The amateur economist who finds the truth in the freakiest places

FOR someone who has spent much of the last decade successfully writing about economics, Stephen Dubner is surprisingly keen to point out that he is not an economist. Following his co-authorship of Freakonomics, one of the publishing phenomena of recent years, and a sequel called Superfreakonomics, however, surely he has picked up some knowledge. Well yes, he finally admits, although he is unwilling to call himself anything more than an &ldquo;amateur expert&rdquo;.<br /><br />After spending an hour or so with Dubner, it is clear that this is typical of his modesty. In truth, the New Yorker seems rather well versed in the dismal science, as you might well expect of an author who has had to explain economic research in layman&rsquo;s terms while also making it amusing and engaging.<br /><br />The first book came about after Dubner profiled University of Chicago professor Levitt for the New York Times and was based on research that Levitt had already carried out. The follow-up was built from scratch, however, and they decided together what they wanted to include.<br /><br />&ldquo;I&rsquo;m sure we threw out a lot more than we included,&rdquo; says Dubner. &ldquo;We throw things out either if the topic becomes boring or if one of us is more enthusiastic than the other. We did have to throw out about two-thirds of a chapter on talent that we had already written. A small avalanche of books came out on the same topic and we just felt it would be silly to do it too because the books were really good.&rdquo;<br /><br />Perhaps partly as a result of his partnership with Levitt and also because he was initially putting together a book on the psychology of money when Freakonomics intervened, for Dubner the freakier and more interesting aspects of the subject lie in microeconomics &ndash; the study of individuals and decision-making &ndash; rather than in big picture macroeconomics, which has been brought into the headlines as a result of the financial crisis and the subsequent economic recession.<br /><br />Superfreakonomics addresses some of the wackiest questions that would probably have never crossed your mind: eating kangaroos could save the planet because they produce less methane than cows and prostitutes are facing stiff competition from women prepared to have pre-marital sex for free. And don&rsquo;t try to teach monkeys the concept of money &ndash; they quickly turn to crime and prostitution if you do. <br /><br />When you compare the issues addressed in Superfreakonomics to tales of global imbalances and currency fluctuations, you can easily see why Dubner prefers microeconomics. <br /><br />For Dubner, the most personally interesting topic was what has since become the most controversial: the chapter on global warming, which has been described as at best deliberately provocative and at worst plain wrong. Levitt and Dubner anticipated some controversy from their book and they certainly got it, being blasted by climate-change activists for either misrepresenting data or not taking the issues seriously enough. Dubner and Levitt have complained that they have been misrepresented in the ensuing media storm, and Dubner has written that &ldquo;in the larger scheme of things the dispute is practically meaningless, at best a very distant second to the actual climate issues on the table&rdquo;. When we met, he simply said that the chapter&rsquo;s purpose was to &ldquo;make people think a little bit differently&rdquo;. <br /><br />That phrase could be used to sum up the purposes of the Freakonomics books. But however wacky the ideas might seem, what everything boils down to in a freakonomic world is that central pillar of microeconomics: incentives. Even, says Dubner, the recession. <br /><br /><strong>MISALIGNED INCENTIVES</strong><br />&ldquo;I would say the crisis was all about misaligned incentives,&rdquo; he says. &ldquo;From the people who bought houses that could not afford them to the banks that wrote mortgages that they shouldn&rsquo;t have and the traders and financiers that commoditised these instruments while either not understanding or not appreciating the risks. They all had incentives to do exactly what they did but in total, they produced an unsustainable environment.&rdquo; <br /><br />Part of this he puts down to human beings&rsquo; innate self-interest. &ldquo;It&rsquo;s easy to say it would be great if all those people who wanted houses but couldn&rsquo;t afford them didn&rsquo;t buy them, if all those mortgage brokers who shouldn&rsquo;t have been pushing mortgages on hadn&rsquo;t, if all those bankers who shouldn&rsquo;t have been packaging them up and selling them on as loans hadn&rsquo;t, but of course they did. It&rsquo;s naive to expect that somehow we are going to wake up and say we should be less self-interested.&rdquo;<br /><br />&ldquo;Banks probably should have slightly higher capitalisation rates but when it comes to bonuses, it is absurd to go from an industry where it is very bonus driven and where bonuses are used to attract talent and then to assume that you can get rid of bonuses and attract the same kind of talent.&rdquo; <br /><br />But that doesn&rsquo;t means that self-interest should be seen as a bad thing, says Dubner. The key is to create incentives that harness self-interest to produce a good outcome. <br /><br />After spending the last four years putting the book together &ndash; he was making the last changes as late as this August &ndash; Dubner is looking forward to figuring out what the third chapter of his life will be &ndash; in the first he was part of a signed rock band until he quit during the making of the group&rsquo;s first record before becoming a writer in the second chapter.<br /><br />Not another book, at least for now, he says. &ldquo;At this moment I don&rsquo;t have the desire to sit by myself for another four years and write a book. I want to do something fairly different. If it weren&rsquo;t such a cliche and such a terrible business plan I would like to open a restaurant. But I think that would be the easiest way in the world to lose money.&rdquo;<br /><br />But fans of Freakonomics won&rsquo;t be disappointed. Levitt and Dubner are continuing their blog on the New York Times website, at least for the foreseeable future. And Dubner says that they were talking about maybe making a Freakonomics television show. &ldquo;It would be really fun,&rdquo; he says. <br /><br />Economics on the box? Now that would be freaky. <br /><br /><strong>CV </strong>STEPHEN DUBNER<br />Age: 46<br />Family: He lives in Manhattan with his wife Ellen Binder &ndash; a photographer &ndash; and their two children, aged nine and seven. <br />Career: 1999 &ndash; : Dubner has been an author and freelance journalist for Time and The New Yorker among other publications. <br />1994 &ndash; 1999: Editor and writer for The New York Times Magazine;<br />1990 &ndash; 1994: Editor and writer at New York Magazine. <br />Books: Superfreakonomics (2009); The Boy With Two Belly Buttons (2007); <br />Freakonomics (2005); Confessions of a Hero-Worshipper (2003); and Turbulent Souls: A Catholic Son's Return to His Jewish Family (1998)