Chapter 4

1. In economic terms, what was Nicolae Ceau_escu’s rationale for banning abortion in Romania, i.e., how did he see banning abortion befitting the Romanian economy?

2. Describe the incentives Ceau_escu used to increase the birth rate in Romania.Were these incentives effective? Explain.

3. As a result of Ceau_escu’s policies, what happened to the average quality of life in Romania? Provide an economic explanation for the change that occurred.

4. Describe the general behavior of the crime rate in the United States between 1970 and 1999, i.e., indicate whether it was increasing or decreasing from year to year.

5. List each of the explanations of the drop in the crime that occurred in the 1990s that are evaluated by Levitt and Dubner.

6. Of the explanations you identified in the previous question, which ones do not appear to in fact be valid? Which ones do appear to in fact be valid?

7. The argument linking the drop in crime to the robust economy in the1990s would seem to be quite strong. Provide a brief explanation of what the data have to say about the viability of this explanation.

8. What rationale do some criminologists offer for the argument that imprisonment rates should be lowered as part of the effort to reduce crime in the United States? Was their logic sound? If not, what fallacy did they commit?

9. What does the available evidence have to say about whether increased reliance on prisons is a viable explanation for the drop in crime in the 1990s?

10.What does the available evidence have to say about whether increased reliance on capital punishment is a viable explanation for the drop in crime in the 1990s?

11. Explain how an increase in the number of police officers could cause the crime rate to decline. Does the evidence support this explanation of the drop in crime in the 1990s? Explain.

12. Many observers maintained that the drop in crime in the 1990s was at least in part due to the adoption of innovative policing strategies. Focusing on the experience in New York City, what do the data tell us about the viability of this assertion? Should we then conclude that smart policing is not a good thing? Why or why not?

Chapter 5

1. Why are parents more susceptible to “fearmongering” than other people?

2. What market forces give rise to parenting books that appeal to a parent’s fears and inadequacies rather than books which present an objective and evenhanded articulation of the state-of-the- science of good parenting?

3. How does the information in this chapter regarding the contradictory and confusing assemblage of information from parenting experts support the major theme of this book (Hint: incentives matter)?

4. Based on the example of perfect parenting in this chapter, provide examples that illustrate how the combination of asymmetric information and fear can lead to inefficient outcomes.

5. When looking at statistical data over a period of time, what does “correlation” mean? How is it different from “causation?”

6. What tool does an economist use to make sense of data which include many variables? In general terms, how does regression analysis sort out the data?

7. Describe the difference between normative and positive analysis.What can you learn about the utility of this distinction from this chapter on perfect parenting?

8. Describe, in general terms, the Early Childhood Longitudinal Study (ECLS)? Who conducted it, who was the target of the study, and what was the purpose of the study?

9. According to the data in this chapter, what are the main differences between a school which overwhelmingly has black students versus a school which overwhelmingly has white students?

10. Academically, how well does an average black student do in a “bad” school? How is this different from an average white student in a “bad” school?

11. According to the data developed from the ECLS, what is more important regarding a child’s success on standardized tests: what a parent does for a child or what a parent is? In your opinion, what might be an explanation for such a strange conclusion?

12. According to the data developed from the ECLS, having lots of books in the home is correlated with higher scores on a child’s tests, reading to the child nearly every day is not. If a parent were only interested in having his or her child achieve higher scores on standardize tests, what would you imagine his or her benefit/cost considerations to be when it came to the purchase of books and this use of his or her time?

13. According to the data developed from the ECLS, a low birth weight is correlated with lower test scores on standardized tests, but the attendance by a child in the Head Start program is not. If you were a government official with limited financial resources, how would this inform your decisions regarding the allocation of government funds?

Chapter 6

1. What do the experiences of Winner Lane, Loser Lane, and Temptress tell us about the likely relationship between a child’s name and his/her prospects for success in life? Are these examples sufficient for us to draw any definitive conclusions? Why or why not?

