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Opinion

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Students fight for the right to file-share. (Earlier)

Headhunters see spike in lies on resumes.

Is Craigslist inadvertently prolonging the Iraq war? (Earlier)

Why are so many good kidneys going to waste? (Earlier)

Back in August, we blogged about allegations of match rigging at Wimbledon. According to a new report by SI.com, that may have been only the tip of the iceberg; now, 150 matches are being investigated by tennis officials.

My hunch, having seen no data and only read this article, is that the number of rigged tennis matches will ultimately turn out to be very small. My reason for this conclusion is that there is something absent from tennis that is present in sumo wrestling: a highly non-linear incentive scheme. The eighth win in a sumo tournament is worth far more than a six, a seventh, a ninth, or a tenth win. As such, the sumo wrestlers themselves can see strong gains from trade. In tennis, however, the only apparent incentive at work is bribes related to gambling. (There have been some quirky changes to tournament formats, in which players are grouped in a manner similar to World Cup soccer qualifying matches — but that is a different story.) The lack of incentive for tennis players to trade wins has to mean that endemic cheating is far less likely. Read more …

Public school or private school: does it matter?

Test security firm Caveon sees business thrive at U.S. schools. (Earlier)

Employers impose “no e-mail” days; workers rebel.

Are antidepressants safe for children?

Tamara Audi and Adam Thompson write in the Wall Street Journal about how the Las Vegas casinos helped authorities catch point-shaving football players at the University of Toledo.

It is no surprise that the sportsbooks take an active role in this endeavor: when cheating happens, the sportsbook is the party from which money gets stolen. (If the bookies balanced the action so that money came evenly on both sides, this wouldn’t be the case; but they don’t). In contrast, online poker Web sites have been criticized for not doing enough to catch cheaters. Their reticence is not a complete surprise: the other players, not the poker site itself, are the ones victimized by online poker cheating.

The NCAA, NFL, and other sports leagues complain about sports betting and publicly attempt to distance themselves from it — but I’m sure that, behind closed doors, they thank God on a regular basis for the existence of gambling. The share of folks who watch sports because they have something riding on it (if nothing more than a fantasy team) must be enormous. It is nice that this type of story lets them share the love openly.

Does the Internet need replacing?

Airport security to focus on remote-control toys. (Earlier)

Can cheating in online games be stopped? (Earlier)

Woman sues for $1 million over iPhone price cut. (Earlier)

Does file sharing really have no effect on record sales? (Earlier)

Four men charged with selling steroids on MySpace. (Earlier)

Consultants build a business around “nonverbal cue” coaching.

Smaller Volvo marketed to new group of “enlightened consumers”.

Two arrested in “money-making potion” scam. (Hat tip: Consumerist)

Are economists incapable of cognitive dissonance?

Meteorite crashes in Peru, causes panic.

Cigarette merchants sued for selling knockoff Marlboros.

Do restaurants blacklist black customers? (Earlier)

Higher emissions standards could give car inspectors more incentives to cheat.

New Broadway play puts game theory into action. (Earlier)

Let’s say you discover an old lamp and rub it, and out comes a genie offering to grant you a wish. You are greedy and devious, so you wish for the ability, whenever you play online poker, to see all the cards that the other players are holding. The genie grants your wish.

What would you do next?

If you were a total idiot, you would do exactly what some cheaters on the Web site Absolute Poker appear to have done recently. Playing at the very highest stakes games, they allegedly played every hand as if they knew every card that the other players had. They folded hands at the end that no normal player would fold, and they raised with hands that were winners but would seem like losers if you didn’t know the opponents’ cards. They won money at a rate that was about 100 times faster than a good player could reasonably expect to win.

Their play was so anomalous that, within a few days, they were discovered.

What did they do next? Read more …

Political scandals are a bit like the weather: there’s always something brewing. But of all the congressmen and senators whose careers have fallen apart in recent years, few have done so as spectacularly as Randall “Duke” Cunningham, the Republican congressman from California who in 2006 was sentenced to eight years and four months in prison after F.B.I. investigators discovered that he had accepted over $2 million in bribes, the largest amount in U.S. Congressional history.

Seth Hettena, an A.P. reporter who covered the scandal, has now written a book about Cunningham, Feasting on the Spoils. Hettena agreed to answer our questions about the book and the long, gloried history of government corruption.

Q: What was the structure of Cunningham’s bribery scheme? How much, and in what form, did he receive payoffs? How did he hide (or fail to hide) the money?

