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This is my diary....what I make sense of, around me. You'll find short prose on contemporary topics that interest me. What can you expect - Best adjectives? …. hmm occasionally, tossed around flowery verbs ?…. Nope, haiku-like super-brevity? … I try to. Thanks for dropping by & hope to see you again

August 17, 2009

Levitt’ating Economics

Economics , can be a subject vacillating between extremities. Atleast that’s the way I found it to be. On one hand you’ll find tonnes of theories propounded by John Maynard Keynes, Adam Smith and their ilk and among the reams of such theories lay ideas of on how Market forces interact at macro & micro level. Esoteric as it may be , on the other hand you have economics lay buried in Complex mathematical equations, and awash with numbers spewed by statistics. It therefore required someone like Levitt & Dubner to have done economics a great favour by taking it to middle ground and demystifing it in this book ‘Frekonomics – A Rogue economist explores the hidden side of everything‘. That they have done it admirably in this book lies in no doubt, but more importantly during this process, they have succeeded in relating Economics to a layman and his common sense.

Using various case studies Levitt & Dubner, unravel Economics with a basic hypothesis that it operates at a fundamental level on an elaborate scheme of Incentives (or disincentives) as one would call it. And in many a ways they use Economics to explain missing links between seemingly unrelated phenomena. Like the commonality between School teachers & Sumo wrestlers ; how they conveniently bend the rules of the game to incentivise themselves. Or the striking similarity in the way Drug Cartel organise themselves and operate like any corporate entity say McDonalds (their analogy) makes interesting reading.

They also show how Economics can also make strange bedfellows, however jarring it may be, for instance they elaborately make a case out of how abortion was one of the greatest crime lowering factors in American history contrary to popular wisdom. In another instance they show how the Internet has flattened the ‘Information Asymmetry’. The book goes to add “Information is the currency of the Internet. As a medium, the internet is brilliantly efficient at shifting information from the hands of those who have it into the hands of those who do not”. Bad news for all those experts; Doctors, Lawyers, Insurance salesman or the Real estate agents.

In a nutshell it is a wonderful compilation from someone self described as “ an economist who instead of thinking grand macro thoughts, favoured his own list of offbeat micro curiosities”.

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