Freakonomics Thesis

Freakonomics Thesis-47
, May 2001.† “Testing Economic Hypotheses with State-Level Data: A comment on Donohue and Levitt (2001)”. Levitt initially states that there is no “unifying theme” to the book, but there is: The introduction establishes the underlying idea that conventional wisdom is often full of misunderstandings, since one does not look into the motivations behind a situation to find the truth.

Mr Levitt says his case is based on a “collage of evidence”, of which the flawed test is one small piece.

He is, in particular, sceptical that crack undermines his thesis: it varied more by age group than by state, he says, hitting 17-year-olds in all states harder than 25-year-olds in any state.

Combining the two generates so much noise, it is hard for the statistical tests to hear anything.

Ted Joyce, a professor at Baruch College (part of the City University of New York), who has had his own methodological disagreements with Messrs Donohue and Levitt, also thinks the debate is stretching the data too far.

He points out that if you add controls for 50 states and 12 years—as Messrs Foote and Goetz do, and as Messrs Donohue and Levitt meant to do—you are, in effect, holding another 600 things constant.

This robs the data of most of their variety, and of much of their ability to explain anything.Even if abortion cuts crime, it is still immoral, they fulminate.But this is largely beside the point: Mr Levitt's research does not take a position on abortion's social virtues, but aims merely to uncover its societal effects.“The debate over abortion and crime will not be resolved within the parameters of our paper,” says Mr Donohue.He thinks the arrest figures are “muddy” and the state population data “sloppy”.Abortion, legalised throughout the United States by the Supreme Court's ruling in 1973, prevents unwanted pregnancies from becoming unwanted children.Higher abortion rates from the 1970s onwards thus help to explain why crime rates fell in America about two decades later. But a paper published last week† by Christopher Foote and Christopher Goetz, two economists at the Federal Reserve Bank of Boston, finds an embarrassing hole in the evidence.Besides, for someone of Mr Levitt's iconoclasm and ingenuity, technical ineptitude is a much graver charge than moral turpitude.To be politically incorrect is one thing; to be simply incorrect quite another.* “The Impact of Legalised Abortion on Crime”. That claim—first demonstrated by John Donohue, of Yale Law School, and Steven Levitt, of the University of Chicago, in an academic article in 2001*—is the kind of provocative and surprising conclusion that has made Mr Levitt's book, “Freakonomics”, such a runaway success this year.Unwanted children, the story goes, are more likely to become criminals in later life.

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