Four years ago, economist Steven Levitt and journalist Stephen Dubner produced a sensation. Their book, Freakonomics, described how Levitt and a few other scholars used the techniques of economics to examine quirky topics and controversial ones. There was a chapter on cheating among sumo wrestlers, another on the profitability of drug-dealing, yet another on the possible link between liberalized abortion laws and falling crime rates and much more (the subtitle was A Rogue Economist Explores the Hidden Side of Everything).
The book was a surprise mega best seller, with more than 4 million copies now in print worldwide. Levitt and Dubner became sought-after speakers and much-linked-to bloggers. They had made economics seem unexpectedly ... fun. "CSI: Economics," one observer called it.
For the past couple of years, though, economics hasn't been fun. It's been scary. The quirky topics in which Levitt specializes have been pushed aside by the big questions of how to halt a financial crisis and fix an ailing global economy. Macroeconomics has overwhelmed microeconomics. Not that the macroeconomists have exactly covered themselves with glory. Queen Elizabeth II wondered aloud late last year how economists had missed the problems that brought on the financial crisis. This September, economist Paul Krugman lamented "the profession's blindness to the very possibility of catastrophic failures in a market economy," unleashing a bitter debate over what the heck economics is good for.
Now Levitt and Dubner are about to land in the middle of this maelstrom with a new book, Superfreakonomics. It's very good jauntier and more assured than their first. But is the world ready for freakonomics again? Or, to put it another way, can the freakonomists restore our shaken faith in economics?
Levitt likes his timing, since he sees macro as something of a dead end. "The problems of the macroeconomy are just so hard and the degree of complexity so immense that it's almost hopeless to think that we would have really good models of those systems," he says, chatting at his house a few blocks from the University of Chicago, where he teaches. (A video of the interview is at time.com/levitt.) Aside from the complexity, there's a crucial data limitation. "We have one macroeconomy," Levitt explains. "We get to watch the world unfold once." That means we have no way of knowing for sure whether the bank bailouts, to name one topical example, helped the economy or hurt it.
So Levitt has spent his career looking for narrow subjects that lend themselves to empirical testing. His standard line is that he's not smart enough for macro. But he's been smart enough to avoid it and to win, in 2003, the John Bates Clark Medal, an award for the top under-40 American economist that is often the precursor to a Nobel (no, he's not really a "rogue economist"). His work also caught writer Dubner's attention, which led to the 2003 article in the New York Times Magazine that spawned Freakonomics.
Levitt describes his favored subject matter as "questions that are too embarrassing and degrading for other economists to find interesting." The pioneer at using economic methods to explore subjects not normally seen as economic was Levitt's Chicago mentor, Gary Becker, who won a Nobel in 1992 for his work on marriage, crime and other topics. A few years ago, another economist applauded this work as "economic imperialism" because it invaded realms dominated by sociologists and political scientists.
Levitt makes for an awfully diffident imperialist. When half of this year's economics Nobel went to a political scientist, he wrote that "the prize is moving toward a Nobel in social science, not a Nobel in economics." But his belief in the power of economic methods remains strong. "For me, being anchored in the data is the most important thing," Levitt says. "It's about applying data in an unemotional way to emotional issues."
Except when you can't. In Superfreakonomics, he and Dubner detour from small puzzles (can you find a terrorist by using financial data? How much money do prostitutes make?) to tackle the big, big issue of global warming. This is partly an opportunity for Levitt to express his skepticism of models of complex phenomena such as the global economy or, in this case, the global climate. Mainly, though, it's an excuse to tout the mind-blowing ideas for combatting global warming that he and Dubner learned about while hanging out with former Microsoft chief technology officer Nathan Myhrvold and his merry band of inventors (Myhrvold is a big Freakonomics fan). Like a hose 18 miles (29 km) long that would spew sulfur dioxide into the stratosphere. That's not economics. But it is freaky.