2. Explain what Roland G. Fryer was trying to get at when he decided to explore the following question: is distinctive black culture a cause of the economic disparity between blacks and whites or merely a reflection of it?

3. Why is the California birth certificate data set so valuable from the economist’s perspective? In particular, what type of data does it include that would be of interest to economists? Why are the variables you listed so useful/valuable?

4. What do the California names data tell us about the similarity between the names black parents and white parents gave their children up until the early 1970s and in the period of time since then?

5. Summarize the degree of uniqueness of names given to black girls and black boys revealed in the California names data.What do the authors cite as the most likely cause of this phenomenon?

6. Summarize the characteristics of a black parent who is most likely to give his/her child a distinctively black name.

7. Explain how an “audit study” is used to determine whether having a very “white” name or a very “black” name matters.

8. Are the results of audit studies regarding the effects of a person’s name on that person’s prospects for success reliable? If not, why not?

9. According to the analysis of the California names data, does a person with a distinctively black name have, on average, a worse life outcome than a person with a distinctively white name? If so, is it the fault of the name? If not, explain what the data are telling us.

10. Is there a discernible pattern in how certain names move through the population over time? If so, describe it.

11. Is a low-income parent more likely to choose the name of a celebrity or the child of an upper-income family for his/her own child.Why?

12.According to the California names data,what are many parents trying to signal when they choose a particular name for their child?

Freakonomics

Chapter 1

1. Explain how the imposition of a fine for tardy parents at a day care center may have altered motivations of these parents. The parents will have a reason to be prompt as apposed to an excuse to being late. Since they have to pay a fine anyways.

2. What is an incentive? How does it relate to the study of economics? An incentive is any factor that enables or motivates a particular course of action, or counts as a reason for preferring one choice to the alternatives.

3. What examples can you think of where moral or social incentives and economic incentives are both present? Are the different incentives complementary or competing? For each of the cases you cite, which do you think is the stronger incentive?
Charities want to make money to help the unfortunate. Give good to those who contribute, and those who contribute are helping a good cause. They are complimentary and the moral cause is stronger.

4. Describe some ways in which a school teacher might be able to improve the scores of his or her students on a standardized test.
Give them incentives to want to study to make a good grade.

5. How has a well motivated and seemingly begin government requirement to administer?
An example of another incentive. The people will not do things on their own.

6. Explain how Levitt devised a mean of examining student test scores to uncover evidence of cheating teachers. Explain also why Levitt's analysis of the data constituted evidence, but not proof, of cheating.

7. Explain what incentives, if any, a university might have to artificially improve the test scores and grades of its athletes.
Most universities have a minimum GPA that must be achieved to be on the team. If the scores were artificially improved, the athletes would then be able to spend more time with the team and continue to be on the team.

8. Describe, in general terms, how sumo wrestling tournaments in Japan are arranged

and how the rank of an individual sumo wrestler might change as a result of his performance at one of these tournaments.
The sumo wrestling tournaments in Japan are arranged where the top 40 wrestlers make at least 170,000 dollars a year. In a tournament the wrestler needs to win eight or better. A wrestler with an 8-6 ratio has almost nothing to lose whereas a 7-7 ratio wrester has everything to win. In the tournaments often when there is a 7-7 ratio against an 8-6 ratio the 7-7 ratio wins.

9. Describe what it means for a Japanese sumo wrestler to be “on the bubble” and what incentives this wrestler and his opponent may have to “throw” a wresting match.

When one stable’s wrestlers fare well on the bubble against wrestlers from a second stable, they tend to do especially poorly when the second stable’s wresters are on the bubble. This indicates that some match rigging may be choreographed at the highest level of the sport.The incentives that a wrestler might have to throw a match are he might be accepting a bribe. Or some other arrangement is made between two wrestlers. They might make an agreement saying “you let me win today, when I really need the victory, and I’ll let you win the next time.”

