Italy to Include Prostitution and Illegal Drugs in GDP

Bloomberg reports that Italy will now begin including its shadow economy in the country’s GDP, in an effort to reduce the national deficit:

Italy will include prostitution and illegal drug sales in the gross domestic product calculation this year, a boost for its chronically stagnant economy and Prime Minister Matteo Renzi’s effort to meet deficit targets.

Drugs, prostitution and smuggling will be part of GDP as of 2014 and prior-year figures will be adjusted to reflect the change in methodology, the Istat national statistics office said today. The revision was made to comply with European Union rules, it said.

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The Thinking Person’s Guide to Betting the Belmont Stakes

It has been 36 years since a horse won the Triple Crown. California Chrome has a chance to make history today if he wins the Belmont Stakes, the last leg of the Triple Crown.

So how should you bet the race? California Chrome will be a prohibitive favorite, partly because he deserves to be based on past performances, and partly because it is fun and exciting to be able to say that you bet on the horse who won the Triple Crown. I can remember the specifics of very few horse races, but I still remember exactly where I was watching on TV when Secretariat won the Triple Crown because I had decided after the Preakness that he was my favorite horse. I was six years old. It’s fun to feel a connection to a champion.

Most likely, way too much money will be bet to win on California Chrome, for the reasons above. The more money that is bet on him, the worse the odds. I doubt that it will be a smart bet to play California Chrome to win. Read More »



Failure Is Your Friend: A New Freakonomics Radio Podcast

This week’s episode is called “Failure Is Your Friend.” (You can subscribe to the podcast at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.)

This is a natural followup to last week’s episode, “The Upside of Quitting.” Why are so many people so reluctant to quit projects or jobs or relationships that have soured? One reason, Stephen Dubner argues, is that we tend to equate quitting with failure, and there’s a huge stigma attached to failure. But … should there be? In their new book Think Like a Freak, Dubner and Steven Levitt  argue that perhaps we’re not thinking clearly about failure. Failure, they say, can be your friend:

LEVITT: I always tell my students — fail quickly. The quicker you fail the more chances you have to fail at something else before you eventually maybe find the thing that you don’t fail at.

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The Upside of Quitting: A Freakonomics Radio Rebroadcast

This week’s podcast is a rebroadcast of our episode called “The Upside of Quitting.”  (You can subscribe at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript.)

You know the saying “a winner never quits, and a quitter never wins.” To which Freakonomics Radio says … Are you sure? Sometimes quitting is strategic, and sometimes it can be your best possible plan. To help us understand quitting, we look at a couple of key economic concepts in this episode: sunk costs and opportunity costs. Read More »



Think Like a Child: A New Freakonomics Radio Podcast

Our latest podcast is called “Think Like a Child.” (You can subscribe to the podcast at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.) Why would anyone want to think like a child? Aren’t kids just sloppy, inchoate versions of us, who can’t even say “I Don’t Know”?

Hardly. As Stephen Dubner and Steve Levitt describe in their new book, Think Like a Freak, thinking like a child can be very fruitful.

 LEVITT: I think the beauty of thinking like a child … is that sometimes doing things differently and simply and with a kind of joy and triviality leads you to a really special place that as an adult you don’t get to go to very often.

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Mr. Poo

I visited India for the first time a few years ago, and ever since I have been thinking about the enormous problem of public defecation. It is not quite as au courant a topic as, say, human trafficking, but in terms of the number of lives affected, it has massive implications because of the spread of disease.

The latest attempt to make progress on this problem is a music video launched by UNICEF. Read More »



How About Paying Parents for Their Kids’ Good Grade? This Guy Is Really Thinking Like a Freak

In  Think Like a Freak, we touch briefly on paying schoolkids for good grades — which, much of the time, isn’t successful. This inspired a note from a reader named Gary Crowley, who describes himself as “an economics major in college many years ago”:

Hey Guys,

Loved Think Like a Freak.

One thought: Why don’t we trying paying parents for kids getting good grades??? If the parents are motivated to make money, from someone else’s hard work, then they’ll make the kids work harder and want them to stay in school.  I think paying the kids doesn’t take  advantage of the leverage of a parent over their child.  Just a thought.

As a child in the feudal system of a blue-collar Irish-Catholic East Coast family, my Dad took great pride in and took the credit for his beautiful lawn. This would be the same lawn that his children did all the work on. Haha. Don’t see why it wouldn’t work for grades. And I’m sure the parents would be just as proud, even if they’re getting paid.

Gary’s note may also be referring to a brief passage in Think about the parents of schoolkids: Read More »



A Freakonomics Proposal to Help the British National Health Service

In the first chapter of our new book, Think Like a Freak, we recount an ill-fated interaction that Dubner and I had with David Cameron shortly before he was elected Prime Minister of the U.K. (In a nutshell, we joked with Cameron about applying the same principles he espoused for health care to automobiles; it turns out you don’t joke with Prime Ministers!)

That story has riled up some people, including an economics blogger named Noah Smith, who rails on us and defends the NHS.

I should start by saying I have nothing in particular against the NHS, and I also would be the last one to ever defend the U.S. system.   Anyone who has ever heard me talk about Obamacare knows I am no fan of it, and I never have been. Read More »



Saying “I Don’t Know” in the Navy, the Classroom, and Beyond

The best part of publishing a new book – besides the media blitz — is learning which stories resonate with readers and podcast listeners, and how.

One great example is the book’s second chapter, “The Three Hardest Words in the English Language,” which is about how  people are reluctant to say “I don’t know” when in fact they don’t know the answer to a question or the solution to a problem.

We explored this topic in last week’s podcast, and I wanted to share with you some of the most interesting feedback. Read More »



The Three Hardest Words in the English Language: A New Freakonomics Radio Podcast

This week’s episode is called “The Three Hardest Words in the English Language.” (You can subscribe to the podcast at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.)

So what are the three hardest words? Conventional wisdom suggests: “I love you.” Readers of this blog recently offered up their suggestions of challenging three-word phrases. In their new book Think Like a Freak, Stephen Dubner and Steve Levitt tell us that the hardest three words in the English language are “I don’t know,” and that our inability to say these words more often can have huge consequences. Read More »