Still More Reviews of Freedomnomics

Cao has a nice review of Freedomnomics over at her blog:

Freedomnomics explains a lot of things in an easy-to-understand conversational way. He surprises the reader with fascinating information. I’d never stopped to think, for example, that there is a relationship between the increasing number of out-of-wedlock births and abortion and increasing crime statistics.5 Did you know that? Or that there is a relationship between single parent and cohabitating unmarrieds and children who are not engaged in school, children who cut school, children who don’t perform well in school, etc. . . . .

David Henderson also has a nice review of Freedomnomics:

For the first years of its existence, radio seemed like an economic loser without government subsidy. No one could figure out how to make listeners pay, and, consequently, radio hosts and entertainers usually worked for free. In 1922, Herbert Hoover, then Secretary of Commerce, asserted, "Nor do I believe there is any practical method of payment from the listeners." But that same year, AT&T discovered that it could make money by selling ad time on radio. It sounds obvious now, but it wasn’t then. After that, radio thrived and is still thriving.

John Lott tells that story and many others – and tells them well – in his latest book, Freedomnomics. . . . .

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Anonymous Hyde Park said...

I just received my copy in the mail and have just started reading it. While so far I enjoy the analysis there seem to be a few problems.

For example on page 33 in the discussion of predatory pricing, the phrase “a predatory firm has to raise prices even higher than the price had been before the predation effort” seems to imply that the potential predator must price after the predation to create profits for them equal to what they would have earned if there were no competitor, however this is not the choice – the real choice is between the expected profits with the competitor and the expected profits without the competitor less the cost of predation. In both cases the predator is likely to be worse off. The predator has also created a credible deterrent to entry for the next company that looks at the market.
This doesn’t mean I think there is tons of predatory pricing – just that the logic isn’t as solid as it could be or that the case is more complex than described.

As for cola on page 26, I have difficulty accepting that the price for seltzer, almost 2x the cola was due simply to a materials difference and seems unlikely. Other factors such as differences in the velocity of sales and value to consumers due to different use occasions seem more likely. I many track down footnote 20 to find out what the whole argument is but I’m not sure.

An interesting example of what I am pretty sure is price discrimination is diet beverages in India – Diet coke or Pepsi was usually 2x that of regular coke.

7/12/2007 1:11 AM  
Anonymous Cao said...

It was my pleasure, I am still referring to sections in there, and absorbing the part about campaign finance reform.

Thanks for the link.

7/12/2007 5:49 PM  

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