THE ARTICLE · 9 MIN
Freakonomics is a best-selling book about the hidden incentives behind everyday behaviour. Here are its big ideas in our own words, a check of its main claims against later research, and a few small practices drawn from the parts that hold up.
About the book
Freakonomics: A Rogue Economist Explores the Hidden Side of Everything is by Steven D. Levitt, a University of Chicago economist who received the John Bates Clark Medal in 2003, and Stephen J. Dubner, an award-winning author and journalist. William Morrow published it in 2005, and a revised and expanded edition followed in 2006. It is popular economics: each chapter takes an odd question, such as what schoolteachers and sumo wrestlers have in common, and answers it with a story built on research, much of it Levitt’s own papers. The authors’ website says it went on to sell more than 4 million copies in 35 languages.
We did not read the full book. We read short passages of the 2005 and 2006 printings through Open Library’s search-inside tool, the publisher’s and the authors’ pages, and the studies behind each claim, mostly their published abstracts.
The big ideas
1. Incentives explain a great deal
The book calls incentives “the cornerstone of modern life” and sorts them into three flavours: economic, social and moral. An early example is a group of Israeli day-care centres that began fining parents who came late, and saw lateness go up rather than down. The researchers behind that study argued that a fine can change the information people have about what lateness means; the title of their paper puts it in four words, “A Fine Is a Price”.
2. Where there are incentives, there is cheating
Chicago schoolteachers facing test-based incentives and sumo wrestlers one win short of a winning record both had reasons to cheat. Levitt’s papers looked for signs in the data that honest behaviour would rarely produce, such as suspicious patterns of answers in a classroom or a wrestler who wins when he needs to and loses the rematch, and found them.
3. Information is power
The book argues that experts, from estate agents to criminologists, use their informational advantage over the people who rely on them. Its example is a study comparing agents’ own home sales with their clients’: because an agent receives only a small share of any extra price, the agent has a reason to sell a client’s house too cheaply and too quickly. The Klan chapter applies the same lens to secrets, telling how Stetson Kennedy upended the Klan’s information asymmetry in the 1940s, a story the authors later revised (see below).
4. The conventional wisdom is often wrong
The authors write that “the conventional wisdom is often wrong”, and the gang chapter is their clearest case. One gang’s own financial records, analysed by Levitt and Sudhir Venkatesh, suggested that street-level drug dealing is less lucrative than is generally thought, with the money concentrated at the top. That is the point of the chapter title, “Why Do Drug Dealers Still Live with Their Moms?”
5. Big effects can have distant causes
The crime chapter argues that the legalisation of abortion in the US in the early 1970s helped cause the fall in crime in the 1990s. Its reasoning, in one line: “Legalized abortion led to less unwantedness; unwantedness leads to high crime; legalized abortion, therefore, led to less crime.” The authors expected it to provoke reactions “ranging from disbelief to revulsion”. The evidence on each side is in the next section.
6. Who parents are matters more than what they do
The parenting chapter concludes that “it isn’t so much a matter of what you do as a parent; it’s who you are.” One strand of its evidence is Chicago’s high-school lotteries, where students who won a place at a sought-after school did no better on traditional academic measures than similar students who lost.
What holds up
Most of the book’s studies hold up within their own scope, and the main ones were published in peer-reviewed economics journals. The real dispute is over abortion and crime. A few stories are weaker than the book makes them sound, mostly because they rest on one study, one city or one gang. The rows below give each claim, the verdict and the source.
The abortion–crime debate, in more detail
This is a disagreement between credible researchers. Critics argue that comparing states cannot separate abortion from everything else that differed between them; Christopher Foote, one of the two economists who found the coding error, put it this way in 2019: “there are a lot of reasons New York crime might decline relative to Utah crime.” Reviewing the evidence in 2009, Ted Joyce wrote that criminologists largely dismiss the association, while Donohue and Levitt have responded to each challenge with more data.
We treat “as much as half” as unsettled rather than established. Independent studies point both ways: work on Canada (2007) and on 16 Western European countries (2014) found effects in the same direction, while a study of England and Wales (2008) and the tests that compared people born just before and just after a change in the law, in the US and in Romania, found little or no effect on crime rates. Whether legal abortion is right or wrong is a moral question; none of this research answers it, and this page takes no side on it.
How to use it
These practices come only from the parts that hold up, or partly hold up. They describe; what fits your situation is your call.
- Asking what someone is rewarded for. The estate-agent study turns on one question: who gains, and by how much, from each outcome? Asked of an adviser, a salesperson or a system, it can explain behaviour that otherwise looks odd.
- Watching the cut-offs. Jacob and Levitt concluded that incentive systems, especially those with bright-line rules, often induce distortions such as cheating, and the sumo results cluster at the edge of a winning record. Behaviour near a threshold, such as a target, a pass mark or a bonus line, is the place to look first.
- Letting patterns in the data raise questions. Both cheating studies started from patterns that honest behaviour would rarely produce. A pattern is a reason to look closer, not proof on its own.
- Checking whether a penalty did what it was meant to do. The day-care study shows a fine can backfire; the replication shows it is not guaranteed to. Measuring what happens after a new rule, rather than assuming, is the lesson both support.
