Economics Bestseller “Super Freakonomics” Answers “Why Suicide Bombers Should Buy Life Insurance?” (Hint: To make it harder to datamine them!)
by Efin Advisor | October 24, 2009
The New York Times’ runaway bestseller, “Freakonomics,” was a worldwide sensation that sold more than four million copies in 35 languages and changed the way we think about number-crunching and socio-economics.
Now, the distinguished writing team of University of Chicago economist Steven D. Levitt and journalist Stephen J. Dubner has released “Super Freaknonmics: Why Suicide Bombers Should Buy Life Insurance.” The mix of sharp thinking and great storytelling uses the same no holds barred, street-smart approach to exploring societies ills, asking (and answering) questions like” “What’s the best mathematical way to catch a terrorist?” “What do hurricanes, heart attacks and highway deaths have in common?” Or, “Why are doctors so bad at washing their hands?”
Illustrating the statistical science of datamining, the authors showcase research on how economists use information to both unearth and debunk startling trends in society. They examine whether TV has caused a rise in crime? Or whether hospital emergency rooms can do more harm than good for the average patent? Or whether eating Kangaroo save the planet? One such case study looks at the efforts to identity terrorists from a databased standpoint by looking at personal financial trends, including life insurance, to tell them apart!
For example, when looking at the metrics of known terrorists or those most likely to become a terrorist, the candidates were predominately men between the ages of twenty-six and thirty-five that were disproportionately likely to: own a mobile phone, be a student and rent, rather than own, a home.
There were also some prominent negative indicators. The data showed that a would-be terrorist was disproportionately unlikely to: have a savings account, withdraw money from an ATM on a Friday afternoon, or buy life insurance.
The no ATM-on-Friday metric would seem to be a proxy for a Muslim who attends that day’s mandatory prayer service. The life insurance marker is a bit more interesting. Let’s say you’re a twenty-six-year-old man, married with two young children. It makes sense to buy some life insurance so your family can survive if you happen to die young. But insurance companies don’t pay out if the policyholder commits suicide. So a twenty-six-year-old family man who suspects he may one day blow himself up probably isn’t going to invest money in life insurance.
In the above example of a bank examiner was able to use these financial and lifestyle ijnfo-metrics to take a database of millions of bank customer and generate a list of about 30, uninsured, and highly suspicious individuals! That’s Super Freakonomics!
As the renowned statistician Jon Tukey once said,” An approximate answer to the right question is worth a great deal more than a precise answer to the wrong question.” The Freakonomics book comes up with the right questions.
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The Father of Freakonomics was Gary Becker who has written many books, papers and articles that should be widely read, including “The Economic Approach to Human Behavior,” He also made an amazing Nobel Prize acceptance speech!
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The economists behind Freakonomics are just the kind of “eggheads” this world needs. Instead of political or cultural spin, the numbers are what they are…they do not lie, tilt or obfuscate. Would recommend both the books to anyone looking for a clear and objective take on the many bizarre issues and challenges of our day.
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