February 12, 2007
59, Number 19
February 12, 2007
‘Rogue Economist’ Levitt gives rollicking talk
BY carol clark
Do incentive theories work when potty training a 4-year-old? What can a prostitute teach us about economics? Is it worth it to attend an expensive private university as opposed to a public one?
Two years after the publication of his best-selling
book “Freakonomics,” economist Steven Levitt is still raising eyebrows in his offbeat explorations of what makes individuals and social systems tick.
“They don’t usually let me speak in churches,” he deadpanned to the near-capacity crowd at Glenn Auditorium, where he gave the opening lecture for Founders Week.
The Alvin H. Baum Professor in Economics at the University of Chicago, Levitt looks like the stereotype of a mild-mannered academic in his wire-rimmed glasses, preppy blazer and khakis. But as he and co-author Stephen Dubner made clear in “Freakonomics,” there is a hidden side to everything. Levitt is actually a self-described “rogue economist,” known for exposing the inner workings of everything from sumo wrestling to crack gangs.
Following are excerpts from his lecture and the Q&A session he held with Emory students and faculty.
• During his first semester at Harvard, as a student who aspired to become a great economist, Levitt realized that he was hopeless in math. He went home to Minnesota to ponder his future and his father, a successful physician, told him that he had faced a similar situation when he was starting out as a medical researcher. His mentor pulled him aside and told him that he didn’t have much talent for research, adding that there was one area that was desperate for scientists where he might find work. “My father said, ‘Well, what area is that?’ and his mentor told him, ‘Intestinal gas,’” Levitt said. “So my father devoted his entire professional career to the study of intestinal gas, looking into questions that no self-respecting doctor wants to take on. When I was in high school, GQ did a profile of my father with the headline: ‘The King of Farts.’ When you’re not good enough to compete on equal footing with other people, you’ve got to find that niche that nobody else wants to take. ‘Freakonomics’ is the economics parallel to my father’s career in intestinal gas.”
• Currently, Levitt is doing a study of pimps and prostitutes in Chicago. One of his research subjects is a former computer programmer who charges $300 an hour as a high-end call girl. Levitt asked her if she was happy when her “client line” rang on her Palm Pilot. She told him that she wasn’t happy, but indifferent. He told her that meant she was not charging enough for her services. Later, Levitt offered to pay her the hourly rate she charged clients if she would come speak to his economics class. “The students said that was the single best lecture they’d had in their entire academic careers,” Levitt said. He was surprised, however, when one of the students asked the prostitute what she charged and she replied, “$400 an hour.” The student then asked her how she had determined that rate. “She turned to me,” Levitt recalled, “flashed me this huge smile and said, ‘Well, I was talking with Professor Levitt and he convinced me that my services were worth more than I was previously charging.’”
• His wife was having trouble potty-training their daughter, Amanda. Levitt said he told her: “I’m an economist. I understand incentives. Let me handle this.” Levitt then told his daughter that he would give her a bag of M&Ms whenever she used the potty. The method worked well for two or three days. On about the fourth day, his daughter would dribble out a few drops, demand a bag of M&Ms, then go and dribble out a few more drops and demand another bag. “Parenting keeps you humble, in terms of setting policy,” Levitt said. “If a 4-year-old can figure out how to beat the system in four days, what does that mean if you’re a policy maker and you think you’re going to write the rules that are going to be a panacea?”
• When someone in the audience asked Levitt if he felt it was worth it to attend an expensive private university, as opposed to a public one, Levitt replied: “At the University of Chicago, the motto used to be ‘This is where fun goes to die.’” The university has recently built recreational facilities that have improved the atmosphere, he said, adding: “I think what colleges have done more and more [with rising tuitions] is provide perks.” But Levitt said he had not researched whether an expensive tuition equates with a better education. “If you’re going to write a thesis, that’s a great subject,” he said.