A: Like many criminal enterprises, Cunningham’s bribery started small and grew over time. According to federal prosecutors, the bribes date back to the mid-1990s, when a defense contractor named Brent Wilkes paid for Cunningham’s meals and limousine rides in Washington, lent the congressman a 14-foot motorboat, and gave him quarterly payments of $500 worth of “maintenance money.” In return, Cunningham vowed to “fight like hell” for the defense contractor, who made millions of dollars from funds that Cunningham had earmarked for him.

Things kicked into high gear after the attacks of Sept. 11, Read more …

Shortly after Brian Jacob and I did our research on teachers who cheat, we thought about starting a company that would provide cheating detection services to schools systems. What I quickly discovered, however, was that there were few things in the world that school systems wanted less than to catch teachers who cheat — suffice it to say that school districts have few incentives to self-police. As such, we quickly abandoned the idea.

Maybe now it’s time for someone else to give it a shot. With No Child Left Behind and other policies making standardized test scores more and more important, the incentives to cheat are growing rapidly. The New York Times recently ran an article by Ford Fessenden describing gross instances of cheating that were missed by school districts until whistleblowers came forward. There is little question that cheating is still widespread — which, given cheating’s low likelihood of detection, should come as no surprise.

Are school districts more likely today to be receptive to an outsider selling cheating detection services than they were back when we first thought about doing it? Read more …

See? Even bacteria cheat. (Earlier)

Dissed by Oprah: one author’s tale.

Global warming hits the fashion industry. (Earlier)

Can railroad track layouts show the causal effects of segregation?

Is Freakonomics too cynical?

I don’t think so, but some people do. Occasionally we hear from readers who say it’s a shame that we’ve called attention to so much deceit, trickery, and cheating among sumo wrestlers, school teachers, tax filers, and online daters. I could argue back and say, “Hey, don’t we also call attention to people who don’t cheat, like the office workers who eat Paul Feldman’s bagels?”

The point isn’t that you can divide people into piles of good people or bad people, cheaters or non-cheaters. The point is that people’s behavior is determined by how the incentives of a particular scenario are aligned.

So it was interesting to see this article on Salon’s Machinist by Farhad Manjoo about a contest run by the website Read more …

Yesterday, I posted a short piece called “Should We Just Let the Tour de France Dopers Dope Away?” It wasn’t an outright call for legalization of sports doping, but I wanted to put the idea on the table.

Well, Joe Lindsey, a contributing writer for Bicycling magazine, wrote in to say that there are a lot of compelling reasons to keep the idea off the table. Joe, who has written widely on doping in cycling, was good enough to write up his argument in the guest post below.

Guest Blog

Why Legalizing Sports Doping Won’t Work
by Joe Lindsey

The irony of the recent report that the Olympics are considering kicking out cycling because of its doping probems is that it was then-International Olympic Committee president Juan Antonio Samaranch who floated the idea in 1997 of a “gladiator class” of sports – where doping was acknowledged and allowed.

It’s worth considering, as the Tour de France practically grinds to a halt as one after another top competitor is removed from the race under suspicion of doping, whether we might just throw the doors of the pharmacy wide open and say have at it. “Pure cycling is just an illusion,” said Francesco Moser once. Moser is a former top cyclist who now heads the professional riders’ union. “There comes a stage when a rider must be told the effects of a medicine. Then if he wants to, let him take it.”

Or is that such a good idea? If we play Prometheus to cycling’s mortals, what happens?

First, let’s set aside two logistical problems.

One, not all cyclists dope, nor do they want to. Jonathan Vaughters, a former pro who now runs a domestic cycling team called Slipstream Sports, which performs its own anti-doping testing, has characterized the doping dynamic as the dragged and the draggers. (This is an unpublished quote from a personal interview with Vaughters for a Men’s Journal article on Floyd Landis.) The vast majority of cyclists who would prefer to race clean (the dragged) are instead tempted to dope simply to keep up with the small minority who aggressively dope for a competitive advantage (the draggers). Modern oxygen-vector doping is so effective, a rider has two choices: dope and keep up, or stay clean and fall behind. “I guess, after years and years and years of standing on the start line and feeling like I was a mile behind, it finally got to me,” said nine-time Tour finisher Frankie Andreu of the experience. Andreu succumbed, temporarily. (This is from a Dec. 2006 Men’s Journal article, not available online.) But it is possible to race and even win clean, if you’re smart and work hard. So some racers never dope, even if their careers suffer for it. But if most riders want to race clean, then legalizing doping puts them in an impossible position: dope, or quit the sport.

