When to Rob a Bank: ...And 131 More Warped Suggestions and Well-Intended Rants Read online

  Dedication

  We dedicate this book to our readers.

  We are perpetually wowed by your vigor and

  grateful for your attention.

  Contents

  Dedication

  What Do Blogs and Bottled Water Have in Common?

  1 We Were Only Trying to Help

  2 Limberhand the Masturbator and the Perils of Wayne

  3 Hurray for High Gas Prices!

  4 Contested

  5 How to Be Scared of the Wrong Thing

  6 If You’re Not Cheating, You’re Not Trying

  7 But Is It Good for the Planet?

  8 Hit on 21

  9 When to Rob a Bank

  10 More Sex Please, We’re Economists

  11 Kaleidoscopia

  12 When You’re a Jet . . .

  The Highest Praise Anyone Could Ever Give

  Acknowledgments

  Notes

  Index

  About the Authors

  Also by Steven D. Levitt & Stephen J. Dubner

  Credits

  Copyright

  About the Publisher

  What Do Blogs and Bottled Water Have in Common?

  ©iStock.com/MrPlumo

  Ten years ago, as we were about to publish a book called Freakonomics, we decided to start a companion website. It was called, unimaginatively, Freakonomics.com. The site happened to offer a blogging function.

  Levitt, who is always a few years behind, had never heard of a blog, much less read or written one. Dubner explained the idea. Levitt remained unconvinced.

  “Let’s just give it a try,” Dubner said. It was so early in our partnership that Levitt hadn’t yet come to understand that those six words were Dubner’s way of getting him to do all sorts of things he never intended to do.

  So we gave the blog a try. Here’s the first post we wrote:

  Unleashing Our Baby

  Every parent thinks he has the most beautiful baby in the world. Evolution, it seems, has molded our brains so that if you stare at your own baby’s face day after day after day, it starts to look beautiful. When other people’s children have food clotted on their faces, it looks disgusting; with your own kid, it’s somehow endearing.

  Well, we’ve been staring at the Freakonomics manuscript so much that it now looks beautiful to us—warts, clotted food, and all. So we started to think that maybe some people would actually want to read it, and after reading it, might even want to express their opinions about it. Thus, the birth of this website. We hope it’s a happy (or at least happily contentious) home for some time to come.

  And it has been a happy home! Our blog writing tends to be more casual, more personal, more opinionated than how we write our books; we are just as likely to float a question as to give a concrete answer. We’ve written things we only thought halfway through and later regretted. We’ve written things we did think through but also later regretted. But mostly, having the blog gave us good reason to stay curious and open about the world.

  Unlike that first post, the vast majority of the blog entries were written by just one of us, not the pair, as in our book writing. We sometimes asked friends (and even enemies) to write for the blog; we’ve held “quorums” (asking a bunch of smart people to answer a tough question) and Q&As (with people like Daniel Kahneman and a high-end call girl named Allie). For several years, The New York Times hosted the blog, which gave it a veneer of legitimacy that wasn’t quite warranted. But the Times eventually came to its senses and sent us off to do the thing we do, once more on our lonesome.

  All these years, we routinely asked ourselves why we kept blogging. There was no obvious answer. It didn’t pay; there wasn’t any evidence the blog helped sell more copies of our books. In fact it may have cannibalized sales, since every day we were giving away our writing. But over time we realized why we kept at it: our readers liked reading the blog, and we loved our readers. Their curiosity and ingenuity and especially their playfulness have kept us at it, and in the pages to follow you will see ample evidence of their spirit.

  Occasionally a reader would suggest that we turn our blog writing into a book. This struck us as a colossally dumb idea—until, one day not long ago, it didn’t. What changed? Dubner was dropping off one of his kids at summer camp in Maine. In the middle of nowhere, they came upon a huge Poland Spring water-bottling plant. Having grown up in the middle of nowhere himself, Dubner had always thought it strange that so many people would pay good money for a bottle of water. And yet they do, to the tune of roughly $100 billion a year.