- Comparing like with like. Students who apply for a popular school are not a typical group, which is why the Chicago researchers used lotteries. Before crediting a choice with a result, it helps to ask who made the choice.
Who it’s for, and who can skip it
It suits readers who want an entertaining introduction to how economists use data to answer everyday questions. Readers looking for a practical guide or for up-to-date evidence will need to look beyond it: the studies date from the late 1990s and early 2000s, and the debates about several of them continued long after publication.
If you liked this
- Numbers that mislead, on correlation, small samples and other traps behind arguments like the abortion–crime debate.
- How to read a study, including what it means when a finding has, or has not, been repeated.
- Nudge, summarised, another best-seller on how incentives and design shape choices, with its claims checked.
Sources
- S. D. Levitt and S. J. Dubner, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything (William Morrow, 2005; revised and expanded edition 2006), read as Open Library search-inside snippets of the Internet Archive copies (2005, 2006); Freakonomics books page; HarperCollins, Freakonomics Rev Ed.
- J. M. Poterba, “Steven D. Levitt: 2003 John Bates Clark Medalist”, Journal of Economic Perspectives 19 (2005).
- B. A. Jacob and S. D. Levitt, “Rotten apples: an investigation of the prevalence and predictors of teacher cheating”, Quarterly Journal of Economics 118 (2003).
- M. Duggan and S. D. Levitt, “Winning isn’t everything: corruption in sumo wrestling”, American Economic Review 92 (2002); France 24, “Sumo tournament cancelled amid revelations of match fixing”, 6 February 2011.
- S. D. Levitt and S. A. Venkatesh, “An economic analysis of a drug-selling gang’s finances”, Quarterly Journal of Economics 115 (2000).
- R. G. Fryer and S. D. Levitt, “The causes and consequences of distinctively Black names”, Quarterly Journal of Economics 119 (2004); M. Bertrand and S. Mullainathan, “Are Emily and Greg more employable than Lakisha and Jamal?”, American Economic Review 94 (2004); P. Kline, E. K. Rose and C. R. Walters, “Systemic discrimination among large U.S. employers”, Quarterly Journal of Economics 137 (2022).
- J. B. Cullen, B. A. Jacob and S. D. Levitt, “The effect of school choice on participants: evidence from randomized lotteries”, Econometrica 74 (2006); D. J. Deming, J. S. Hastings, T. J. Kane and D. O. Staiger, “School choice, school quality and postsecondary attainment”, American Economic Review 104 (2014).
- S. D. Levitt and C. Syverson, “Market distortions when agents are better informed: the value of information in real estate transactions”, Review of Economics and Statistics 90 (2008); R. Rutherford, T. Springer and A. Yavas, “Evidence of information asymmetries in the market for residential condominiums”, Journal of Real Estate Finance and Economics 35 (2007).
- U. Gneezy and A. Rustichini, “A fine is a price”, Journal of Legal Studies 29 (2000); C. Metcalf, E. A. Satterthwaite, J. S. Dillbary and B. Stoddard, “Is a fine still a price? Replication as robustness in empirical legal studies”, International Review of Law and Economics 63 (2020).
- J. J. Donohue and S. D. Levitt, “The impact of legalized abortion on crime”, Quarterly Journal of Economics 116 (2001); C. L. Foote and C. F. Goetz, “The impact of legalized abortion on crime: comment”, Quarterly Journal of Economics 123 (2008); J. J. Donohue and S. D. Levitt, “Measurement error, legalized abortion, and the decline in crime: a response to Foote and Goetz”, Quarterly Journal of Economics 123 (2008); T. Joyce, “A simple test of abortion and crime”, Review of Economics and Statistics 91 (2009), and “Abortion and crime: a review”, NBER Working Paper 15098 (2009); J. J. Donohue and S. D. Levitt, “The impact of legalized abortion on crime over the last two decades”, American Law and Economics Review 22 (2020); R. Hjalmarsson, A. Mitrut and C. Pop-Eleches, “The impact of abortion on crime and crime-related behavior”, Journal of Public Economics 200 (2021); A. Sen, “Does increased abortion lead to lower crime?”, B.E. Journal of Economic Analysis & Policy 7 (2007); A. François, R. Magni-Berton and L. Weill, “Abortion and crime: cross-country evidence from Europe”, International Review of Law and Economics 40 (2014); L. H. Kahane, D. Paton and R. Simmons, “The abortion–crime link: evidence from England and Wales”, Economica 75 (2008); Journalist’s Resource, “Economic research resurfaces debate about the link between legalized abortion and crime reduction” (2019, updated 2022).
- S. J. Dubner and S. D. Levitt, “Freakonomics in the Times Magazine: Hoodwinked?”, Freakonomics.com (January 2006); NPR, “Stetson Kennedy, who ‘unmasked’ the Klan, dies”, 28 August 2011.
Checked October 2026. What we read: short search-inside passages of the 2005 and 2006 printings (not the full text of any edition); the publisher’s and the authors’ pages; the authors’ 2006 web page on the Kennedy story; the published abstracts of every study listed above (not their full texts); the France 24, NPR and Journalist’s Resource articles (the last updated in 2022).
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- economics
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