10.  How did Levitt construct a means of detecting evidence of cheating among Japanese sumo wrestlers? What evidence does he offer in support of his claim that some Japanese sumo wrestlers probably “throw” some of their matches?
Sumo wrestlers that have already won a spot in the top could easily beat the wrestler that is "in the bubble." The proformance standards do not mtach up. Then, we these same people meet again in a match neither at risk or "in the bubble" the stats seem to be that of what the match should have been when one was "in the bubble."

11. How did Paul Feldman set up his bagel business in the Washington, D.C. area? How did it differ from most business models?
While working for a big business in Washington D.C. he started to bring in bagels into work and basket with a suggested price then later he would collect the money and leftovers. After Feldman quit his job, he starting doing this in multiple businesses. This is different because it leaves the comsumer (the business getting the bagels) to pay for the bagels themselves. They are not forced to pay like you usually are, it is only a suggestion.

12. What do the authors of Freakonomics conclude from an analysis of the Paul Feldman’s bagel sales data? Do these conclusions match with economists’ expectations of human behavior?

The authors of Freakonomics conclude from the analysis of the Paul Feldman bagel sales data that people are dishonest. At first Paul would leave a basket for money with the bagels but many times all of the money vanished. He then left a can with a lid, which ended with the money vanishing again. He had to make small ply wood boxes with slits in the top, which proved to be better than the others. The data also showed that smaller offices are more honest than big ones. It also reflected how much personal mood seems to affect honesty. Unseasonably pleasant weather inspires people to pay at a higher rate, while the opposite makes people cheat. These conclusions do match with economists’ expectations of human behavior that people cheat.


13. What window does an analysis of the sales data of Paul Feldman’s bagel business open? Why is this usually a difficult subject for economists and others to analyze?
This bagel business provides evidence into white collar crime. In white collar crime there usually is not no victim but in this case Paul Feldman is the victim. When embezzlement happens there is not an problem (not one that needs to have action taken like in a murder or attack) the person who is commiting the crime says nothing and goes along with life "not hurting anyone." This makes white collar crime difficult to analyze.

14. Based on what can be learned from a study of sales data of Paul Feldman’s bagel business, what
variables affect the incidence of theft in an office setting?
Many factors came into play on whether a person payed for his bagel or not:

• Weather
• Holidays
• Rank at work (People ranked higher are more likely to cheat)
• Shame

Chapter 2

1. Describe, in broad terms, how the Ku Klux Klan came into existence and how its level of popularity varied over time. In addition, identify specific factors that caused the Klan’s popularity to rise or fall.

I think it came of white people not liking and accepting the fact of white's and other people getting along with each other and others thinking the same. The rise of them was all of them thinking the same and the fall was to do with all people getting along with each other.

                                                           Chapter 3

1. What is “conventional wisdom?” What are some ways that “conventional wisdom” comes into being?

2. Explain why challenging the “conventional wisdom” with regard to a sticky social issue may be difficult to do.

3. Considering this chapter’s analysis of the transformation of Listerine from an antiseptic to a cure for halitosis, what can one conclude about the effect of advertising on market demand for a good or service?

4. Explain how the incentives of police departments and the public media gave rise to explanations of the rising crime rate in the 1980s that were totally wrong.

5. Describe, in general terms, the organizational structure of the Black Disciples street gang. How is it similar to the organizational structure of most business?

6. Explain how four years of financial records of the Black Disciples street gang found their way into the hands of a University of Chicago graduate student.

7. How did J.T., a branch leader of a Black Disciples street gang, acquire and maintain a regional monopoly over crack cocaine within the territorial domain of the gang?

8. What are monthly costs incurred by J.T.’s unit of the Black Disciples? Which costs would be considered fixed costs? Which would be considered variable costs?

9. Explain how a “tournament” or “winner take all” labor market works.Why would a street-level drug dealer be willing to accept low pay and poor working conditions?

