Steven Levitt
Encyclopedia
Steven David "Steve" Levitt (born May 29, 1967) is an American
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...

 known for his work in the field of crime, in particular on the link between legalized abortion and crime rates
Legalized abortion and crime effect
The effect of legalized abortion on crime is the theory that legal abortion reduces crime. Proponents of the theory generally argue that since unwanted children are more likely to become criminals and that an inverse correlation is observed between the availability of abortion and subsequent crime...

. Winner of the 2004 John Bates Clark Medal
John Bates Clark Medal
The John Bates Clark Medal is awarded by the American Economic Association to "that American economist under the age of forty who is adjudged to have made a significant contribution to economic thought and knowledge"...

, he is currently the William B. Ogden Distinguished Service Professor of Economics at the University of Chicago
University of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...

, director of the Becker
Gary Becker
Gary Stanley Becker is an American economist. He is a professor of economics, sociology at the University of Chicago and a professor at the Booth School of Business. He was awarded the Nobel Memorial Prize in Economic Sciences in 1992, and received the United States' Presidential Medal of Freedom...

 Center on Chicago Price Theory at the University of Chicago Booth School of Business. He was co-editor of the Journal of Political Economy
Journal of Political Economy
The Journal of Political Economy is an academic journal run by economists at the University of Chicago and published every two months by the University of Chicago Press. The journal publishes articles in both theoretical economics and empirical economics...

published by the University of Chicago Press
University of Chicago Press
The University of Chicago Press is the largest university press in the United States. It is operated by the University of Chicago and publishes a wide variety of academic titles, including The Chicago Manual of Style, dozens of academic journals, including Critical Inquiry, and a wide array of...

 until December 2007. He co-authored the best-selling book Freakonomics
Freakonomics
Freakonomics: A Rogue Economist Explores the Hidden Side of Everything is a 2005 non-fiction book by University of Chicago economist Steven Levitt and New York Times journalist Stephen J. Dubner. The book has been described as melding pop culture with economics, but has also been described as...

(2005) and its sequel Superfreakonomics (2009). In 2009, Levitt co-founded The Greatest Good, a business and philanthropy consulting company. He was chosen as one of Time magazine's
Time (magazine)
Time is an American news magazine. A European edition is published from London. Time Europe covers the Middle East, Africa and, since 2003, Latin America. An Asian edition is based in Hong Kong...

 "100 People Who Shape Our World" in 2006.

Career

Levitt was born in 1967 and attended St. Paul Academy and Summit School
St. Paul Academy and Summit School
St. Paul Academy and Summit School is a college preparatory independent day school in St. Paul, Minnesota, for students in grades K–12....

, graduated from Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...

 in 1989 with his B.A.
Bachelor of Arts
A Bachelor of Arts , from the Latin artium baccalaureus, is a bachelor's degree awarded for an undergraduate course or program in either the liberal arts, the sciences, or both...

 in economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

, and received his Ph.D.
Ph.D.
A Ph.D. is a Doctor of Philosophy, an academic degree.Ph.D. may also refer to:* Ph.D. , a 1980s British group*Piled Higher and Deeper, a web comic strip*PhD: Phantasy Degree, a Korean comic series* PhD Docbook renderer, an XML renderer...

 in economics from MIT in 1994. He is currently the William B. Ogden Distinguished Service Professor and the director of The Becker Center on Price Theory at the University of Chicago
University of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...

. In 2004 he won the John Bates Clark Medal
John Bates Clark Medal
The John Bates Clark Medal is awarded by the American Economic Association to "that American economist under the age of forty who is adjudged to have made a significant contribution to economic thought and knowledge"...

, awarded bi-annually by the American Economic Association
American Economic Association
The American Economic Association, or AEA, is a learned society in the field of economics, headquartered in Nashville, Tennessee. It publishes one of the most prestigious academic journals in economics: the American Economic Review...

 to the most promising U.S. economist under the age of 40.
In April 2005 Levitt published his first book, Freakonomics (coauthored with Stephen J. Dubner
Stephen J. Dubner
Stephen J. Dubner is an American journalist who has written four books and numerous articles. Dubner is best known as co-author of the pop-economics book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything and its 2009 sequel, SuperFreakonomics.-Background:His parents were...

), which became a New York Times bestseller. Levitt and Dubner also started a blog (www.freakonomics.com).

Work

His work on various economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 topics, including crime
Crime
Crime is the breach of rules or laws for which some governing authority can ultimately prescribe a conviction...

