The Economist article titled “Why ‘Freakonomics’ failed to transform economics” does very little to answer the titular question.
Freakonomics was a hit. It ranked just below Harry Potter in the bestseller lists. Much like Marvel comics, it spawned an expanded universe: New York Times columns, podcasts and sequels, as well as imitators and critics, determined to tear down its arguments. It was at the apex of a wave of books that promised a quirky—yet rigorous—analysis of things that the conventional wisdom had missed.
While still a thriving enterprise—the book has been a bestseller through multiple editions now and co-authors Steven Dubner hosts a popular long-running podcast by that name and other co-author Steve Levitt has yet another podcast under the brand’s umbrella—one of the most famous findings in the original book was embarrassingly wrong:
The book’s most controversial chapter argued that America’s nationwide legalisation of abortion in 1973 had led to a fall in crime in the 1990s, because more unwanted babies were aborted before they could grow into delinquent teenagers. It was a classic of the clever-dick genre: an unflinching social scientist using data to come to a counterintuitive conclusion, and not shying away from offence. It was, however, wrong. Later researchers found a coding error and pointed out that Mr Levitt had used the total number of arrests, which depends on the size of a population, and not the arrest rate, which does not. Others pointed out that the fall in homicide started among women. No-fault divorce, rather than legalised abortion, may have played a bigger role.
Many critics of the approach of using social science methodologies to explore “the hidden side of everything” found it trivial or “cute.” The article concludes,
The credibility revolution ate its own children: subsequent papers often overturned results, even if, as in the case of those popularised by Freakonomics, they had an afterlife as cocktail-party anecdotes. The problem has spread to the rest of the profession, too. A recent study by economists at the Federal Reserve found that less than half of the published papers they examined could be replicated, even when given help from the original authors. Mr Levitt’s counterintuitive results have fallen out of fashion and economists in general have become more sceptical.
Yet Mr Heckman’s favoured approaches have problems of their own. Structural models require assumptions that can be as implausible as any quirky quasi-experiment. Sadly, much contemporary research uses vast amounts of data and the techniques of the “credibility revolution” to come to obvious conclusions. The centuries-old questions of economics are as interesting as they always were. The tools to investigate them remain a work in progress.
None of which really explains why the Freakonomics approach didn’t catch on or, indeed, demonstrates that it didn’t. Certainly, the behavioral economics it helped popularize is having a moment, including spawning some Nobel Prize winners.
The most interesting thing I learned from the article is that Levitt announced his retirement from academia, at the ripe old age of 57, earlier this month. Timothy Taylor offers some tidbits from an interview explaining why. Two caught my attention.
First, on the process that led to the first edition of the book:
Neither of us thought anybody would read a book if we did write it. But we both were kind of, prostitutes in some sense. And so, for the right amount of money, we were willing to write this book. And interestingly, the right amount of money turned out to be similar for both of us. And so much to our surprise, we got offered, I don’t know, three times that amount of money to write the book. And then the only thing that stood in the way of us writing the book is we had to figure out how to divide the profits, the payments. And Dubner, I don’t remember the exact numbers, but Dubner came to me and he said, “Hey, I know it’s uncomfortable to talk about this, but we need to decide to split.” And he said, “I was thinking 60 /40.” And I said, “I was actually thinking 2 /3, 1 /3.” And he said, “Oh, I’m just not willing to write this book for 1 /3.” And I said, “No, no, I was thinking 2 /3 for you and 1 /3 for me.” And he said, I was thinking 60 % for you and 40 % for me. So, it’s the easiest negotiation ever. We settled on 50 /50, we both felt like we got a lot of surplus and we’ve had a great relationship ever since.
I love it when a plan comes together!
Second, on the retirement decision:
I think two different forces at work here. The first one is that maybe between five and 10 years ago, I worked on three or four projects that I was just incredibly excited about that I felt were some of the best research that I’d ever done … [T]hese were four papers that I was really excited about and collectively they had zero impact. They didn’t publish well by and large, nobody cared about them and I remember looking at one point at the citations and seeing that collectively they had six citations. I thought, my god, what am I doing? I just spent the last two years of my life and nobody cares about it. And I really think it’s true that the way I approached economic problems, without a fashion, without a vogue, and for better or worse, probably the profession is better for having a different set of standards than I was used to meeting up with. And that was really discouraging to me. And you combine that with the idea, with the fact that along with Stephen Dubner, we’ve got this media franchise where Dubner’s podcast Freakonomics Radio gets a couple million downloads a month. And if I want to get a message out, I can get millions of people through a different medium. It just didn’t make sense to me to keep on puttering around, doing all this work, spending years to write papers that no one cared about when I had other ways of getting my ideas out. And really my interests were elsewhere. I didn’t get any thrill. … The question I should ask myself is why didn’t I retire a long time ago? It made no sense. I’ve just been, I’ve thought, I’ve known for years, it’s the wrong place for me to be. And it just took me a long time to figure out how to extricate myself from academics. And I’m so glad I’m doing it. It’s good for everyone. It doesn’t make any sense to, it feels to me awful to be in a place where I’m not excited and where I’m not contributing materially. So, for me, it feels like a breath of fresh air to be saying, “Hey, I’m not going to be an academic anymore. I’m going to be doing what I really love to do.
It’s simple economics! One imagines Levitt makes more money from his side hustle than from his day job. So, if he’s not enjoying the latter, it’s a really poor use of his time.
It’s noteworthy that, while Levitt is mostly known for the Freakonomics franchise, he was a superstar in the field first. Indeed, the reason Dubner interviewed him to begin with was because he’d just won the John Bates Clark Medal, the second most prestigious award in economics short of the Nobel itself.
But, for whatever reason, most of his articles from the last few years have a handful of citations, whereas his very-highly-cited works are mostly from 1995 through 2007. Indeed, the only exceptions appear to be foreign translations of Freakonomics.