10. Give your own examples of a “tournament” type of labor market.

11. How do the incentives of the street-level drug salesman differ from those of the gang leader/ franchise owner? Are they both attempting to maximize the profits of the gang? Why or why not?

12. How did the invention of crack cocaine transform the urban street gang?

13. According to the data cited in this chapter, civil rights laws and a shift in the attitudes in the United States regarding race helped to improve the status of black society. How did crack cocaine alter that progress?

14. Based on the examples in this chapter, what does the invention of better and cheaper production methods do to the price and sales of a good or service?

2. Explain Stetson Kennedy’s role in the Klan’s ultimate decline in popularity in the South, focusing on the role the dissemination of what the Klan believed was secret information played in that process.

He gave people a reason not to agree with the Klan and it worked

3. Explain what is meant by the term “information asymmetries” and give examples of information asymmetries we encounter in everyday life.

It deals with the study of decisions in transactions where one party has more or better information than the other, Adverse selection and moral hazzard

4. Explain whether, and if so, how, information asymmetries create a competitive advantage for particular individuals.

Its like deciding for insurence you may have to choose between two and one of them has better information.

5. Explain how such innovations as the Internet have affected the prevalence

of information asymmetries.

It gives them information so they can decide easily what they want.

6. Explain how information asymmetries facilitated the corporate scandals that occurred

in the early 2000s.
They had to choose a option between one or two choices and they picked one of them

7.

They can fear both choices that there are to make and possibly choose the wrong choice.

8. What evidence do the authors offer to support their claim that real estate agents exploit an information asymmetry to their client’s detriment? As more clients become aware of the possibility of such behavior by agents, how might it affect the relationship between the two?

9. Explain how the choice of terms a real estate agent uses to describe a particular property conveys
additional information about the property, and hence the price a potential buyer might be able to successfully offer the seller.


10. This chapter examines how the economic incentives of a real estate agent may differ from those of his or her client.What other subject matter experts are often hired by individuals and businesses? Might they have incentives that differ from those of the clients that hire them?


11. Explain how the information a person has can affect his/her propensity to discriminate. As part of your explanation, distinguish between taste-based discrimination and information-based discrimination.


12. According to the voting data from the Weakest Link, which two groups of people are most likely to be discriminated against in that setting.What type of discrimination is being practiced in each case? Explain.


13. What do the data say about the characteristics of men and women who participate in Internet dating sites relative to the characteristics of the broader population?


14. Assuming many of the people who use Internet dating sites are not being truthful when they describe themselves, what could motivate them to do so, knowing that if they ever actually met a date face-to-face, the truth would likely come out?

Provide examples that illustrate how the combination of an information asymmetry and fear can lead to inefficient outcomes. Explain how the introduction of the element of fear makes the problem of the information asymmetry even worse.

Define the major economic goals

Economic Growth - Increase in the production of product and services to boost the economy and improve the living standards.

Full Employment - Opportunities should be available or created for the people of country who are willing and able to work.

Economic efficiency - Improve productivity by utilizing the resources in a better way, this approach will reduce the expense overhead of the product and services and allow the manufactures to sell their products at lower prices in the market.

Price- Level Stability - Variable up and down in the prices of goods and services reduce people trust on government. It is better to control the major upswings and downswings in the price level.

Equitable distribution of Income - Government have to ensure the proper distribution of income among people to lower the percentage of poverty level.

Economic Security - The people which are disable, chronically ill, laid off, aged or earning low income should be supported.

Balance of Trade - Overall balance in international trade with other countries and financial transactions

List and dicuss the four types of resources

Labor, Land, Capital, Entreprenurial

Labor- is a measure of the work done by human beings

Land-comprises all naturally occuring resouces whose supply is inherently fixed. Examples are any and all particular geographphical locations.

Capital-is the factor of production, used to create goods or services. Other types of capital: Capital goods and Real Capital

Entreprenurial-is the study of the entreprenuer and entreprenuership within the economy.