Colorado College economics professor Mark Smith said in the introduction to tonight’s lecture that for years, he always got one of three reactions when he told people he was an economics professor (paraphrased):

(1) About 50% of the time, they would say something like “I took one economics course as an undergrad and I hated it.” Then the person would wander off to find someone more interesting to talk to (Smith noted that his wife falls into this category).
(2) “So, what do you think is going to happen with the economy?” Smith is a microeconomist and this is a macroeconomics question, so he gauges the person’s intelligence and attention span, strings together some unrelated facts, and goes to find someone more interesting to talk to.
(3) “I read this article in Mother Jones about how the black market in handbags in Italy is, like, 500% of Italy’s above-ground economy. Is that true?” Enough said.

But since Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, by economist Steven D. Levitt and journalist Stephen J. Dubner, people actually ask Smith questions about microeconomics.

Freakonomics made economics sexy for the average person, or at least the average person who reads books. Also, it has an eye-catching and clever cover (that’s an apple with an orange inside, if you can’t tell):

I read Freakonomics sometime last year, before my brain was eaten by the thesis (which is no longer a thesis; I don’t want to talk about it). I very much enjoyed it; it’s a fascinating read even for someone like me who’d never thought much about economics. In some ways, it’s as much sociology as economics.

So I was ridiculously excited when I heard that Levitt would be speaking at Colorado College tonight. The lecture was funded by the H. Chase Stone Memorial Endowment and arranged by the CC Economics Department. The audience filled the largest building on campus and spilled over into Max Kade Theatre in Armstrong Hall to watch a live video feed. Much of the audience consisted of faculty and Colorado Springs community members, but there were still quite a few students.

Levitt opened with some discussion of how the book came about (a much more entertaining version than the one in the book) and then told one of the stories from the book, about Sudhir Venkatesh, a sociologist who spent a lot of time studying Chicago gangs, and a study they did about the economics of drug-dealing gangs. You can read the book for that story–it’s in chapter 3, “Why Do Drug Dealers Still Live with Their Moms?”

The rest of the lecture had to do with prostitution and altruism (two different studies!). Below the cut I’ll be summarizing, so be aware.

Venkatesh and Levitt are currently collaborating on a study of street-level prostitution in Chicago (after street-level drug dealing, the “second worst job in America” in terms of wage to potential consequence ratio, according to Levitt). The study isn’t published yet–he said I could look for it in three to five months or so–so he couldn’t go into details, but the basic methodology involves giving the prostitutes “tracking sheets” on which they write down information about their tricks. One of the interesting findings is that about 1 in 10 tricks are freebies to the local police.

After a while, the police started finding these tracking sheets when they arrested prostitutes. Levitt and Venkatesh were initially concerned that they’d be used as evidence to prosecute the women, which was not their goal at all. But it turned out that the police weren’t interested in using the tracking sheets to prosecute, nor were they upset that one of the questions was, in effect, “Was this a freebie to a cop?” They were passing the data around in fascination!

The final part of Levitt’s talk was about a sociological study intended to quantify altruism. In the lab, people tended towards altruism–unless they were giving the option of stealing, in which case they tended to steal. But if forced to work for the money first, both altruism and theft almost vanished.

It was a good talk, and quite funny–Levitt’s a good speaker, and realistic about his work (one of the things he pointed out was that for every ten problems he studies, he usually only solves one of them, after months of work).

Not sure whether you want to buy the book? Monkey Business: Keith Chen’s Monkey Research is my favorite of the articles on their website. Apparently, when you teach monkeys about money, they start acting a lot like humans, down to theft and prostitution. They also gamble subjectively, like humans, rather than by the odds (as economists would predict). This article is one of my favorite pieces of science writing, both for its fascinating subject matter and its style.

The other articles from their New York Times Magazine column are also available on their website, and Levitt and Dubner have a blog, which is the place to watch if you want to know when the prostitution study is published.

Edit 22 May 2006: You can listen to a podcast from the Colorado College website.