Second, not all doping techniques are created equal. The most effective regimens are also the most sophisticated and expensive – according to a der Spiegel interview, German pro Jorg Jaksche paid 37,000 Euros one year for a “medical program” that was slightly less than comprehensive. Star riders such as Tyler Hamilton and Jan Ullrich are alleged to have paid 50,000 Euro or more, a substantial chunk of the average pro racer’s contract but a mere tithe to riders of Hamilton and Ullrich’s salary range. So if doping is legalized, the sport’s richest riders and teams will have access to techniques that lesser lights don’t. The playing field, never level, would be tilted permanently.

If you can somehow manage to get past those two little hurdles, there is a third, much more formidable one: what to legalize, and how to enforce it?

One of the serious allegations against Michael Rasmussen, who was yanked from the Tour while leading the race, is that in 2002, he attempted to use a synthetic blood substitute called Hemopure.

We can’t legalize Hemopure for sporting use. It’s only approved for human medical use in one country: South Africa. If you transport it to or use it in France, Italy, the United States or virtually any other country outside of a government-approved clinical trial, you’re breaking federal law on the transport and possession of controlled substances. Trenbolone, which Game of Shadows authors Mark Fainaru-Wada and Lance Williams say Barry Bonds used, is a veterinary-only product, intended for use in cattle. Don’t even mention designer steroids like BALCO’s infamous The Clear.

Medical laws and medical ethics prevent us from letting athletes use these substances outside of a clinical trial. But athletes, who eagerly seek out anything that will give them a competitive edge, will still try and get them. H. Lee Sweeney, a professor at the University of Pennsylvania, was shocked when, after publishing research in an obscure scholarly journal on an experimental gene therapy technique to inhibit myostatin (as a therapy for muscular dystrophy), he began receiving inquiries from athletes, and even a high-school wrestling coach, on how to use the technique to boost performance.

Simply put, wherever you draw the line, something, some technique or substance, will always be off-limits. And so you’ve merely moved the line, not erased it.

Finally, none of that addresses the moral problems involved in legalizing doping. Doping in sports isn’t inherently wrong; it’s wrong by the value system with which we judge sports. Sports themselves are by their nature civilized: everyone agrees to follow a certain set of rules. If you don’t, that’s cheating. Legalizing doping doesn’t change those rules as much as remove them altogether, and then it’s no longer a sport, but merely entertainment. Right or wrong, we look to sports and to athletes for an inspiration that mere entertainment cannot provide – there is an implicit contract that the sweat and effort we see before us is real and natural. Do you want to see who’s the best athlete, or just who had the best access to pharmaceutical enhancement?

Now that virtually every cyclist in the Tour de France has been booted for doping, is it time to consider a radical rethinking of the doping issue?

Is it time, perhaps, to come up with a pre-approved list of performance-enhancing agents and procedures, require the riders to accept full responsibility for whatever long-term physical and emotional damage these agents and procedures may produce, and let everyone ride on a relatively even keel without having to ban the leader every third day?

If the cyclists are already doping, why should we worry about their health? If the sport is already so gravely compromised, why should we pretend it hasn’t been?

After all, doping in the Tour is nothing new. According to this MSNBC.com article, it was cycling that introduced the sports world to doping:

[T]he history of modern doping began with the cycling craze of the 1890s and the six-day races that lasted from Monday morning to Saturday night. Extra caffeine, peppermint, cocaine and strychnine were added to the riders’ black coffee. Brandy was added to tea. Cyclists were given nitroglycerine to ease breathing after sprints. This was a dangerous business, since these substances were doled out without medical supervision.

Are there parallels to be made between legalizing narcotics and allowing cyclists to use performance enhancers chosen from an approved list? I wonder what Gary Becker would have to say on the subject.

Last year we blogged about the fascinating study written by economists Ray Fisman and Ted Miguel analyzing the patterns of parking violations among diplomats to the United Nations in New York. They find that diplomats from high corruption countries have more unpaid parking tickets, as do diplomats from countries that are more anti-American.

Armed with that information, try to guess which country’s diplomats are the worst offenders when it comes to dodging congestion charges in London. If you guessed “Nigeria,” you would be close; it has the second worst record for deadbeat diplomats. Still, Nigeria has less than half of the outstanding fines accrued by the No. 1 offender, whose ambassador has been so reluctant to pay for tickets that the Mayor of London has branded him a “venal little crook.”

You can find the answer, which might surprise you, in this report from Britain’s Channel 4 News.

(Hat tip: Colin Robinson.)

Read the Column »

In their June 10, 2007, column for the New York Times Magazine, Dubner and Levitt present some interesting new research on real estate sales. No, it’s not what you’re thinking: more Realtor bashing! Although it is true that they have written before about the imperfect nature of the Realtor’s commission model, this column takes a somewhat different tack. It’s about a little-known trick known as a cash-back transaction, in which a buyer receives a “rebate” to finance his own down-payment — a rebate that the lending bank never finds out about. Click here to read the column and here to comment. This blog post supplies additional research materials.