, politics
Politics
Politics is a process by which groups of people make collective decisions. The term is generally applied to the art or science of running governmental or state affairs, including behavior within civil governments, but also applies to institutions, fields, and special interest groups such as the...

 and sport
Sport
A Sport is all forms of physical activity which, through casual or organised participation, aim to use, maintain or improve physical fitness and provide entertainment to participants. Sport may be competitive, where a winner or winners can be identified by objective means, and may require a degree...

s, includes over 60 academic publications. For example, his An Economic Analysis of a Drug-Selling Gang's Finances (2000) analyzes a hand-written "accounting" of a criminal gang, and draws conclusions about the income distribution among gang members. In his most well-known and controversial paper (The Impact of Legalized Abortion on Crime
The Impact of Legalized Abortion on Crime
"The Impact of Legalized Abortion on Crime" is a controversial paper by John J. Donohue III of Yale University and Steven Levitt of University of Chicago that argues that the legalization of abortion in the 1970s contributed significantly to reductions in crime rates experienced in the 1990s...

(2001), co-authored with John Donohue
John J. Donohue III
John Donohue is a law professor and economist widely known for his writings on effect of legalized abortion on crime and criticism of the More Guns, Less Crime theory of John Lott.-Biography:John J. Donohue III was born on January 30, 1953...

), he shows that the legalization of abortion in the US was followed approximately eighteen years later by a reduction in crime, then argues that unwanted children commit more crime than wanted children and that the legalization of abortion resulted in fewer unwanted children, and thus a reduction in crime as these children reached the age at which many criminals begin committing crimes.

Crime

Among other papers, Levitt's work on crime includes examination of the effects of prison population, police hiring, availability of LoJack devices and legal status of abortion on crime rates.

The Impact of Legalized Abortion on Crime

See The Impact of Legalized Abortion on Crime
The Impact of Legalized Abortion on Crime
"The Impact of Legalized Abortion on Crime" is a controversial paper by John J. Donohue III of Yale University and Steven Levitt of University of Chicago that argues that the legalization of abortion in the 1970s contributed significantly to reductions in crime rates experienced in the 1990s...

 for a detailed discussion of the issue.


Revisiting a question first studied empirically in the 1960s, Donohue and Levitt argue that the legalization of abortion can account for almost half of the reduction in crime witnessed in the 1990s. This paper has sparked much controversy, to which Levitt has said
"The numbers we're talking about, in terms of crime, are absolutely trivial when you compare it to the broader debate on abortion. From a pro-life view of the world: If abortion is murder then we have a million murders a year through abortion. And the few thousand homicides that will be prevented according to our analysis are just nothing—they are a pebble in the ocean relative to the tragedy that is abortion. So, my own view, when we [did] the study and it hasn't changed is that: our study shouldn't change anybody's opinion about whether abortion should be legal and easily available or not. It's really a study about crime, not abortion."


In 2003, Theodore Joyce argued that legalized abortion had little impact on crime, contradicting Donohue and Levitt's results ("Did Legalized Abortion Lower Crime?" Journal of Human Resources, 2003, 38(1), pp. 1 –37.). In 2004, the authors published a response, in which they claimed Joyce's argument was flawed due to omitted-variable bias
Omitted-variable bias
In statistics, omitted-variable bias occurs when a model is created which incorrectly leaves out one or more important causal factors. The 'bias' is created when the model compensates for the missing factor by over- or under-estimating one of the other factors.More specifically, OVB is the bias...

.

In November 2005, two Federal Reserve Bank of Boston
Federal Reserve Bank of Boston
The Federal Reserve Bank of Boston, commonly known as the Boston Fed, is responsible for the First District of the Federal Reserve, which covers most of Connecticut , Massachusetts, Maine, New Hampshire, Rhode Island and Vermont. It is headquartered in the Federal Reserve Bank Building in Boston,...

 economists, Christopher Foote and Christopher Goetz, published a working paper, in which they argued that the results in Donohue and Levitt's abortion and crime paper were due to statistical errors made by the authors: the omission of state-year interactions and the use of the total number of arrests instead of the arrest rate in explaining changes in the murder rate. When the corrections were made, Foote and Goetz argued that abortion actually increased violent crime instead of decreasing it and did not affect property crime. They even concluded that the majority of women who had abortions in the 1970s were middle class
Middle class
The middle class is any class of people in the middle of a societal hierarchy. In Weberian socio-economic terms, the middle class is the broad group of people in contemporary society who fall socio-economically between the working class and upper class....

 whites rather than low income
Poverty
Poverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...

 minorities as Levitt stated; this was, they stated, because white middle class women had the financial means for an abortion. The Economist
The Economist
The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...

remarked on the news of the errors that "for someone of Mr Levitt's iconoclasm and ingenuity, technical ineptitude is a much graver charge than moral turpitude. To be politically incorrect is one thing; to be simply incorrect quite another." In January 2006, Donohue and Levitt published a response, in which they admitted the errors in their original paper but also pointed out Foote and Goetz's correction was flawed due to heavy attenuation bias. The authors argued that, after making necessary changes to fix the original errors, the corrected link between abortion and crime was now weaker but still statistically significant, contrary to Foote and Goetz's claims.