  Suddenly a book of blog posts didn’t seem so dumb. So in the tradition of Poland Spring, Evian, and other hydro-geniuses, we’ve decided to bottle something that was freely available and charge you money for it.

  To be fair, we did go to the trouble of reading through the whole blog and picking out the best material. (It was gratifying to find that among eight thousand mostly mediocre posts, we actually had some good ones.) We edited and updated the posts as necessary, arranging them into chapters that make book sense. Chapter One, for instance, “We Were Only Trying to Help,” addresses the abolition of academic tenure, alternatives to democracy, and how to think like a terrorist. “Limberhand the Masturbator and the Perils of Wayne” is about names that are strange, fitting, or strangely fitting. “When You’re a Jet . . .” shows that once you start thinking like an economist, it’s hard to turn it off—whether the subject is baby formula, animated films, or rancid chicken. Along the way, you will learn more than you ever wanted to know about our personal obsessions like golf, gambling, and the dreaded penny.

  It has given us gargantuan pleasure over the years to put our warped thoughts into writing. We hope you enjoy peeking inside our heads to see what it’s like to view the world through Freakonomics-colored glasses.

  CHAPTER 1

  We Were Only Trying to Help

  ©iStock.com/kumdinpitak

  Some of the best ideas in history—nearly all of them, in fact—sounded crazy at first. That said, a lot of crazy-sounding ideas truly are crazy. But how do you find out? One of the best things about having a blog is that you’ve got a place to run your craziest ideas up the flagpole and see just how quickly they get shot down. Of all the posts we’ve ever written, the first one in this chapter generated the quickest, loudest, angriest response.

  If You Were a Terrorist, How Would You Attack?

  (SDL)

  The TSA recently announced that most airplane carry-on restrictions will stay in place for now, although the ban has now been lifted on cigarette lighters. While it seems crazy to keep people from bringing toothpaste, deodorant, or water through security, it didn’t seem so strange to ban lighters. I wonder whether the lighter manufacturers were lobbying for or against this rule change. On the one hand, having twenty-two thousand lighters confiscated per day would seem good for business; on the other hand, maybe fewer people will buy lighters if they can’t travel with them.

  Hearing about these rules got me thinking about what I would do to maximize terror if I were a terrorist with limited resources. I’d start by thinking about what really inspires fear. One thing that scares people is the thought that they could be a victim of an attack. With that in mind, I’d want to do something that everybody thinks might be directed at them, even if the individual probability of harm is very low.

  Humans tend to overestimate small probabilities, so the fear generated by an act of terrorism is greatly disproportionate to the actual risk.

  Also,
I’d want to create the feeling that an army of terrorists exists, which I’d accomplish by pulling off multiple attacks at once, and then following them up with more shortly thereafter.

  Third, unless terrorists always insist on suicide missions (which I can’t imagine they would), it would be optimal to hatch a plan in which your terrorists aren’t killed or caught in the act, if possible.

  Fourth, I think it makes sense to try to stop commerce, since a commerce breakdown gives people more free time to think about how scared they are.

  Fifth, if you really want to impose pain on the U.S., the act has to be something that prompts the government to pass a bundle of very costly laws that stay in place long after they have served their purpose (assuming they had a purpose in the first place).

  My general view of the world is that simpler is better. My guess is that this thinking applies to terrorism as well. In that spirit, the best terrorist plan I have heard is one that my father thought up after the D.C. snipers created havoc in 2002. The basic idea is to arm twenty terrorists with rifles and cars, and arrange to have them begin shooting randomly at pre-set times all across the country. Big cities, little cities, suburbs, etc. Have them move around a lot. No one will know when and where the next attack will be. The chaos would be unbelievable, especially considering how few resources it would require of the terrorists. It would also be extremely hard to catch these guys. The damage wouldn’t be as extreme as detonating a nuclear bomb in New York City, of course, but it sure would be a lot easier to obtain a handful of guns than a nuclear weapon.

