Savings, incentives and Freakonomics

Stephen Dubner tried to avoid writing about University of Chicago economist Steven Levitt for the New York Times Magazine, not once, but three times. The journalist was writing a book about the psychology of money and just couldn't get excited about profiling an economist. He read some of Levitt's unorthodox research, such as the study linking abortion and lower crime rates. Still, Dubner had his doubts.

"My fear that [the magazine story] would be a total dud was confirmed when the first call I got the morning it came out was Levitt's own mom," Dubner said. Levitt grew up in the Twin Cities.

How wrong he was. The profile led the pair to write the bestseller "Freakonomics," which examines the way we live using the tools of a research economist, but with cocktail-party conversation results. A sequel and a New York Times blog followed. Now, five years after Freakonomics went viral, Levitt and Dubner have launched a radio and podcast partnership with Minnesota Public Radio's parent company American Public Media. And "Freakonomics" the movie just opened in Minneapolis.

I spoke with Dubner in advance of his speech at a Temple Israel fundraiser later this month. The conversation has been edited for length.

QAs the mom of three, I found the research about baby names and success in life featured in both the book and the movie to be extremely interesting.

AReaders like that chapter more than any other. I can't tell you how many people have written to us to get hold of more data on parents' education level for certain names. Sitting in the maternity ward, 'My wife's about to give birth. These are the names we're thinking about. Please, please, please tell me the one.'

So many people come to the wrong conclusion. We try to empirically show that a name doesn't matter for the outcome of a person's life and yet all kinds of people read the book and in the film there's the impression that 'Oh yeah, you'd better watch out what you name your kid,' whereas we're saying this is a classic case of correlation not equalling causation. This little girl Temptress [in the movie]: Did her name actually have anything to do with her outcome? Absolutely not. But the fact that you have a parent who is going to give you a name like that says so much about the situation you're born into.

AWhat most people think when they think of academic economics is macro-economics and macro predictions. Levitt is using the tools that are usually applied to studying the economy to look at interesting scenarios in the real world. Things like corruption and cheating, things like the causes of crime. Things like the influence of a parent. Basically you're trying to isolate a cause from an effect -- which can be much harder than you think. And the tools of economics turn out to be often really helpful in doing that.

QI'm sure people are always asking you to apply the Freakonomics lens to problems. So fix this problem for me: How do we get people to save more?

AWhy do we assume we want people to save more? People have been given such massive incentives to not save that to just say 'Hey, people should be saving more' is kind of a cruel expectation. Here's an entire economy built on consumerism, essentially, and part of that economy is built on giving people access to anything they want, any time, right now. Now we're saying 'Hey, this didn't work out so well because some people helped blow up the system and now you people need to change your personal behavior!'

QThe theme "Incentives matter" winds throughout the film and your books. Surely we can find an incentive to save?

AI think incentives are powerful when they work. But it can be hard to make them work and often you don't know what will work. Like the story Levitt tells in the film about his daughter and the M&Ms? (His potty-training daughter quickly learned that more bathroom breaks equal more candy.) He's a smart guy and he got played by a 3-year-old.

QI imagine that in your speech at Temple Israel you'll talk about your memoir "Choosing My Religion," about growing up in a Jewish-turned-Catholic family and your journey back to Judaism. Religion feels like a topic very far from economic writing. Is there anything that links the two?

AWhat they have in common to me is a kind of abiding desire and curiosity to get beneath the surface of how things got to be that way and figure out why. I like to be an observer and that dates back to when I was a little kid and my dad, who was a newspaper man, played this game called "Powers of Observation" where he would say, 'Look around. Pay attention to everything that's happening. The waitress, people's orders.' And then he'd say 'Close your eyes' and then he would grill me. 'Does the waitress write left-handed or right-handed? The people behind us, what did they order?'

It was this very simple little spy game and I loved it. I've just always been quite transfixed with seeing what's on the surface and then trying to figure out how it got to be that way.

Kara McGuire • 612-673-7293 or kmcguire@startribune.com. Read her blog: www.startribune.com/kablog.