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Freakonomics: Part 1

On October 2, 2006, authors Steven D. Levitt and Stephen J. Dubner published the first of what would become a four-book series. The first novel navigates different economic concepts, each of them having a “hidden side” or a truth that isn’t commonly acknowledged. With six different chapters, all being diverse and some having shocking comparisons, Levitt and Dubner busts myths in an engaging way: narratives. While the book has no unifying theme, each of the stories revolve around incentives, a fundamental part of human behavior. The first section of the Freakonomics novel is the comparison aspect of daily life. 

What do schoolteachers and sumo wrestlers have in common?

Cheating. Starting off, in 1996, the Chicago Public Schools began to strive for better standardized testing scores. In order to promote improvement among school children from one year to the next, they offered the ability for teachers to receive raises/promotions. However, this backfired. In the novel, it’s presented that one year, a student would see tremendous growth in their scores, yet the next, their score wouldn’t stay consistent, but actually drop. The investigation into this resulted in the discovery that after the students would turn in the answer sheets, some teachers within the Chicago Public Schools would change the last few answers on students’ sheets, discovering a pattern in correct answers. Plus, because the last few questions on standardized tests are generally harder, it didn’t appear reasonable that students could get the last few answers all correct, but have incorrect answers towards the beginning of the test. The correlation between schoolteachers and sumo wrestlers is the fact that both have incentives to cheat. Schoolteachers are willing to cheat in order to get the raise and sumo wrestlers are willing to cheat to ensure better rank results during matches. In sumo wrestling, a match consists of 15 rounds, and in order for a sumo wrestler to advance in rank, they must win 8 of these matches. When cheating, sumo wrestlers will form agreements with one another in order to win and lose matches, benefiting each wrestler and allowing them to win or lose, depending on the wins they currently have. 

How is the Ku Klux Klan like a group of real-estate agents? 

Information Asymmetry. Following that, one significant reason that the KKK was able to hold so much power was due to the secret code they were able to form. This code eliminated the ability for people to understand what went on during KKK meetings, preventing them from knowing when the members would attack next. Plus, the members within the Ku Klux Klan also had code names that they were referred to during meetings, making it much harder for anyone to identify which individuals were members. This made it much harder for officials to stop the terrorism caused by KKK members for many years. The correlation between the Ku Klux Klan and real-estate agents is the ability to manipulate individuals because they hold information that we don’t. A real-estate agent, for instance, has a primary goal of selling your house, but even more so, making the most amount of commission with the least amount of work. The reason we hire these agents to sell our house is because this is their area of expertise, not ours. Therefore, they use this to their advantage by possibly selling our house for much less than it’s worth. In the novel, a narrative to demonstrate this idea is described as when a real-estate agent could sell a house for $300,000 and make $9500 off of commission. Yet, they know this house is worth more, but knowing the extra work of selling it for $325,000, let’s say, would be a significant amount of hours, only to make less than $1000 more off of commission. Therefore, the real-estate agent would settle for the best deal for themself, instead of the house seller, in order to efficiently make money. 

Breeley Moll, Rogers, 10th Grade, Instagram- @breeley0212

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