Freakonomics

Freakonomics: A Rogue Economist Explores the Hidden Side of Everything Steven D. Levitt, Stephen J. Dubner ISBN: 006073132X Pub. Date: April 2005 Publisher: HarperCollins Publishers

I am now a Steven Levitt wannabe. So much.

Have an observation. Develop a theory. Most likely, there is no freaking way to prove, or disprove, that theory. Wait. There is a chunk of data in plain sight, just overlooked by the whole world. OK, mine the data, prove the theory, and shock them, the world, that they were wrong all along. By the way, getting paid to do this too.

Imagine a conversation between Steve Levitt and a CEO.

You have excellent customer data, Sir. I did few regression analysis against an accidentally discovered set of data that can be used as the control group. It seems if you change the package to blue, spell the product name with an extra E, and change the font to sans-serif, you can double your price and double your sales volume.” (Is that a smile?) “By the way, the control data were actually published by your main competitor on their web site.

Would it be so cool.

The discussion on risks was interesting. People do not perceive risks rationally. Instead of computing the expected outcome like an engineer should. Most people weigh dread factor too much. They also worry about losing control and the imminency irrationally. I found it so true. I know someone who is willing to suffer fever instead of taking a simple aspirin, because “drugs are bad for you.” Guess his brain was fried already.