Much of Levitt and Dubner's Freakonomics is centered around the revelation of controversial or unusual information. For example, their choices of what questions to ask were unconventional to say the least. Just look at Chapter 2, titled, "How is the Ku Klux Klan Like a Group of Real-Estate Agents?". While at first the question may look ridiculous or even offensive to some, it turns out the two groups are similar in that they both proverbially 'hold all the cards'.
The way I see it, this chapter is simply how Levitt and Dubner prove the saying, "knowledge is power". It is revealed that statistically speaking, the Klan was not as rampantly violent as was perceived by the general public. This is not to say the acts of violence they did commit weren't brutal and unnecessary, but instead it shows how powerful cultural perception can be. Levitt and Dubner tell us, "there were actually more lynchings...when the Klan was dormant than during the 1920's when the Klan had millions of members". So it turns out that much of the Klan's 'dominance', if you will, stemmed from their ability to strike fear into the black community using mainly distorted facts. The authors briefly speak about claims the Klan made and how it is very possible these were just to scare people and weren't actually rooted in fact.
Once the two finished unveiling the Klan's secrets, the question of how it all related to modern day real-estate still remained. As it turns out, the two groups are similar on a fundamental level. Neither reveals the whole truth to people other than themselves. Obviously, real-estate agents aren't a hate organization, but they do have their own personal interests as their first priority.
Very early in the book, Levitt and Dubner make the point that people like real-estate agents are merely human and humans respond to incentives. So, the most prominent piece of controversy in this chapter was the revelation of how real-estate agents are happy to do less than their full ability just to close a deal and move on to the next client. Why? Because these agents main source of income is the commission they make from selling houses. So if they can make a faster sale by convincing the buyer the price their being offered is a good value, then they can get to more clients that way and ultimately make more money.
Brian I think the line that drew me into this chapter the most was probably was, "knowledge is power." The first thing that immediately came to mind was that the knowledge that someone holds in this book always stems back to a central problem, fear. The KKK held all this power because of fear and the real-estate agent held her knowledge because she feared she would have to spend more money than necessary. Teachers cheated on tests by changing answers with their knowledge so they could get past the fear of getting fired. In this book it is quite apparent that knowledge and fear go hand in hand. It is in human nature to to respond to incentives and one plain one is just fear.
ReplyDeleteBrian, another aspect of this "knowledge is power" theory could be related to that of individuals joining into an armed force such as the United States Marine Core. Some people have the decision even before they graduate high school. Unfortunately, most if not ALL young people that apply into the Core are not well educated about what they are about to get themselves into. Most have the strong sense of nationalism to help our country, but when arriving to boot camp, realize that they don't have the will power to perform the elite tasks, and quit. But lastly very good analysis, good job!
ReplyDeleteBrian, your reference to Levitt's analysis of the real estate agent's personal interest really hit home to me. My grandmother is in the process of selling the home she has lived in for the past 54 years. After the home inspection, there was a two-day discussion between my grandmother's real estate agent and the buyers' real estate agent about two windows that didn't work properly. After several e-mails back and forth it was agreed that she would take $300.00 off the accepted price. When I thought about it I bet the real estate agents were more than aggravated. The two days of haggling did nothing but waste their time and potentially lose them clients. For my grandmother's agent, who owned his agency, that meant that he would lose 2.5% of his commission, or about $7.50. The sellers' agent had to split his $7.50 loss with his office. Both agents probably would have been willing to take $3000.00 off the price of the house just to get the deal done. There was no personal interest on the part of the agents. That $300.00 meant a lot to my 84-year-old grandmother but nothing to the real estate agents. There was no incentive for the real estate agents on either side to even deal with the window issue.
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