  I’m sure many readers have far better ideas. I would love to hear them. Consider that posting them on this blog could be a form of public service: I presume that a lot more folks who oppose and fight terror read this blog than actual terrorists. So by getting these ideas out in the open, it gives terror fighters a chance to consider and plan for these scenarios before they occur.

  This post was published on August 8, 2007, the day the Freakonomics blog took up residence on The New York Times’s website. That same day, in an interview with The New York Observer, Dubner was asked to explain why Freakonomics was the first outside blog that the Times had decided to publish. His answer reflected the fact that he used to work at the newspaper and knew well its standards and mores: “They know I’m not going to issue some sort of fatwa on the blog.” As it turns out, Levitt’s post soliciting ideas for a terrorist strike was considered exactly that. It drew so much heated response that the Times shut down the comments section after a few hundred comments. Here is a typical one: “You have got be kidding me. Ideas for terrorists? Think you are being cute? Clever? You are an idiot.” This led Levitt to try again, the following day:

  Terrorism, Part II

  (SDL)

  On the very first day that our blog was hosted by The New York Times, I wrote a post that generated the most hate mail I’ve gotten since the abortion-crime story first broke almost a decade ago. The people e-mailing me can’t decide whether I am a moron, a traitor, or both. Let me try again.

  A lot of the angry responses make me wonder what everyday Americans think terrorists do all day. My guess is that they brainstorm ideas for terrorist plots. And you have to believe that terrorists are total idiots if it never occurred to them after the Washington, D.C., sniper shootings that maybe a sniper plot wasn’t a bad idea.

  The point is this: there is a virtually infinite array of incredibly simple strategies available to terrorists. The fact that it has been six years since the last major terrorist attack in the United States suggests either that the terrorists are incompetent, or that perhaps their goal isn’t really to generate terror. (A separate factor is the prevention efforts by law enforcement and the government; I’ll address that later.)

  Many of the angry e-mails I received demanded that I write a post explaining how we stop terrorists. But the obvious answer is a disappointing one: if terrorists want to engage in low-grade, low-tech terror, we are powerless to stop it.

  That is the situation in Iraq right now, and, to a lesser degree, in Israel. That was also more or less the situation with the IRA a while back.

  So what can we do? Like the British and Israelis have done, if faced with this situation, Americans would figure out how to live with it. The actual cost of this low-grade terrorism in terms of human lives is relatively small, compared to other causes of death like motor-vehicle crashes, heart attacks, homicide, and suicide. It is the fear that imposes the real cost.

  But just as people in countries with runaway inflation learn relatively quickly to live with it, the same happens with terrorism. The actual risk of dying from an attack while riding a bus in Israel is low—and so, as Gary Becker and Yona Rubinstein have shown, people who have a lot of experience riding Israeli buses don’t respond much to the threat of bombings. Similarly, there is little wage premium for being a bus driver in Israel.

  Beyond this, I think there are a few more prospective things we can do. If the threat is from abroad, then we can do a good job screening risky people from entering the country. That, too, is obvious. Perhaps less obvious is that we can do a good job following potential risks after they enter the country. If someone enters on a student visa and isn’t enrolled in school, for instance, he is worth keeping under close surveillance.

  Another option is one the British have used: putting cameras everywhere. This is very anti-American, so it probably would never fly here. I also am not sure it is a good investment. But the recent terrorist attacks in the U.K. suggest that these cameras are at least useful after the fact in identifying the perpetrators.

  The work of my University of Chicago colleague Robert Pape suggests that the strongest predictor of terrorist acts is the occupation of a group’s territory. From that perspective, having American troops in Iraq is probably not helping to reduce terrorism—although it may be serving other purposes.

