The man once described as the Indiana Jones of economists arrives for our interview in a bit of a shambles, which isn't the kind of entrance one associates with Indiana Jones. Steven Levitt has just left his suitcase in the back of a New York taxi, and now his container of apple juice is leaking all over the Manhattan office of his collaborator, journalist Stephen Dubner. "Do you think I'll ever get it back?" Levitt wonders absently, in a tone that suggests no personal investment in the outcome, while Dubner mops up the puddle.
To be fair, of course, the action-hero analogy was never intended to describe Levitt's personal bearing: it was a reference to the swashbuckling spirit of the two men's bestselling book, Freakonomics, which took economics into uncharted territory, explaining such riddles as why sumo wrestlers deliberately lose matches, why estate agents don't get the best deals for their clients and why crack dealers, instead of growing rich, end up living with their mothers. Somewhere, no doubt, there are statistics on the fate of items abandoned in New York City cabs; Levitt, one of his generation's most ingenious economists, could presumably use them to ferret out proof that more suitcases get returned in sunny weather, or at Christmas, or when the taxi driver is the oldest child in his family.
Haughty academic colleagues, poring over unemployment rates and balance-of-payments deficits, accuse Levitt of cutesiness. He has no big unifying theme, they say, and nothing to say about the world financial crisis: he would rather spend his days showing how winning the Nobel prize seems to increase your longevity, or explaining the changing price charged for oral sex by prostitutes on the streets of Chicago. Picking a fight with Levitt is a dissatisfying business, though, because he tends to agree with his accusers. "To have a unifying theme, you need to be a big thinker, and that's just not the way I think," says the 42-year-old, who speaks with a slight lisp. "I think small." When Dubner, 46, interviewed him for the New York Times article that led to their collaboration on Freakonomics, which has now sold more than 3m copies worldwide, Levitt was even blunter. "I just don't know very much about the field of economics," he said.
There is plenty more cutesiness – as well as much that's genuinely fascinating – in the sequel to Freakonomics, published this month, which labours under the title of Superfreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance. But there are also arguments that promise to expose its authors to a new kind of controversy. Levitt and Dubner may have nothing to say about the financial crisis, but they have much to say about climate change, and why, in their analysis, economics shows that trying to change people's polluting behaviour is utterly pointless. The real solution, they maintain, involves pumping large quantities of sulphur dioxide into the stratosphere through an 18-mile-long hose, of which more later. "We could end this debate and be done with it," Levitt says, with a sigh, "and move on to problems that are harder to solve."
People will object to this, they acknowledge, just like they objected to the claim, in Freakonomics, that the legalisation of abortion in the 1970s was the reason for the precipitous drop in crime levels in America in the 1990s. (Unwanted children, according to this theory, are more likely to turn into criminals, so when they don't get born in the first place, crime falls.) But to Levitt and Dubner, such objections are pure emotionalism. Their job, as dispassionate analysts, is to take a cold-eyed look at how things really are, not how we would like them to be, and to deliver difficult truths with no regard for hurt feelings. "The data," they write, in the kind of phrase that recurs throughout Superfreakonomics, "don't lie."
Prostitutes, suicide bombers and swimming-pool deaths
Thus in the new book we learn, for example, that more deaths are caused per mile, in America at least, from drunk walking than drunk driving – so when you drive to a party and get plastered, it's not necessarily a wise decision to leave the car and walk home. We discover that female emergency-room doctors are slightly better at keeping their patients alive than male ones, and that Hezbollah suicide bombers, far from being the poorest of the poor, with nothing to lose, tend to be wealthier and better-educated than the average Lebanese person. There's an artful takedown of the fashionable "locavore" movement: transportation, Levitt and Dubner argue, accounts for such a small part of food's carbon footprint that buying all-local can make matters worse, because small farms use energy less efficiently than big ones. And we learn that at some point in the last 80 years, the cost of a blowjob from a Chicago prostitute went from being more expensive to less expensive than vaginal sex, as the societal taboo against oral sex – which gave it scarcity value – declined. (The average price of each, in case you were wondering, is currently $37.26 versus $80.05.)
Levitt had a thing for statistics long before his passion made him a tenured professor of economics at the University of Chicago at just 36, and won him the prestigious John Bates Clark medal, awarded to the best American economist under 40. "I was an odd child," Levitt says, and perhaps some kind of oddness was to be expected: his mother is a psychic, his father the world's leading expert on the science of farts. "My favourite thing to do was always just to go play in my room by myself, and it was always data-related . . . Every day, when my father came home from work, my job was to report the correlation coefficients between various baseball statistics."
