When I share that I am studying International Business, Finance, and Economics, I usually get three responses from people having no experience in this area:
1. “Isn’t business, finance, economics, accounting, and management all the same?”
2. “This sounds really boring and dry. “
3. “Well, good for you but I always found this subject to be really distant from me.”
I gave up long time ago trying to explain the differences between finance, economics, accounting, and business (yes, they are as different as physics, chemistry, and biology). I also gave up convincing others that my studies do not encompass only numbers, calculations, and graphs. After all I find my course quite interesting and stimulating and I am sticking to my point.
Personally, I have my preferences and I have always found finance to be much more exciting and challenging than economics and accounting. The former for me was just dry theories about consumer behavior, demand and supply, inflation and exchange rates, GNP and GDP. The latter – well I hate accounting as soon as I think of the endless balance sheets, income statements, and cash flows I had to calculate.
Reading Freakonomics by Steven Levitt and Stephen Dubner I realized I judged economics far too quickly. It has the potential to be a really exciting, amusing, and unpredictable subject. It just depends on your attitude, your approach, and the questions you ask yourself. I strongly recommend the book to all those, who have no idea what economics is about and quickly judge it “by the cover” and to all those who actually study it but hate its strict theoretical models, implications, and rules.
Freakonomics is the product of a rather strange cooperation: Levitt is a young, eminent, and unordinary economist and Dubner is a journalist. Levitt graduated from Harvard University with a BA in Economics and received his Phd in MIT. Currently, he is a professor in the University of Chicago.
The two of them came together to prove 4 basic points about economics: incentives are the main causes in modern economics, conventionality is often wrong, events sometimes have distant and strange causes, and experts use their knowledge in their advantage. Instead of looking at endless statistical data, equations, or tables, Levitt attempts to defend these four postulates by asking weird questions: Why do all drug dealers live with their mothers?; What do schoolteachers and sumo wrestlers have in common?; What makes a perfect parent? You might consider these topics as far from economics as the sun is from the earth but do not be quick to judge before you read at least one chapter. Levitt is not just another mediocre economist, who decided to make some money by shocking people. He won the John Bates Clark medal, awarded to the most promising US economists under 40 (the equivalent of a Noble Price under 40, I would say) and was chosen by Time’s Magazine as one of the “100 People, who shape our world”. If this is not an inspiration to check Freakonomics out, than I do not know what is.
Of course, this novel has many critics, who claim it is NOT really about economics as it parts from the conventional and strict economic theory. What I like about Levitt can be summarized in two points: 1) He found a way to show that economics is not a boring academic subject; in fact it is quite exciting and offers may new exploratory possibilities; and 2) He admitted he was terrible in statistics in university. Obviously, this did not affect his development as many consider him one of the most prominent and innovative economists of our generation.
The Steven-Stephen tandem has published a sequel, Superfreakonomics, due to the unbelievable success of the first one. I can’t wait to read what more startling questions and proves Levitt has prepared for us. What I will always remember from the first novel is how he defended and convinced that crime rates are not connected only to police control, laws, and income, but are highly linked to legalized abortion! Are you already running to the bookstore to find out why?