Chapter 4

This chapter started out stunning me by explaining about the insane leaders of Romania, named Nicolas and Madame Ceausescu. What really stunned me was when the author explained how they bugged there own children to ensure loyalty to them. Madame Ceausescu also required that she have 40 homes!! What really bothered me about these leaders was there policy on birth control in Romania, and how they forced women to have children. It shocked me how they would take women from work to get a pregnancy test, and if they continued to not conceive they were given a steep "celibacy tax"!! Nicolas Ceausescu and his wife had an ironic ending when the young people, with an average age of 13-20, protested his regime in 1989. This resulted in Nicolas to be put on trial and got him a punishment of death by firing squad. If it wasn't for his ban on abortion, and forced births, the majority of protesters wouldn't have been alive. I like how the author used this history to compare how legalized abortion resulted in the drop of the crime rate in America. Out of the eight crime drop explanations that were given I believe I would have leaned towards increased prison time as the major factor. But I do believe that legalized abortion was the biggest factor that dropped the crime rate in the late 1990's, because mothers who knew that they couldn't raise there child in a positive environment were able to prevent the child from growing up in adverse conditions. A quote from the book that supports this is that, "since 1985, states with high abortion rates have experienced about 30% drop in crime relative to low abortion rates." This is an interesting "unintended benefit" of abortion. I found it fascinating that in Switzerland every adult male is given an assault rifle for militia duty and is allowed to keep it at home. But what's even more interesting is that it is one of the safest places on earth and it has the highest per capita basis with firearms.

Chapter 3

I thought it was interesting how the author compared a capitalist business, like McDonalds specifically, to the crack business. There are similarities, like how the customers aren't usually known, product is sold fast, and relatively cheap. I also liked how he compared a turf war between drug dealers with a price war between Burger King and McDonalds. Then I was very interested when he went into the details about a student, named Venkatesh, who lived with a Chicago crack dealer for around six years. What was really amazing was how the student got the spiral notebooks from a dealer that was ahead of the financials of his drug dealing business that consisted of four years of finances. It showed an interesting view of the crack dealing business. JT, who was the head of the crack dealers in his area in Chicago and had a college degree, made $100,000 tax free, and this doesn't include extras that were pocketed! This is a very powerful factor that attract's smaller dealers who want to make it to the top. Small time crack dealers, or foot soldiers, who try to become leaders only make around $3.30 an hour, which is far less than minimum wage. This was the obvious reason of why crack dealers live with there moms. The most shocking figure out of the notebooks was that the "board of directors", who led the leaders of the crack dealers, made $500,000 tax free!! These were crazy numbers to me, because I knew that crack dealers could make money, but six digit figures is pretty shocking to me. These big numbers obviously came with a big risk, in JT's gang case there was a 1 in 4 chance that a member of the gang was going to be killed. It was also interesting how there weren't old drug dealers, dealers in there 30's, until crack exploded in inner city's. What was really fascinating, and which I had heard about before, was how the CIA was responsible for the introduction of crack cocaine in inner city's. The "Johnny Appleseed of Crack", named Oscar Blandon, said that he was able to sell crack with impunity for years because of the CIA. I can see how corrupt officials in the CIA would be able to be bribed by drug dealers, because of the enormous amount of money that is made from crack dealing. I think a majority of people will probably disagree with that, but a majority of people were convinced that Iraq needed to be invaded, because of "WMD's."

Chapter 2

I thought it was interesting how he compared the KKK, stock brokers, and real estate agents based on the fact that they have there own circle of private information and once the information was made public it started to negatively affect the group. Like the example of when John Brown was an inside man in the KKK and he broadcasted his findings on the radio, which resulted in the attendance rate to drop at future meetings. This makes sense because if everyone had all the information that a real estate agent had, which is becoming more of a possibility with the internet, then they are not needed any more. I agree that information asymmetry is becoming a thing of the past because of the internet. An example was shown with term life insurance, and how when websites started popping up comparing prices, term life insurance prices dropped. The next study that got me thinking was the online dating sites and the stats that go along with them. When guys listed that they were looking for casual encounters they ended up getting less emails in proportion to women who put the same thing. Also, blond girls as well as guys with higher incomes got more emails than others, which is something that I would have expected to occur. The story about Duke of the KKK who had a mailing list of thousands of KKK members was pretty funny. Duke sold the list for a large amount of money and then used it again after he sold it to satisfy his gambling addiction by sending out a sad story about almost losing his house and needing money. This resulted in him receiving more money. So he basically robbed other KKK members by proclaiming one thing and using the money for his addiction, which is pretty funny because all those involved were KKK members and deserved to get robbed. The basic lesson I got from the chapter was know how to find the difference between the information proclaimed and what the truth really is.

