Ordering the Chaos of the Contemporary World: An Introduction to Freakonomics Answers

Read the following excerpt from Levitt and Dubner’s Freakonomics.So what do the bagel data have to say? In recent years, there have been two noteworthy trends in the overall payment rate. The first was a long, slow decline that began in 1992. By the summer of 2001, the overall rate had slipped to about 87 percent. But immediately after September 11 of that year the rate spiked a full 2 percent and hasn’t slipped much since. (If a 2 percent gain in payment doesn’t sound like much, think of it this way: the nonpayment rate fell from 13 to 11 percent, which amounts to a 15 percent decline in theft.) Because many of Feldman’s customers are affiliated with national security, there may have been a patriotic element to the 9/11 Effect. Or it may have represented a more general surge in empathy.The excerpt serves as which type of support for the authors’ argument?

Which of the following statements support the claim in Freakonomics that “people are generally good even without enforcement”?

Read the following excerpt from Levitt and Dubner’s Freakonomics.There is a tale, “The Ring of Gyges,” that Feldman sometimes tells his economist friends. It comes from Plato’s Republic. A student named Glaucon offered the story in response to a lesson by Socrates—who, like Adam Smith, argued that people are generally good even without enforcement. Glaucon, like Feldman’s economist friends, disagreed. He told of a shepherd named Gyges who stumbled upon a secret cavern with a corpse inside that wore a ring. When Gyges put on the ring, he found that it made him invisible. With no one able to monitor his behavior, Gyges proceeded to do woeful things—seduce the queen, murder the king, and so on. Glaucon’s story posed a moral question: could any man resist the temptation of evil if he knew his acts could not be witnessed? Glaucon seemed to think the answer was no. But Paul Feldman sides with Socrates and Adam Smith—for he knows the answer, at least 87 percent of the time, is yes.Compared with Feldman’s argument, the tale of “The Ring of Gyges” is best described as a

Read the excerpt from Levitt and Dubner’s Freakonomics.Driving around the parks that encircle Washington, he solicited customers with a simple pitch: early in the morning, he would deliver some bagels and a cash basket to company’s snack room; he would return before lunch to pick up the money and the leftovers. It was an honor-system commerce scheme, and it worked. Within a few years, Feldman was delivering 8,400 bagels a week to 140 companies and earning as much as he had ever made as a research analyst. He had thrown off the shackles of cubicle life and made himself happy.The authors prove Feldman’s success by describing

Read the following excerpt from Levitt and Dubner’s Freakonomics.The bagel data also reflect how much personal mood seems to affect honesty. Weather, for instance, is a major factor. Unseasonably pleasant weather inspires people to pay at a higher rate. Unseasonably cold weather, meanwhile, makes people cheat prolifically; so do heavy rain and wind. Worst are the holidays. The week of Christmas produces a 2 percent drop in payment rates—again, a 15 percent increase in theft, an effect on the same magnitude, in reverse, as that of 9/11. Thanksgiving is nearly as bad; the week of Valentine’s Day is also lousy, as is the week straddling April 15. There are, however, a few good holidays: the weeks that include the Fourth of July, Labor Day, and Columbus Day. The difference in the two sets of holidays? The low-cheating holidays represent little more than an extra day off from work. The high-cheating holidays are fraught with miscellaneous anxieties and the high expectations of loved ones.Based on the excerpt, the conclusion that “personal mood seems to affect honesty” is best supported by which of the following statements?

Read the following excerpt from Levitt and Dubner’s Freakonomics.Despite all the attention paid to rogue companies like Enron, academics know very little about the practicalities of white-collar crime. The reason? There are no good data. A key fact of white-collar crime is that we hear about only the very slim fraction of people who are caught cheating. Most embezzlers lead quiet and theoretically happy lives; employees who steal company property are rarely detected.With street crime, meanwhile, that is not the case. A mugging or a burglary or a murder is usually tallied whether or not the criminal is caught. A street crime has a victim, who typically reports the crime to the police, who generate data, which in turn generate thousands of academic papers by criminologists, sociologists, and economists. But white-collar crime presents no obvious victim. From who, exactly, did the masters of Enron steal? And how can you measure something if you don’t know to whom it happened, or with what frequency, or in what magnitude?The excerpt helps the authors support their conclusion by

Read the following excerpt from Levitt and Dubner’s Freakonomics.He had also—quite without meaning to—designed a beautiful economic experiment. From the beginning, Feldman kept rigorous data on his business. So by measuring the money collected against the bagels taken, he found it possible to tell, down to the penny, just how honest his customers were. Did they steal from him? If so, what were the characteristics of a company that stole versus a company that did not? Under what circumstances did people tend to steal more, or less?Based on the excerpt, which of the following best explains why the authors included Feldman in their study?

Read the excerpt from Levitt and Dubner’s Freakonomics.In the beginning, Feldman left behind an open basket for the cash, but too often the money vanished. Then he tried a coffee can with a money slot in its plastic lid, which also proved too tempting. In the end, he resorted to making small plywood boxes with a slot cut into the top. The wooden box has worked well. Each year he drops off about seven thousand boxes and loses, on average, just one to theft. This is an intriguing statistic: the same people who routinely steal more than 10 percent of his bagels almost never stoop to stealing his money box—a tribute to the nuanced social calculus of theft. From Feldman’s perspective, an office worker who eats a bagel without paying is committing a crime; the office worker probably doesn’t think so. This distinction probably has less to do with the admittedly small amount of money involved (Feldman’s bagels cost one dollar each, cream cheese included) than with the context of the “crime.” The same office worker who fails to pay for his bagel might also help himself to a long slurp of soda while filling a glass in a self-serve restaurant, but he is very unlikely to leave the restaurant without paying.Which of the following best summarizes the main idea of this paragraph?

Read the excerpt from Levitt and Dubner’s Freakonomics.If morality represents the way we would like the world to work and economics represents how it actually does work, then the story of Feldman’s bagel business lies at the very intersection of morality and economics. Yes, a lot of people steal from him, but the vast majority, even though no is watching over them, do not. This outcome may surprise some people—including Feldman’s economist friends, who counseled him twenty years ago that his honor-system scheme would never work. But it would not have surprised Adam Smith. In fact, theme of Smith’s first book, the Theory of Moral Sentiments, was the innate honesty of mankind. “How selfish soever man may be supposed,” Smith wrote, “there are evidently some principles in his nature which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”Which best describes the authors’ purpose in using a quotation from Adam Smith’s book The Theory of Moral Sentiments?

Read the following excerpt from Levitt and Dubner’s Freakonomics.Driving around the parks that encircle Washington, he solicited customers with a simple pitch: early in the morning, he would deliver some bagels and a cash basket to company’s snack room; he would return before lunch to pick up the money and the leftovers. It was an honor-system commerce scheme, and it worked. Within a few years, Feldman was delivering 8,400 bagels a week to 140 companies and earning as much as he had ever made as a research analyst. He had thrown off the shackles of cubicle life and made himself happy.Based on the excerpt, which statement best strengthens Feldman’s claim that people are mostly honest?