Real estate agents’ motivations can lead to actions that aren’t in the best interest of their clients. By understanding their incentives, clients can make more informed decisions. 	“An agent keeps the entire premium from selling your house for a higher price, but shares the commission from a quicker sale.”

Real Estate Agent’s Incentives

11.	Fear’s Role: Drives irrational decisions.	12.	Cheating Incentives: High pressure can lead to corruption.	13.	Real Estate Agents: Understand their motivations﻿14.	Drug Dealer Hierarchies: Similar to corporate structures.	15.	Secret Knowledge: Used for power and influence.	16.	Economic Disparities: Historical and economic factors perpetuate inequality.

The structure of drug-dealing organizations is similar to that of legitimate businesses, with most profits concentrated at the top, leaving little for lower-level workers. 	“It turns out that dealing crack is a lot more like working at McDonald’s than you might have thought.”

Why Crack Dealers Still Live With Their Mothers

Social norms and economic incentives often conflict, shaping behavior in different ways. Understanding this dynamic helps explain actions that seem irrational. 	“Economic incentives are more powerful than social norms.”

Social Norms Vs Economic Influence

The authors explore what really matters in parenting, suggesting that many commonly held beliefs about child-rearing have little effect on future success. 	“What matters most is who you are, not what you do.”

The Impact of Parenting Styles

1.	Incentives Drive Behavior: Understanding incentives explains actions.	2.	Look Beyond the Obvious: Question conventional wisdom.	3.	Drug Dealing Economics: Similar to legitimate businesses.	4.	Information Asymmetry: Creates power imbalances.	5.	Crime and Abortion: Legalization linked to crime reduction.﻿6.	Parenting Impact: Who you are matters more than what you do.	7.	School Choice: Family background is crucial.	8.	Names Matter: Influence perceptions and opportunities.	9.	Experts’ Agendas: Evaluate advice critically.	10.	Social Norms vs. Incentives: Shape behavior differently.

Levitt emphasizes looking beyond the obvious to uncover hidden truths. By questioning conventional wisdom, we can reveal surprising insights about human behavior and societal trends. 	“Morality, it could be argued, represents the way that people would like the world to work—whereas economics represents how it actually does work.”

The Hidden Side of Everything

Names carry significant social and economic implications. They can influence how individuals are perceived and the opportunities available to them. 	“If you name your child Winner, he might end up a loser; if you name him Loser, he might end up a winner.”

The Power of Names

Fear often drives irrational decisions. By recognizing the impact of fear, we can make more rational choices and better understand societal behaviors. 	“The conventional wisdom is often wrong.”

The Role of Fear In Decision-Making

Both the Ku Klux Klan and real estate agents use secret knowledge to gain power and influence. By exposing this information, their power can be diminished. 	“Sunlight is said to be the best of disinfectants.”

The Ku Klux Klan & Real Estate Agents

When one party has more information than another, it creates a power imbalance. This concept explains various phenomena, from car sales to internet fraud. 	“Information is a beacon, a cudgel, an olive branch, a deterrent—all depending on who wields it and how.”

Information Asymmetry

Experts often have their own agendas, which can skew their advice and decisions. Understanding this helps us critically evaluate the information we receive. 	“An expert doesn’t so much argue the various sides of an issue as plant his flag firmly on one side.”

Experts & Their Influence

School choice has a complex impact on student performance. The study suggests that the family background and the desire for a better education are more important than the school itself. 	“It isn’t so much a matter of what you do as a parent; it’s who you are.”

School Choice & Student Performance

Incentives to succeed can lead to cheating, whether in standardized testing or professional sumo wrestling. Both cases illustrate how pressures can corrupt integrity. 	“Cheating is a primordial economic act: getting more for less.”

Cheating Teachers & Sumo Wrestlers

Drug dealers operate like any business, with hierarchies, salaries, and economic pressures. Many street-level dealers earn low wages and live in poverty, contrary to popular belief. 	“In a gang, the top 2.2 percent of gang members made up 25 percent of the total gang profit.”

The Economics of Drug Dealing

The book explores how historical and economic factors perpetuate racial and economic disparities. Understanding these dynamics helps explain persistent inequality. 	“The conventional wisdom is often shoddily formed and self-interested.”

The Dynamics of Racial & Economic Disparities

Levitt controversially links the legalization of abortion to a significant drop in crime rates, arguing that unwanted children are more likely to grow up in adverse conditions that lead to criminal behavior. 	“Legalized abortion led to less unwantedness; unwantedness leads to high crime; legalized abortion, therefore, led to less crime.”

Crime & Abortion Coorelation

Solving a problem is hard enough; it gets that much harder if you’ve decided beforehand it can’t be done.

1.	Incentives Are the Cornerstone of Modern Life	2.	The Hidden Side of Everything	3.	The Economics of Drug Dealing	4.	Information Asymmetry	5.	Crime and Abortion Correlation	6.	The Impact of Parenting Styles	7.	School Choice & Student Performance	8.	The Power of Names	9.	Experts and Their Influence	10.	Social Norms vs. Economic Incentives	11.	The Role of Fear in Decision-Making	12.	Cheating Teachers & Sumo Wrestlers	13.	Real Estate Agents’ Incentives	14.	Why Crack Dealers Still Live with Their Moms	15.	The Ku Klux Klan and Real Estate Agents	16.	The Dynamics of Racial & Economic Disparity

Topics You’ll Master Today

Incentives drive behavior in every aspect of life. Understanding these motivations helps explain why people do what they do, from committing crimes to donating to charity. 	“People respond to incentives, although not necessarily in ways that are predictable.”

Incentives Are The Cornerstone of Modern Life

Uncover the hidden truths of everyday life and human behavior through surprising economic insights.

En esta obra, Levitt y Dubner demuestran, a través de ejemplos y una sarcástica perspicacia, que la economía representa el estudio de los incentivos. ¿Qué resulta más peligroso: una pistola o una piscina? ¿Qué tienen en común un maestro de escuela y un luchador de sumo? ¿Por qué continúan los traficantes de drogas viviendo con sus madres? ¿En qué se parecen el Ku Kux Klan a los agentes inmobiliarios? Quizás éstas no sean las típicas preguntas que se formula un experto en economía, pero Steven D. Levitt y Stephen J. Dubner no son unos economistas muy típicos. Se trata de especialistas que estudian la esencia y los enigmas de la vida cotidiana y cuyas conclusiones, con frecuencia, ponen patas arriba la sabiduría convencional. A través de ejemplos prácticos y de una sarcástica perspicacia, Levitt y Dubner demuestran que la economía, en el fondo, representa el estudio de los incentivos: el modo en que las personas obtienen lo que desean, o necesitan, especialmente cuando otras personas desean o necesitan lo mismo.

Information Asymmetry

Similar ideas to Information Asymmetry

Asymmetric Information

Too Much Information, Too Little Attention

6. Journalist