Why Use the Best Lumber in a House That Won’t Last?

A Freakonomics Radio listener named Kevin wrote in response to our recent episode called “Why Are Japanese Homes Disposable?” First, here’s a quick summary of that episode:

It turns out that half of all homes in Japan are demolished within 38 years — compared to 100 years in the U.S.  There is virtually no market for pre-owned homes in Japan, and 60 percent of all homes were built after 1980. In Jiro Yoshida’s estimation, while land continues to hold value, physical homes become worthless within 30 years. Other studies have shown this to happen in as little as 15 years.

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Confessions of a Paid Line-Sitter

Racked interviews entrepreneur and professional line-sitter Robert Samuel.  Samuels started his line-sitting venture, Same Old Line Dudes (SOLD Inc.), as the iPhone 5 was launched:

I was an employee at AT&T, and I lost my job. I wanted to supplement my income because I used to sell iPhones, and this time I wasn’t going to be able to sell them and make a big commission check. I live a few blocks from the Apple store on 14th Street, so I said, “Let me wait in line for somebody else and make them happy.”

The guy that hired me cancelled and said he wasn’t going to use me—he was just going to get it online but that he was still going to pay me. He paid me $100 and I resold the spot and made another $100, and then I called my friends and told them to come on down, because I just made $200 standing in one spot on a weekday afternoon.

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Some Evidence on Whether Money Buys Political Influence

A new paper by graduate students David Broockman and Josh Kalla tackles an eternal, oft-debated question: does money buy influence? Here’s the abstract:

Concern that lawmakers grant preferential treatment to individuals because they have contributed to political campaigns has long occupied jurists, scholars, and the public. However, the effects of campaign contributions on legislators’ behavior have proven notoriously difficult to assess. We report the first randomized field experiment on the topic. In the experiment, a political organization attempted to schedule meetings between 191 Members of Congress and their constituents who had contributed to political campaigns. However, the organization randomly assigned whether it informed legislators’ offices that individuals who would attend the meetings were contributors. Congressional offices made considerably more senior officials available for meetings when offices were informed the attendees were donors, with senior officials attending such meetings more than three times as often (p < 0.01). Influential policymakers thus appear to make themselves much more accessible to individuals because they have contributed to campaigns, even in the absence of quid pro quo arrangements. These findings have significant implications for ongoing legal and legislative debates. The hypothesis that individuals can command greater attention from influential policymakers by contributing to campaigns has been among the most contested explanations for how financial resources translate into political power. The simple but revealing experiment presented here elevates this hypothesis from extensively contested to scientifically supported.

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Not-So-National Merit

Last December, thousands of high school sophomores and juniors learned the results of the 2013 Preliminary SAT (PSAT) test.  The juniors’ test scores will be used to determine whether they qualify as semifinalists for the prestigious National Merit Scholarship, which in turn makes them eligible for a host of automatic college scholarships.  (Sophomores take the test just as practice.)

The juniors will have to wait to find out for sure if they qualify until September, just before they begin submitting applications to colleges across the country.  But it is fairly straightforward to predict, based on their scores and last year’s cutoffs, whether they will qualify as semifinalists.

Many students would be surprised to learn that qualification depends not only on how high they score, but also on where they go to school.   The National Merit Scholarship Corporation (NMSC) sets different qualifying cutoffs for each state to “ensure that academically talented young people from all parts of the United States are included in this talent pool.”  They have not disclosed any specific criteria for setting the state cutoffs. Read More »

Is Uber Making the Taxi Market More Efficient?

The Economist analyzes the microeconomics of Uber’s controversial “surge” pricing model, in which users are charged significantly higher prices during high-demand times:

There is some evidence Uber’s surge pricing is improving taxi markets. The firm says drivers are sensitive to price, so that the temptation to earn more is getting more Uber drivers onto the roads at antisocial hours. In San Francisco the number of private cars for hire has shot up, Uber says. This suggests surge pricing has encouraged the number of taxis to vary with demand, with the market getting bigger during peak hours.

However, the inflexibility of Uber’s matchmaking fee, a fixed 20% of the fare, means that it may fail to optimize the matching of demand and supply. In quiet times, when fares are low, it may work well. Suppose it links lots of potential passengers willing to pay $20 for a journey with drivers happy to travel for $15. A 20% ($4) fee leaves both sides content. But now imagine a Friday night, with punters willing to pay $100 for a ride, and drivers happy to take $90: there should be scope for a deal, but Uber’s $20 fee means such journeys won’t happen.

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Bring Your Think Like a Freak Questions for Levitt and Dubner

On May 12, Levitt and I will publish our third book, Think Like a Freak. We cannot wait for you to read it. Here’s how the publisher describes it:

The New York Times-bestselling Freakonomics changed the way we see the world, exposing the hidden side of just about everything. Then came Super-Freakonomics, a documentary film, an award-winning podcast, and more.

Now, with Think Like a Freak, Steven D. Levitt and Stephen J. Dubner have written their most revolutionary book yet. With their trademark blend of captivating storytelling and unconventional analysis, they take us inside their thought process and teach us all to think a bit more productively, more creatively, more rationally—to think, that is, like a Freak.