As a Harvard undergraduate, he wrote a computer program to help his classmates decide how to pair off into groups of roommates, though it turned out that everybody disliked the same people – "and so the optimal thing to do was to put all the people who were hated together, even though they hated each other worse than everybody else did." He made an academic name for himself with quirky studies on crime, sports and politics, identifying useful patterns in mountains of data that nobody had bothered to examine. Economic analysis, as a pastime, even seemed to provide him with a measure of solace in the face of the most searing loss. Shortly after he came to Chicago, he and his wife Jeanette lost their first child, Andrew, to pneumococcal meningitis at the age of one. They joined a support group for bereaved parents. Levitt was surprised by the number of attendees whose children had died in swimming-pool accidents, and became absorbed in a new research project, which revealed, when completed, how much more dangerous it is to have a swimming-pool at your home than a gun. Such findings caught the media's imagination. When publishers began to pressure him to write a mass-market book, he said he would only do so if he wrote it with Dubner, a magazine journalist with two book-length memoirs under his belt, whose 2003 piece on Levitt had convinced him that not all journalists were destined to misunderstand and misrepresent his work.
Their mission to explain the world through numbers alone can give Superfreakonomics an oddly detached feel: major social issues are addressed, then instantly reduced to a statistical parlour game. An interesting section on the transactions between pimps and prostitutes, for example, shows that working with a pimp confers great financial advantages: they're much more helpful to prostitutes than estate agents are to house-sellers, for a start. But it neglects to consider the notion that there might, just possibly, be some negative aspects to the pimp-prostitute relationship. (The authors, apparently aware that they have made it look as if selling sex is the business plan to beat all others, add a helpful clarification: "Certainly, prostitution isn't for every woman.")
Based on interviews with a pseudonymous source in the British banking industry, they also suggest that a mathematical algorithm could be developed that would identify "potential bad guys" in advance, with reference to certain behavioural and demographic characteristics. Those arrested on charges of terrorism, they explain, are disproportionately likely to rent their home, have no savings account or life insurance, be a student, and have both Muslim first and last names. Superfreakonomics makes no mention of the possibility that the police might simply be targeting Muslims disproportionately, and Levitt seems genuinely baffled that anyone might object, on civil-liberties grounds, to targeting all those who fulfilled the relevant criteria.
"Isn't everyone in favour of that? How could you not be in favour of that? I'm not saying we should lock them up," he says. "But would it not make sense for MI5 to take a close look at those people? Of course, it's a slight inconvenience to those innocents who have MI5 scrutinise them. But economics is all about trade-offs." Incidentally, this is why, according to the book's subtitle, "suicide bombers should buy life insurance": it doesn't pay out in cases of suicide, so buying it would help evade suspicion.
Self-interest: an uncomfortable fact
Despite the lack of a unifying theme, there's an underlying message to both books, according to Levitt and Dubner, which is that "people respond to incentives". Fundamentally, we're self-interested. This doesn't necessarily mean that we're always greedy and selfish: our self-interest can include a desire for the warm glow of acting in a moral or charitable way. But people, they write, "aren't 'good' or 'bad'. People are people, and they respond to incentives. They can nearly always be manipulated – for good or ill – if only you find the right levers." Or, as Levitt puts it: "You could put Mother Teresa in a situation where she might not act altruistically, and you could put Charles Manson in a situation where he might act altruistically."
The problem with trying to reduce carbon emissions, they argue, is that the incentives are all wrong. Too many of the benefits are "externalities", from which the people making the sacrifices will never benefit – and the whole history of economics demonstrates that such completely unself-interested behaviour is impossible to implement on a large scale, especially when so many people suspect that their sacrifice would not, in fact, make a significant difference to the outcome. "Behaviour change is hopeless," Levitt says. "It's just completely pointless to think that you're going to get six billion people, the poorest people around and the richest people around, to work together, when every individual person has no impact on the problem. That's a fundamental issue that economists have thought about, and recognised the hopelessness of, for hundreds of years . . . One thing we know is that I'm not going to sacrifice, materially, my own life, to help an anonymous person in Bangladesh who might not even have been born yet, when I know that there will be no help for that person anyway." Calling on people to reduce their carbon emissions, the authors write, "is a noble invitation. But as incentives go, it's not a very strong one."
