still a good amount of discrimination. This may range from the overt—denying a woman a promotion purely because she is not a man—to the insidious. A considerable body of research has shown that overweight women suffer a greater wage penalty than overweight men. The same is true for women with bad teeth.

  There are some biological wild cards as well. The economists Andrea Ichino and Enrico Moretti, analyzing personnel data from a large Italian bank, found that female employees under forty-five years old tended to miss work consistently on twenty-eight-day cycles. Plotting these absences against employee productivity ratings, the economists determined that this menstrual absenteeism accounted for 14 percent of the difference between female and male earnings at the bank.

  Or consider the 1972 U.S. law known as Title IX. While broadly designed to prohibit sex discrimination in educational settings, Title IX also required high schools and colleges to bring their women’s sports programs up to the level of their men’s programs. Millions of young women subsequently joined these new programs, and as the economist Betsey Stevenson discovered, girls who play high-school sports are more likely to attend college and land a solid job, especially in some of the high-skill fields traditionally dominated by men. That’s the good news.

  But Title IX also brought some bad news for women. When the law was passed, more than 90 percent of college women’s sports teams had female head coaches. Title IX boosted the appeal of such jobs: salaries rose and there was more exposure and excitement. Like the lowly peasant food that is “discovered” by the culinary elite and promptly migrates from roadside shacks into high-end restaurants, these jobs were soon snapped up by a new set of customers: men. These days, barely 40 percent of college women’s sports teams are coached by women. Among the most visible coaching jobs in women’s sports are those in the Women’s National Basketball Association (WNBA), founded thirteen years ago as a corollary to the men’s NBA. As of this writing, the WNBA has 13 teams and just 6 of them—again, fewer than 50 percent—are coached by women. This is actually an improvement from the league’s tenth anniversary season, when only 3 of the 14 coaches were women.

  For all the progress women have made in the twenty-first-century labor market, the typical female would come out well ahead if she had simply had the foresight to be born male.

  There is one labor market women have always dominated: prostitution.

  Its business model is built upon a simple premise. Since time immemorial and all over the world, men have wanted more sex than they could get for free. So what inevitably emerges is a supply of women who, for the right price, are willing to satisfy this demand.

  Today prostitution is generally illegal in the United States, albeit with a few exceptions and many inconsistencies in enforcement. In the early years of the nation, prostitution was frowned upon but not criminalized. It was during the Progressive Era, roughly from the 1890s to the 1920s, that this leniency ended. There was a public outcry against “white slavery,” in which thousands of women were imprisoned against their will to work as prostitutes.

  The white slavery problem turned out to be a wild exaggeration. The reality was perhaps scarier: rather than being forced into prostitution, women were choosing it for themselves. In the early 1910s, the Department of Justice conducted a census of 310 cities in 26 states to tally the number of prostitutes in the United States: “We arrive at the conservative figure of approximately 200,000 women in the regular army of vice.”

  At the time, the American population included 22 million women between the ages of fifteen and forty-four. If the DOJ numbers are to be believed, 1 of every 110 women in that age range was a prostitute. But most prostitutes, about 85 percent, were in their twenties. In that age range, 1 of every 50 American women was a prostitute.

  The market was particularly strong in Chicago, which had more than a thousand known brothels. The mayor assembled a blue-ribbon Vice Commission, comprising religious leaders as well as civic, educational, legal, and medical authorities. Once they got their hands dirty, these good people realized they were up against an enemy even more venal than sex: economics.

  “Is it any wonder,” the commission declared, “that a tempted girl who receives only $6 per week working with her hands sells her body for $25 per week when she learns that there is demand for it and men are willing to pay the price?”

  Converted into today’s dollars, the $6-per-wee
k shopgirl had an annual salary of only $6,500. The same woman who took up prostitution at $25 a week earned the modern equivalent of more than $25,000 a year. But the Vice Commission acknowledged that $25 per week was at the very low end of what Chicago prostitutes earned. A woman working in a “dollar house” (some brothels charged as little as 50 cents; others charged $5 or $10) took home an average weekly salary of $70, or the modern equivalent of about $76,000 annually.

  At the heart of the Levee, the South Side neighborhood that housed block after block of brothels, stood the Everleigh Club, which the Vice Commission described as “the most famous and luxurious house of prostitution in the country.” Its customers included business titans, politicians, athletes, entertainers, and even a few anti-prostitution crusaders. The Everleigh’s prostitutes, known as “butterfly girls,” were not only attractive, hygienic, and trustworthy, but also good conversationalists who could cite classical poetry if that’s what floated a particular gentleman’s boat. In the book Sin in the Second City, Karen Abbott reports that the Everleigh also offered sexual delicacies that weren’t available elsewhere—“French” style, for instance, commonly known today as oral sex.

  In an age when a nice dinner cost about $12 in today’s currency, the Everleigh’s customers were willing to pay the equivalent of $250 just to get into the club and $370 for a bottle of champagne. Relatively speaking, the sex was pretty cheap: about $1,250.

  Ada and Minna Everleigh, the sisters who ran the brothel, guarded their assets carefully. Butterflies were provided with a healthful diet, excellent medical care, a well-rounded education, and the best wage going: as much as $400 a week, or the modern equivalent of about $430,000 a year.