  1. Itzhak Ben-David, a Ph.D. candidate in finance at the University of Chicago’s Graduate School of Business, has written a paper called “Manipulation of Collateral Values by Borrowers and Intermediaries.” This paper is the basis of the Freakonomics column. Through analysis of nearly 300,000 real-estate transactions in the Chicago area, Ben-David was able to identify sales where a cash-back transaction likely occurred and identify the noteworthy traits they shared. He found that a small group of real estate agents are repeat offenders.
  2. Besides the section on real estate agents in Freakonomics itself and an earlier N.Y. Times column, Dubner and Levitt have blogged regularly about real estate here, including this virtual real estate roller coaster and the question of whether street names affect property values.
  3. In their paper “Income and Wealth Effects of Italian Households,” Charles Grant and Tuomas Peltonen show how much harder it is to buy a home in Italy than in the U.S.
  4. In a briefing paper called “Home Insecurity” from the Demos think tank, David Callahan argues that appraisers, lenders, brokers, and real estate agents are highly incentivized to overvalue homes, and may therefore be responsible for artificially creating a housing bubble.
  5. In a Wisconsin Real Estate Magazine article titled “Appraisal Fraud,” Debbi Conrad writes that most appraisers admit they have the power to end appraisal fraud, but that collusion with real estate agents is so widespread that it’s unlikely to happen.
  6. According to David Jackson at the Chicago Tribune, mortgage fraud is “the new street hustle” among urban gangs like Chicago’s Black Disciples, who don’t make as much money selling crack cocaine as they used to.

Itzhak Ben-David is a Ph.D. candidate in finance at the University of Chicago’s Graduate School of Business. (Levitt is one of his dissertation advisors.) While pursuing his original research idea — the degree to which housing prices efficiently incorporate anticipated tax increases — Ben-David stumbled upon a slightly juicier topic: a real-estate sleight of hand known as the “cashback transaction,” in which the seller gives the buyer a clandestine rebate that the lending bank never finds out about.

Yes, it’s illegal.

Our current New York Times Magazine column is about Ben-David’s research. Here is his paper on the subject. Not only is the subject matter interesting, but the detective work he employed — a sort of mashup of the methodologies in the Levitt/Syverson real-estate paper and the Duggan/Levitt sumo paper — is really impressive.

As always with our N.Y. Times columns, we’ve posted some complementary research materials on the subject.

Greetings, Freakonomics community! This is your friendly neighborhood web editor, Melissa. Starting today, while Steven and Stephen will continue to post the same high-brow discussions of crack dealing, cheating, gold-digging and online poker that have long graced this site, I’ll also be posting under the eponymous apple/orange. So keep sending your good ideas to levittdubner (at) freakonomics (dot) com. The idea is simply to spread even more Freakonomic love around the blogosphere. Enjoy!

I just returned from a fascinating and enjoyable trip to Warsaw.

The only negative to the trip (besides the fact it is a 9 hour flight to get there) was how incredibly rude the Poles were about lines. I have never seen such obvious disrespect for other people when it came to cutting in lines, even when it meant that the person who cut would have to stand in front of you in line for the next 15 minutes. In the United States, people will cut in lines in cars, but usually not when on foot, because of the discomfort of having people you just mistreated standing next to you. A car provides insulation from the social stigma. In Poland, no such distinction appears to be made. (When I told Dubner about this, he told me to stop complaining and save it for when I next went to Israel, where he says there is simply no such thing as a line.)

Just to test my hypothesis, at the airport as I boarded the plane — it was an utter free for all with everyone invited to enter the plane at once — I made a mental note of the most egregious line cutters. Then, when we got to Customs in the United States, I watched to see which of the worst cutters went to the U.S. citizens line and which went to the visitors line. Not one of the worst offenders was an American citizen, supporting my conjecture.

What surprised me most about the line cutting was that having lived under communism for so long, I would have thought that the Poles would have perfected standing in line. I would have predicted even greater courtesy than you find elsewhere. Perhaps, I just got the theory backwards. With so many years of shortages, the rewards for becoming an expert line cutter were much greater in Poland than in the U.S. So they did perfect standing in lines — perfection means being able to cut in front of people and feel no guilt.

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About Freakonomics

Stephen J. Dubner is an author and journalist who lives in New York City.

Steven D. Levitt is a professor of economics at the University of Chicago.

Their book Freakonomics has sold 3 million copies worldwide. This blog, begun in 2005, is meant to keep the conversation going. Melissa Lafsky is the site editor.

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