  Ultimately, though, it strikes me that there are two possible interpretations of our current situation vis-à-vis terrorism.

  One view is this: the main reason we aren’t currently being decimated by terrorists is that the government’s anti-terror efforts have been successful.

  The alternative interpretation is that the terror risk just isn’t that high and we are greatly overspending on fighting it, or at least appearing to fight it. For most government officials, there is much more pressure to look like you are trying to stop terrorism than there is to actually stop it. The head of the TSA can’t be blamed if a plane gets shot down by a shoulder-launched missile, but he is in serious trouble if a tube of explosive toothpaste takes down a plane. Consequently, we put much more effort into the toothpaste even though it is probably a much less important threat.

  Likewise, an individual at the CIA isn’t in trouble if a terrorist attack happens; he or she is only in trouble if there is no written report that details the possibility of such an attack, which someone else should have followed up on, but never did because there are so many such reports written.

  My guess is that the second scenario—the terrorism threat just isn’t that great—is the more likely one. Which, if you think about it, is an optimistic view of the world. But that probably still makes me a moron, a traitor, or both.

  How About a “War on Taxes”?

  (SJD)

  David Cay Johnston, who does an incredible job covering U.S. tax policy and other business issues for The New York Times, reports that the IRS is outsourcing the collection of back taxes to third parties, a.k.a. collection agencies. “The private debt collection program is expected to bring in $1.4 billion over 10 years,” he writes, “with the collection agencies keeping about $330 million of that, or 22 to 24 cents on the dollar.”

  Maybe that seems like too big a cut to surrender. And maybe people will be worried about the collection agencies having access to their financial records. But what’s most striking to me is that the IRS knows who owes the money and knows where to find it, but because it is understaffed cannot afford to collect it. So it h
as to hire someone else to do it, at a stiff price.

  The IRS admits that external collection is far more expensive than internal collection. Former commissioner Charles O. Rossotti once told Congress that if the IRS hired more agents, it “could collect more than $9 billion each year and spend only $296 million—or about three cents on the dollar—to do so,” Johnston writes.

  Even if Rossotti was exaggerating by a factor of five, the government would still be getting a better deal by hiring more agents than by contracting to a third party that takes a 22 percent cut. But Congress, which oversees the IRS budget, is famously reluctant to give the agency more resources to do its job. We touched on this subject in a Times column of our own:

  A main task of any IRS commissioner . . . is to beg Congress and the White House for resources. For all the obvious appeal of having the IRS collect every dollar owed to the government, it is just as obviously unappealing for most politicians to advocate a more vigorous IRS. Michael Dukakis tried this during his 1988 presidential campaign, and—well, it didn’t work.

  Left to enforce a tax code no one likes upon a public that knows it can practically cheat at will, the IRS does its best to fiddle around the edges.

  Why does Congress act as it does? Maybe our congressmen are a bunch of history buffs so imbued with the spirit of our republic that they remember the Boston Tea Party too well and are scared of how the populace might revolt if they ramp up tax enforcement. But keep in mind that we are talking about tax enforcement here, which is the IRS’s job, and not tax law, which is Congress’s responsibility. In other words, Congress is happy to set the tax rates that it does; but it doesn’t want to be seen as giving too much comfort to the bad cops who have to go out and collect those tax dollars.

  So maybe they need to relabel their effort to get all the tax money that is owed. Since Congress approves so much money for the War on Terror and the War on Drugs, maybe it’s time for them to launch a War on Taxes—well, really, a War on Tax Cheats. What if they could demonize the tax cheats so thoroughly, emphasizing that the “tax gap” (the difference between taxes owed and money collected) is about the size of the federal deficit: Would that make it more politically palatable to give the IRS the resources to collect the money that is owed? Maybe they could put pictures of tax cheats on milk cartons, on flyers at the post office, even on America’s Most Wanted. Would that do the trick? Would a properly managed War on Tax Cheats fix the problem?