BUS 100 Lecture Notes - Stephen J. Dubner, Stetson Kennedy, Sumo

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FREAKONOMICS – PART 1
Freakonomics is best described by the title of its introductory chapter “The Hidden Side of
Everything”. It puts a spin on conventional wisdom by looking at it through very different and
unusual perspectives. This book was written by Steven D. Levitt and Stephen J. Dubner and was
published by HarperCollins Publishers Inc. A very unusual trait of this book is that, unlike most
books, it honestly has no theme. In fact, it is often stated within the book that there is no theme.
In the introductory chapter Stephen Levitt explained that when he and Stephen Dubner were asked
by their colleagues what the book’s theme is, they would just reply that they didn’t know and when
the colleagues tried to connect a theme to the book they would just smile and say “you’re right,
that’s the theme”. The authors’ main concern was to make people challenge conventional wisdom
and so the idea that if two things correlate with one another, it doesn’t necessarily mean that one is
the cause, and the other is the effect.
What do Sumo Wrestlers and Teachers have in common?
One of the questions Levitt asks is: Who cheats and why? Well, his studies show that even those
who seem most honorable, or who seem to have the least opportunity to do so, often cheat,
because of incentives. This is what sumo wrestlers and schoolteachers have in common.
In a study of the Chicago public school system, Levitt found that a significant percentage of
teachers helped their students pass the annual standardized tests. Why? Because the system
provides incentives to schools and teachers whose students get high scores? Under the No Child
Left Behind policy in American education, schoolchildren who get low scores on the standardized
tests get held back a year. For a school that gets low scores can get its funding cut or face closure
and a schoolteacher whose students get low scores can get demoted or fired. Conversely, schools
which do well on the tests get more funding while teachers whose students get good scores can get
promoted or receive cash bonuses. But how to measure if teachers are cheating? Levitt and
Dubner looked at a database of test answers by students from the third to seventh grade from 1993
to 2000. This amounted to roughly 30,000 students per grade per year, more than 700,000 sets of
answers, and nearly 100 million individual answers. Then they looked for unusual answer patterns
in a given classroom, such as blocks of identical answers, especially for harder questions, or a
student giving right answers for hard questions, while missing the easy ones. The study found such
unusual answer patterns and theorized that some teachers may have changed students' answers
after they took the test. To test the theory, students of teachers suspected of cheating were
asked to take a retest, with a control group of students who did well in the test but were not
suspected of having their answers changed. The result was: the students who were not
suspected of cheating did the same or better on the retest, while the students whose teachers
were suspected of cheating did much worse on the second test. As a result, several of the
suspected teachers were fired and those who weren’t got a powerful incentive against cheating
again.
Sumo wrestling is another field that is found to be prone to cheating. Sumo is the premier sport in
Japan, one that is considered to be sacred and honorable. But the incentives scheme in sumo makes
it highly prone to cheating. Each sumo wrestler needs to maintain a ranking that affects how much
he earns, what privileges and reputation he enjoys. To maintain his ranking, he needs to win at
least 8 victories out of 17 every year. On the final day of tournament, some wrestlers will have
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7-7 cards, meaning they have 7 wins and 7 loses, and need to win their final bout to maintain
their ranking. Interestingly, wrestlers with 7-7 cards often win by 80% against wrestlers who have
8-6 or 9-6 cards, even though odds often put their chances at less than 50%. This indicates that
some match rigging may be going on. Of course, one can argue that wrestlers with 7-7 cards try
harder to win because they have more at stake. However, if one looks at the win -loss percentage
of the same wrestlers the next time they fight, the data shows that the 7-7 wrestlers win only 40%
of the time against the same opponents. The most logical explanation is that some quid pro quo had
been reached between the players, something like: you let me win today, and I'll let you win the
next time. This theory, however, has always been denied by sumo officials in Japan and no
wrestler has ever been punished for cheating.
What do a group of Real Estate Agents and the Ku Klux Clan have in
common?
As the result of civil war, which freed the Blacks from slavery period, the White skin races feared
the domination of the blacks and that they will turn the white to slavery, as revenge. During this
period of time, The Ku Klux Klan emerged and gained popularity among the whites, who shared
the same fear.
The Ku Klux Klan was established in 1865, it was formed by 6 confederate general armies. The Ku
Klux Klan itself was originally a harmless midnight prank, riding horses through the country side
while draped in white sheets and pillowcase hoods. But soon, it grew to a multistate terrorist
organization.
What did they do?
The Ku Klux Klan’s mission was to promote white supremacy, against blacks, Jews and others.
Some examples of their activities is to overpower the blacks by preventing them from obtaining
the right of armed, right to elect, and reduce the activities of any school that has blacks in it. Most
of all the worst the KKK tried to make them return to the slavery by reducing their populations.
The Klan significantly claimed about 8 million members in the late 1920s. They claimed the
Southern, Catholics, Jews, communists, unionists, immigrants, agitators, and other disrupters as
their enemies. The society began to worry about the Ku Klux Klan wild activities.
Then, there was a 30 year old man named John B. Stetson Kennedy. The founder of the famed hat
company and the man for whom Stetson University was named. He first got exposed to the KKK
was when his family's maid, who pretty much played the role of his mother by raising him up got
raped by a gang of Klansmen. She got tied to a tree, beaten and raped because she talked back to a
white trolley driver who had shortchanged her. Kennedy had hatred towards small mind ness,
ignorance, and intimidation which in his view the KKK perfectly fit into the category. So,
Kennedy decided to go undercover and join the KKk.
In Atlanta he started hanging around a pool hall where he met a man who called himself Slim, a
taxi driver. Kennedy introduced himself as Perkins. He told Slim, truthfully, that his uncle back in
Florida had once been a great Titan with Klan. Slim then offers Perkins a membership for $10.
ONCE Kennedy joined the Klan, he started attending weekly meetings and learned the identities of
the Klan's local and regional leaders, rituals, and language. HE learned the secret handshake, codes
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Document Summary

Freakonomics is best described by the title of its introductory chapter the hidden side of. It puts a spin on conventional wisdom by looking at it through very different and unusual perspectives. This book was written by steven d. levitt and stephen j. dubner and was published by harpercollins publishers inc. a very unusual trait of this book is that, unlike most books, it honestly has no theme. In fact, it is often stated within the book that there is no theme. The authors" main concern was to make people challenge conventional wisdom and so the idea that if two things correlate with one another, it doesn"t necessarily mean that one is the cause, and the other is the effect. Well, his studies show that even those who seem most honorable, or who seem to have the least opportunity to do so, often cheat, because of incentives. This is what sumo wrestlers and schoolteachers have in common.

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