Levitt and Dubner offer a blueprint for an entirely new way to solve problems, whether your interest lies in minor lifehacks or major global reforms. As always, no topic is off-limits. They range from business to philanthropy to sports to politics, all with the goal of retraining your brain. Along the way, you’ll learn the secrets of a Japanese hot-dog-eating champion, the reason an Australian doctor swallowed a batch of dangerous bacteria, and why Nigerian e-mail scammers make a point of saying they’re from Nigeria.

You can read more about the book, check out our tour dates, and of course preorder it: the book will come in all formats including e-book, audio, large-print, and in translation around the world. We will also start up our fee-signed-bookplate-mailing program so that you can get your books autographed.

In the meantime, how about a Freakonomics Radio FAQ episode about the new book? Use the comments section below to ask us anything you want. Here’s the book’s Table of Contents to get you started … Read More »

Does the Absence of Cash Help Cut Crime?

A new working paper (abstract; ungated PDF not available) by Richard Wright, Erdal Tekin, Volkan Topalli, Chandler McClellan, Timothy Dickinson, and Richard Rosenfeld analyzes the effects of delivering welfare benefits via Electronic Benefit Transfer (EBT) instead of checks (which are easily converted to crime-fueling cash):

It has been long recognized that cash plays a critical role in fueling street crime due to its liquidity and transactional anonymity. In poor neighborhoods where street offenses are concentrated, a significant source of circulating cash stems from public assistance or welfare payments. In the 1990s, the Federal government mandated individual states to convert the delivery of their welfare benefits from paper checks to an Electronic Benefit Transfer (EBT) system, whereby recipients received and expended their funds through debit cards. In this paper, we examine whether the reduction in the circulation of cash on the streets associated with EBT implementation had an effect on crime. To address this question, we exploit the variation in the timing of the EBT implementation across Missouri counties. Our results indicate that the EBT program had a negative and significant effect on the overall crime rate as well as burglary, assault, and larceny. According to our point estimates, the overall crime rate decreased by 9.8 percent in response to the EBT program. We also find a negative effect on arrests, especially those associated with non-drug offenses. EBT implementation had no effect on rape, a crime that is unlikely to be motivated by the acquisition of cash. Interestingly, the significant drop in crime in the United States over several decades has coincided with a period of steady decline in the proportion of financial transactions involving cash. In that sense, our findings serve as a fresh contribution to the important debate surrounding the factors underpinning the great American crime decline.

Black-Market Study Notes in Korea

We recently got an e-mail from a reader we’ll call C.:

I’m a professor at an English-language liberal arts college in Seoul, South Korea, where I teach Greco-Roman classics in translation. Compared to most any American school, the academic climate here is hyper-competitive, and my Korean students are studying machines who will do whatever it takes to get good marks. If you’re familiar with the insanity of Korean education, those are my students, the ones who’ve spent years in private tutoring academies 6 days a week, doing nothing but preparing for our admissions exam.

I just learned through the grapevine that some students who took my freshman core course on Western Civ. are selling their notes, study guides, and reconstructed versions of the exam. The prices they charge current freshmen vary, depending upon the grade the seller received from me. Students who did very well (A or A+) can charge $200 for their notes; students who received Bs can ask $120 to $150. Students with a B- or lower can’t find buyers.

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How to Make People Quit Smoking: A New Freakonomics Radio Podcast

Our latest Freakonomics Radio episode is called “How to Make People Quit Smoking.” (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.) The gist: the war on cigarettes has been fairly successful in some places. But 1 billion humans still smoke — so what comes next?

In the U.S., roughly 70 percent of smokers say they want to quit. But when they try, some 90 percent of them fail. So what does get people to smoke less? Something must be working: the smoking rate in the U.S. has fallen by more than half.

Kenneth Warner, an economist at the University of Michigan School of Public Health, has been doing tobacco-policy research since the 1970’s. One of the most powerful smoking deterrents, he says, is making cigarettes more expensive. Read More »

Think Like a Freak: Our New Book Out on May 13

Good news (for us at least): our new book is done! It’s called Think Like a Freak. It will be published on May 13; but you can pre-order now on Amazon.com, B&N.com, iTunes, or any of your finer online bookshops.

Think Like a Freak is, like our two earlier books, a blend of storytelling and data. But Think has a slightly different mission than Freakonomics and SuperFreakonomics. Here’s how we explain it in the first chapter:

The first two books were rarely prescriptive. For the most part, we simply used data to tell stories we found interesting, shining a light on parts of society that often lay in shadow. This book steps out of the shadows and tries to offer some advice that may occasionally be useful, whether you are interested in minor lifehacks or major global reforms.

Although we tell a million stories in Think,  the emphasis is usually on problem-solving:

It strikes us that in recent years, the idea has arisen that there is a “right” way to think about solving a given problem and of course a “wrong” way too. This inevitably leads to a lot of shouting—and, sadly, a lot of unsolved problems. Can this situation be improved upon? We hope so. We’d like to bury the idea that there’s a right way and a wrong way, a smart way and a foolish way, a red way and a blue way. The modern world demands that we all think a bit more productively, more creatively, more rationally; that we think from a different angle, with a different set of muscles, with a different set of expectations; that we think with neither fear nor favor, with neither blind optimism nor sour skepticism. That we think like—ahem—a Freak.

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