This, of course, is desperately tricky territory. My immediate personal response is that Levitt's view is irresponsible defeatism, which I find repugnant. The Superfreakonomics response to that, though, would be to ask about the source of my repugnance. Is it really because I have any hard data to suggest that such massive behavioural change might be feasible – that it wouldn't, in other words, entail a historically unprecedented transformation in human nature? Or is it just because I don't want to confront the fact that people are the way they are, which is to say fundamentally self-interested?
Sulphur dioxide: the quick fix for global warming
A large chunk of Superfreakonomics is given over to what Levitt and Dubner present as a simple, cheap alternative to all this depressing futility. They profile Nathan Myhrvold, the former chief technology officer of Microsoft, whose company, Intellectual Ventures, is exploring the possibility of pumping large quantities of sulphur dioxide into the Earth's stratosphere through an 18-mile-long hose, held up by helium balloons, at an initial cost of around $20m. The chemical would reflect some of the sun's rays back into space, cooling the planet, exactly as happened following the massive 1991 eruption of Mount Pinatubo, in the Philippines. The primary objection to this plan, as with other "geoengineering" schemes, is that there's no predicting the unknown negative effects of meddling in such a complex natural system. And it's strange, given how much is made in both Freakonomics books of the law of unintended consequences, that they don't mention this in the context of Myhrvold's plan. Still, it's hard to object to the authors' argument that this kind of potential solution should have more profile, among politicians and in the media, than it currently does.
It certainly feels wrong to deal with pollution by polluting even more. But what, Levitt and Dubner would ask, is the hard, empirical basis for that feeling? Isn't it just more emotionalism, more wishful thinking? "When you read the actual scientists' reasoning for how this could work, and might need to work," says Dubner, "it's really hard not to come to the conclusion that it's idiotic to discount it. Not to say that it's a slam-dunk to do it, but idiotic to discount it entirely."
"It's just common sense," Levitt says, with the faint exasperation of a man who sees the world in the harsh light of data, and can't quite understand why everyone else does not. "Much of economics is just common sense. What's so surprising is that it is so rarely actually applied in daily life."
SuperFreakonomics by Steven Levitt & Stephen Dubner is published by Allen Lane, price £20. Levitt and Dubner will be speaking at the LSE, Peacock Theatre, London on Monday 9 November at 6.30pm.
A day in the life of Steven Levitt
6.30am: Get up, sneak in a little bit of work. Then I take my kids to school around 8. We live just a few blocks away, and my office at the university is right across the street from the school. I'll have some coffee.
9am: More or less spend the rest of the day working at a computer, analysing data, or sitting around with my research assistants, reviewing what they're doing and figuring out what to do next. If I'm lucky, I'll get to sneak off for a little session at the driving range. I've become a golf nut.
6.30pm: I made a deal with my wife, when we moved two blocks from the university, that I'd be home by 6.30. My wife often plays high-stakes online poker in the evenings, which frees me up to do email and work, as well as putting the kids to bed. My other hobby is betting on horse racing, so I spend some reviewing the day's racing.
11pm: Bed.
A day in the life of Stephen Dubner
5.30am: Awake, pour coffee. Because my nine-year-old son usually races out between 6:00 and 6:15 to talk about the previous night's sporting events, I use this early time to read some news, answer some overnight emails, and moderate comments on our blog.
7am: Go for a run, reluctantly, in Central Park.
8.30am: Walk across the street to my writing studio.
8.35am-11am: Write. No phone or internet during this time.
11am: Catch up on morning phone calls and e-mails.
11.30am: Lunch! Am starved by now since I wake up early and don't eat breakfast. If I make the mistake of eating breakfast, I want to go back to bed and/or eat again immediately.
12.30pm-3pm: Write.
3pm-6pm: Catch up on emails, phone calls, reading, do some blog writing. Call my wife to see if everyone is still alive and well, that no fires have been set, that my children haven't earned any suspension notices at school.
6.05pm: Home for dinner with the family, a bit of homework, a boardgame or some catch, and then the four of us read together in bed for a while. If the day's writing has been particularly good or particularly bad, a glass of scotch will be involved. I am usually ready to sleep soon after the children doze off. While in the middle of writing a book, I have a hard time reading other books for pleasure. Now that Superfreak is done, I've begun again and found it wonderful.
9pm: Program the coffee machine . . .