Chapter 1

This chapter went into detail about the different types of incentives, which are social, economic, and moral.
The economic incentive example that he used was with teachers, and it occurred in 1996. The incentive was a $25,000 bonus reward that was given to schools that do good on standardized testing. The economic incentive spiked the number of good performing schools, which turned out to be because of cheaters; mostly poor performing schools with younger less qualified teachers. Before implementing this bonus, one would have probably thought, what if there was cheating involved, but then again these are teacher's we are talking about. Well, teachers are humans too and when faced with a moral dilemma, they too can succumb to greed. I thought it was interesting how they used an algorithm to weed out the classrooms that really needed to retake the test, because of big fluctuations in there score. This resulted in the firing of teachers, and the next time the test was administered cheating fell 30%!
The sumo wrestler thing was a shock to me, because, like the Japanese, I thought that they had an enormous amount of discipline and respect in the sport, which would prevent cheating from ever happening. But, it made sense to me how stables would work out deals, so that the sumo with the bubble score 7-7, would be allowed to win. When there was a rematch between the two sumo's again, the majority of sumo's who had the bubble score could not win the rematch. When there is money and fame on the line, whether its moral or immoral, anything can happen.
The bagel story, which was based on the honor system, makes me think twice about the negative aspects of human nature. But then again, it was done in an area where people worked and had to be professional, so if he, lets say, had them setup outside a restaurant where anyone off the street could take one, then I believe there would be a lot more thefts involved. But I can see how it would work at a work place where there is a much better chance of theft staying at a minimum.

Introduction

This chapter got me pretty interested and prepared for what to expect from this book, because at first I had no idea how the author was going to use economics to discuss interesting issues. The basic message that I got from the introductory chapter was too look at the hidden incentives behind things when examining different situations, and how looking from a third person view of something can help clear up the picture. Here are some examples of associations that were made in the book that really got me thinking.
First, I thought it was interesting how he associated the Roe v Wade decision and abortion with lowering the crime rate. The theory behind this was because abortion was made legal, people who could not raise children properly because of the situation that they were in would be able to terminate the birth, so as not to raise the child in the adverse conditions that they are in. This created a smaller pool of children who would have been brought up in adverse conditions, and who would have had a greater chance of becoming criminals because they couldn't be guided by proper role models/parents. This made sense to me, because those kids who are raised in bad neighborhoods are going to have a harder time deciphering whats right or wrong in the future, because most of there parents who are living in those conditions either don't know correct morals themselves, or don't have time to teach there kids because they are struggling to work to put food on the table and clothes on there kids backs. This means that the children will end up learning there values on the streets, which could either make the child extremely tough and motivated to have a better life, or continue in the wrong direction.
The next statement that got my attention was how, on average, real estate brokers leave there personal homes on 10 days longer, and sell for more, because of there incentive to obviously get as much money as possible out of a sale. A real estate broker will try to sell there client's home as quickly as possible, because an additional increase in mark up is not a big enough increase in there commission to be an incentive to try to get as much money as possible from a sale. This also makes complete sense to me, because a real estate broker is not going to wait an additional few weeks for an additional few hundred dollars of commission, it makes more sense to bang out the sale and move on to the next house.
The last idea was how an area with low birth rates actually has more cesarean section operations, because of a doctors incentive for a more expensive procedure and bigger payout. Money is an influential factor in people's lives, and as we saw with Enron, professionals can become criminals at the right price. This was not completely convincing to me, but it once again was a valid point.