This is a book by University of Chicago economist Steven D. Levitt and New York Times journalist Stephen J. Dubner published in 2005.
The Excerpt
Morality represents the way people would like the world to work—whereas economics represents how it actually does work. Economists use data as a tool to determine the effect of any one factor, or even the whole effect.
The book based on a few fundamental ideas:
1. Incentives are the cornerstone of modern life – Cheating among school teachers and sumo wrestlers.
2. The conventional wisdom is often wrong – Ask the right question, you might find some interesting answers.
3. Dramatic effects often have distant, subtle causes – Legalized abortion in 1970s causes substantially drop in crime rate in 1990s.
4. Experts like real-estate agents use their informational advantage to serve their own agenda – Internet brings balance to information asymmetry.
5. Knowing what to measure and how to measure it makes a complicated world much less so – If you learn how to look at data in the right way, you can explain riddles that otherwise might have seemed impossible.
Regression analysis – By applying constant every variable except the two he wishes to focus on, and showing how those two correlated. Correlation indicates whether two variables move together, positively or negatively. Cold and snowing outside is positively correlated; but we are not sure whether the cold causes the snow or the snow causes the cold.
Parenting – It does matter who the parents are, not what the parents do in order to have positive influence on the children.
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