Prison population

Levitt's 1996 paper on prison population uses prison overcrowding litigation to estimate that increasing the prison population by 1 person is associated with a decrease of fifteen Index I crimes per year (Index I crimes include homicide, forcible rape, robbery, aggravated assault, burglary, theft, motor vehicle theft, and arson).

Police hiring

In a 1997 paper on the effect of police hiring on crime rates, Levitt uses the timing of mayoral and gubernatorial elections as an instrumental variable
Instrumental variable
In statistics, econometrics, epidemiology and related disciplines, the method of instrumental variables is used to estimate causal relationships when controlled experiments are not feasible....

 to identify a causal effect of police on crime. Past studies had been inconclusive because of the simultaneity inherent in police hiring (when crime increases, more police are hired to combat crime). The findings of this paper were found to be the result of a programming error. This was pointed out in a comment by Justin McCrary published in the American Economic Review in 2002. In a response published with McCrary's comment Levitt admits to the error and then goes on to offer alternative evidence to support his original conclusions.

LoJack

Ayres and Levitt (1998) use a new dataset on the prevalence of LoJack
LoJack
The LoJack Stolen Vehicle Recovery System is an aftermarket vehicle tracking system that allows vehicles to be tracked by police, with the aim of recovering them in case of theft. The manufacturer claims a 90% recovery rate...

 to estimate the social externality associated with its use. They find that the marginal social benefit
Marginal utility
In economics, the marginal utility of a good or service is the utility gained from an increase in the consumption of that good or service...

 of Lojack is fifteen times greater than the marginal social cost in high crime areas, but that those who install LoJack obtain less than ten percent of the total social benefits.

Criminal Age

Another 1998 paper finds that juvenile criminals are at least as responsive to criminal sanctions as adults. Sharp drops in crime at the age of maturity suggest that deterrence plays an important role in the decision to commit a crime.

Finances of a drug gang

Levitt and Sudhir Alladi Venkatesh
Sudhir Alladi Venkatesh
Sudhir Alladi Venkatesh is an Indian American sociologist and urban ethnographer. Born in India, he is a professor of sociology and African-American studies at Columbia University. He is a board member at Philadelphia-based nonprofit Public/Private Ventures...

 (2000) analyze a unique dataset which details the financial activities of a drug-selling street gang. They find that wage earnings in the gang are somewhat higher than legal market alternatives, but do not offset the increased risks associated with selling drugs. They suggest that the prospect of high future earnings is the primary economic motivation for being in a gang.

Link between drunk driving and accident rates

Levitt and Porter (2001) find that drivers with alcohol in their blood are seven times more likely to cause a fatal crash than a sober driver (those above the legal limit are 13 times more likely than a sober driver). They estimate that the externality
Externality
In economics, an externality is a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit...

 per mile driven by a drunk driver is at least thirty cents which implies that the proper fine to internalize this cost is roughly $8,000.

Cheating in sumo wrestling and by teachers in schools

Duggan and Levitt (2002) show how nonlinear payoff schemes establish incentives for corruption and the authors use the nonlinearity to provide substantial statistical evidence that cheating is taking place in Japanese sumo wrestling. Brian and Levitt (2003) developed an algorithm to detect teachers who cheat for their students on standardized tests. They find that the observed frequency of cheating appears to respond strongly to relatively minor changes in incentives.

Politics

Levitt's work on politics includes papers on the effects of campaign spending, on the median voter theorem, and on the effects of federal spending.

Levitt's 1994 paper on campaign spending employs a unique identification strategy to control for the quality of each candidate (which in previous work had led to an overstatement of the true effect). It concludes that campaign spending has a very small impact on election outcomes, regardless of who does the spending. On the subject of federal spending and elections, previous empirical studies were not able to establish that members of Congress are rewarded by the electorate for bringing federal dollars to their district because of omitted variables bias. Levitt and Snyder (1997) employ an instrument which circumvents this problem and finds evidence that federal spending benefits congressional incumbents; they find that an additional $100 per capita spending is worth as much as 2 percent of the popular vote.

