Freakanomics

I think Freakanomics was an appropriate last seminar reading for our Econ class, as the author takes economic reasoning and brings it to bear on other situations in ways not normally used by economists. This is an excellent lesson for us, as going forward, as PPE majors, I think most of us hope to do exactly this in our lives. Good choice Blomberg!

Anyway, the book has a lot of interesting cases. I think we all know the abortion one from Elliott's class. I found myself particularly interested this time by the chapter on cheating, with Sumo wrestlers and teachers. I thought that it actually connected well with Elliott's class of all things. Basically, one of the things that I have learned is that individuals will act on incentives presented towards. I guess this would be obvious... so maybe college was a waste of time...

Just kidding. Anyway, combining this idea of how incentives lead sumo wrestlers and teachers to cheat with some of the stuff we learned in Elliott's class, I think the fundamental problem of humanity comes into play. Individuals act on individual incentives presented towards them, but individual action (driven by individual incentives) is often not good for a population as a whole. I suppose this is a Nash Equilibrium of sorts. For example, teachers have an incentive to change their students scores because it is beneficial to each individual teacher. However, as a group it hurts them in a variety of ways. All of them cheating makes it more likely they will get caught (15 of them got fired), it makes it so the kids will still be behind the next year, and society overall is worse off from this practice. This is the same when it comes to population growth. It might be individually beneficial to have more children in developing countries, as they will make more money for the family and support the parents in old age. But for the society as a whole this hurts with overpopulation.

Conclusion: the essential challenge of society is to mold individual incentives such that they lead to outcomes that are collectively (not just individually) beneficial.