superfreak on o mics

8/9/2019 Superfreak on o Mics

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SUPERFREAKONOMICS A Seminar by Neeraj Sadarjoshi07M230


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1. I ntroduction2 . the economic approach3 . W hom to blame, dealers or consumers?4 . A Typical Football Team5. Terrorists & Revolutionists6 . Testing human tendency 7. Factors which affect lab experiments8 . I ncentives to fight global warming9 . B ig problems, simple solutions10 . C onclusion

Contents


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1. IntroductionNon-fiction book by Steven Levitt and StephenJ . Dubner, released inearly October . I t is asequel to Freakonomics .

U nifying theme : P eoplerespond to incentives .


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2 . the economic app ro ach A phrase made popular by Gary B ecker, the longtimeU niversity of C hicago economist who was awarded aNobel P rize in 1992

the economic approach is not a subject matter, nor is it amathematical means of explaining the economy .

Rather, it is a decision to examine the world a bitdifferently . I t is a systematic means of describing how people make decisions and how they change their minds .


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3 . W hom to bla me, de al ers or consumers?

drug dealing or black-market gunsmostgovernments prefer topunish the people whoare supplying the goodsand services rather than

the people who areconsuming them


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5 . Terrorists & Revo lutionists

C hildren who are borninto low-income, low-education families are farmore likely than averageto become criminals, so

wouldnt the same be truefor terrorists?


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5 . Terrorists & Revo lutionists

C rime is primarily driven by personal gain, whereasterrorism is fundamentally a political act .

B ut a revolutionary and aterrorist have differentgoals . Revolutionaries

want to overthrow andreplace a government .


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5 . Terrorists & Revo lutionistsW hy is terrorism effective?

The probability that an average American will die in a given year

from a terrorist attack is roughly 1 in 5 million; he is 575 timesmore likely to commit suicide .

H ow can a terrorist succeed even by failing?B ritish national named Richard Reid, even though he couldnt

ignite his shoe bomb, exacted a huge price .I n the U nited States alone, this procedure happens roughly 560million times per year . Even though Richard Reid failed to kill a single person, he levieda tax that is the time equivalent of 14 lives per year .


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6 . Testing Hum an Tendenc y

The game: U LT I MAT U M

This path had been paved by the beautiful mind of JohnNash and other economists who, in the 1950s,experimented a game-theory problem that came to beseen as a classic test of strategic cooperation .

I t was invented to glean insights about the nuclearstandoff between the U nited States and the SovietU nion .


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6 . Testing Hum an Tendenc y

The game: D IC TATOR

The U ltimatum and Dictator games inspired a boom inexperimental economics, which in turn inspired a new subfieldcalled behavioral economics . A blend of traditional economics and

psychology, it sought to capture the elusive and often puzzlinghuman motivations


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7 . Factors which aff ect lab ex periments

Selection biasThe best cardiologist in town probably attracts thesickest and most desperate patients

Scrutiny Do you run a red light when theres a police caror amounted cameraat the intersection?

C ontextW e act as we do because, given the choices andincentives at play in a particular circumstance, itseems most productive to act that way


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8 . Incentives to fight global wa rmingI f we were certain that warming would impose large anddefined costs, the economics of the problem would comedown to a simple cost-benefit analysis .

Do the future benefits from cutting emissions outweighthe costs of doing so?

Or are we better off waiting to cut emissions lateroreven, perhaps, polluting at will and just learning to livein a hotter world?


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8 . Incentives to fight global wa rming

The economist Martin W eitzman analyzed the bestavailable climate models and concluded the future holdsa 5 percent chance of a terrible-case scenarioa rise of more than 10 degrees C elsius .

The bottom line is: global warming is caused as a resultof externalities


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9 . B ig Pro bl ems, Simpl e Solutions

Nearly 40,000 people died in U .S. traffic accidents in1950

The cleverest engineer or economist or politician orparent may come up with a cheap, simple solution to a

problem, but if it requires people to change their behavior, it may not work


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Every day, billions of people around the world engage in behaviors they know are bad for themsmokingcigarettes, gambling excessively, riding a motorcycle

without a helmet .

WHY?


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And seat belts, at about $25 a pop, are one of the mostcost-effective lifesaving devices ever invented .

Governments arent exactly famous for cheap orsimple solutions; they tend to prefer the costly-and-

cumbersome route .Even the polio vaccine was primarily developed by aprivate group, the National Foundation for I nfantP aralysis .


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9 . B ig Pro bl ems, Simpl e SolutionsI n a 1999 report called To Err I s H uman, the I nstituteof Medicine estimated that between 44,000 and 98,000 Americans die each year because of preventable hospitalerrorsmore than deaths from motor-vehicle crashes or breast cancerand that one of the leading errors is wound infection .

The best medicine for stopping infections?Getting doctors to wash their hands more frequently .


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9 . B ig Pro bl ems, Simpl e SolutionsI t is hard to change peoples behavior when someoneelse stands to reap most of the benefit .

Surely we are capable of behavior change when our own welfare is at stake, yes?

I f we were, every diet would always work . I f we were, most smokers would be ex-smokers .


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