The 1996 paper on the median voter theorem develops a methodology for consistently estimating the relative weights in a senator's utility function and casts doubt on the median voter theorem, finding that the senator's own ideology is the primary determinant of roll-call voting patterns.

Other studies

  • Testing Mixed-Strategy Equilibria When Players Are Heterogeneous: The Case of Penalty Kicks in Soccer (2002): Chiappori, Levitt, and Groseclose use penalty kicks from soccer games to test the idea of mixed strategies, a concept important to game theory. They do not reject the hypothesis that players choose their strategies optimally.
  • Causes and consequences of distinctively black names (2004): Fryer and Levitt find that the rise in distinctively black names took place in the early 1970s. While previous studies found having a black name harmful, they conclude that having a distinctively black name is primarily a consequence rather than a cause of poverty and segregation.
  • Discrimination in game shows (2004): Levitt uses contestant voting behavior on the US version of the television show Weakest Link to distinguish between taste-based and information-based theories of discrimination. Levitt found no discrimination against females or blacks, while finding taste-based discrimination against the old and information-based discrimination against Hispanics.

Defamation suit

On April 10, 2006, another economist, John Lott
John Lott
John Richard Lott Jr. is an American academic and political commentator. He has previously held research positions at academic institutions including the University of Chicago, Yale University, the Wharton School at the University of Pennsylvania, and the University of Maryland, College Park,...

, filed suit against Steven Levitt and HarperCollins Publishers for defamation. In the book Freakonomics, Levitt and coauthor Stephen J. Dubner claimed that the results of Lott's research in More Guns, Less Crime
More Guns, Less Crime
More Guns, Less Crime is a book by John Lott that says violent crime rates go down when states pass "shall issue" concealed carry laws. He presents the results of his statistical analysis of crime data for every county in the United States during 18 years from 1977 to 1994...

had not been replicated by other academics. Also, in a series of email communications to an economist, John McCall, who pointed to a number of papers in different academic publications that had replicated Lott's work, Levitt said that Lott's work in a special 2001 issue of the Journal of Law and Economics had not been peer reviewed, that Lott had paid the University of Chicago Press to publish the papers, and that papers with results opposite of Lott's had been blocked from publication in that issue.

A federal judge found that Levitt's claim in Freakonomics was not defamation, but required that Levitt admit in a letter to John McCall that he himself was a peer reviewer in the 2001 issue of the Journal of Law and Economics, that Lott had not engaged in bribery, and that he knew that "scholars with varying opinions" had been invited to participate.

Lott appealed the ruling regarding the Freakonomics passage, citing new evidence that the passage damaged him professionally. On February 11, 2009, the appeals court upheld the dismissal of the defamation claim, ruling that "any reasonable, innocent interpretation" of Levitt's claim about replication "sounds the death knell to a per se defamation claim" and that Lott's failure to document pecuniary loss did not support his pro quod defamation claim.

Quotations

  • "Regression analysis is more art than science."

  • "An expert doesn't so much argue the various sides of an issue as plant his flag firmly on one side. That's because an expert whose argument reeks of restraint or nuance often doesn't get much attention. An expert must be bold if he hopes to alchemize his homespun theory into conventional wisdom."

  • "....if you own a gun and have a swimming pool in the yard, the swimming pool is almost 100 times more likely to kill a child than the gun is."

  • "Of course, ocean acidification is an important issue. Now, there are ways to deal with ocean acidification, right, it's actually, that's actually, we know exactly how to un-acidifiy the oceans, is to pour a bunch of base into it, so, so if that turns out to be an incredibly big problem, then we can deal with that."

  • "That's the nature of modern business -- to be inundated with data. Your people don't have the time to analyze it, or the specialized training, but we do. There is nothing we love more than finding things in data that no one else can see."

Academic publications (in chronological order)


Other publications

  • Freakonomics
    Freakonomics
    Freakonomics: A Rogue Economist Explores the Hidden Side of Everything is a 2005 non-fiction book by University of Chicago economist Steven Levitt and New York Times journalist Stephen J. Dubner. The book has been described as melding pop culture with economics, but has also been described as...

    : A Rogue Economist Explores the Hidden Side of Everything
    William Morrow, May 2005 (with Stephen Dubner)
  • SuperFreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance, co-author (2009) (ISBN 0-060-88957-8)

External links


Press

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