The idle ramblings of a Jack of some trades, Master of none

Since I'm on some sort of economic roll, I might as well point out a couple of interesting things I came across today.

Everybody and his pit-bull has heard about Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, that jazzy exemplar of lateral thought and the application of Economics to matters profound and ridiculous. Who else but Steven Levitt would have realised that the fall in crime experienced in the USA over the past few decades stemmed mainly from the Supreme Court judgement in the case of Roe vs Wade in 1973? All those morally degenerate scions of single-family, mainly African American, homes who otherwise would have raped and pillaged their way through the land were mercifully aborted in the wombs of their benighted mothers.

As it turns out, there are other economists wielding the left sides of their brains to startling effect. Another Steven, this time Landsburg (him of the Armchair Economist fame) has written an equally iconoclastic book called More Sex is Safer Sex: The Unconventional Wisdom of Economics. It is funny (“In one recent survey, 37 per cent of New Yorkers said they’d leave the city if they could. Of course, since none of them had left the city, and since all of them could, the only proper conclusion is that 37 per cent of New Yorkers lie to pollsters."), disturbingly logical (giving to one charity is better bang for the buck than giving to many, despite our 'selfish' intentions of spreading the goods), and weird (incentivise firefighters: keep the property they save but beware of them setting off fires in the search for profit).

That last bit reminds me of a hilarious book on skullduggery in the life insurance industry, which talked of similar moral hazards. Bet Your Life by Richard Dooling describes the issue faced by insurance companies in the early years of the business of people taking out policies on total strangers, murdering them, and pocketing the proceeds. Viatical insurance was a consequence: as laws banned the issue of insurance on unrelated people, it became viable for an insured person (who has to die to claim the benefit of said insurance) to sell his policy in a secondary market. This way, he could get some money up-front and the purchaser would stand to gain from his eventual death.

The bulk of the book, though, has little to do with morality. Dooling prefers to skewer the industry (which finds it more profitable to raise premia rather than prosecute fraud), and nobody - not the compulsive video-gamester narrator Carver Hartnett, nor his partner and object of frenzied horniness, Miranda Pryor, or indeed any of the other characters dotting the book - is particularly likeable or respectable.


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