he most brilliant young economist in America -- the
one so deemed, at least, by a jury of his elders -- brakes to a stop at a
traffic light on Chicago's south side. It is a sunny day in mid-June. He
drives an aging green Chevy Cavalier with a dusty dashboard and a window
that doesn't quite shut, producing a dull roar at highway speeds.
But the car is quiet for now, as are the noontime streets: gas
stations, boundless concrete, brick buildings with plywood windows.
An elderly homeless man approaches. It says he is homeless right on his
sign, which also asks for money. He wears a torn jacket, too heavy for the
warm day, and a grimy red baseball cap.
The economist doesn't lock his doors or inch the car forward. Nor does
he go scrounging for spare change. He just watches, as if through one-way
glass. After a while, the homeless man moves along.
''He had nice headphones,'' says the economist, still watching in the
rearview mirror. ''Well, nicer than the ones I have. Otherwise, it doesn't
look like he has many assets.''
Steven Levitt tends to see things differently than the average
person. Differently, too, than the average economist. This is either a
wonderful trait or a troubling one, depending on how you feel about
economists. The average economist is known to wax oracularly about any and
all monetary issues. But if you were to ask Levitt his opinion of some
standard economic matter, he would probably swipe the hair from his eyes
and plead ignorance. ''I gave up a long time ago pretending that I knew
stuff I didn't know,'' he says. ''I mean, I just -- I just don't know very
much about the field of economics. I'm not good at math, I don't know a
lot of econometrics, and I also don't know how to do theory. If you ask me
about whether the stock market's going to go up or down, if you ask me
whether the economy's going to grow or shrink, if you ask me whether
deflation's good or bad, if you ask me about taxes -- I mean, it would be
total fakery if I said I knew anything about any of those things.''
In Levitt's view, economics is a science with excellent tools for
gaining answers but a serious shortage of interesting questions. His
particular gift is the ability to ask such questions. For instance: If
drug dealers make so much money, why do they still live with their
mothers? Which is more dangerous, a gun or a swimming pool? What really
caused crime rates to plunge during the past decade? Do real-estate agents
have their clients' best interests at heart? Why do black parents give
their children names that may hurt their career prospects? Do
schoolteachers cheat to meet high-stakes testing standards? Is sumo
And how does a homeless man afford $50 headphones?
Many people -- including a fair number of his peers -- might not
recognize Levitt's work as economics at all. But he has merely distilled
the so-called dismal science down to its most primal aim: explaining how
people get what they want, or need. Unlike most academics, he is unafraid
of using personal observations and curiosities (though he does fear
calculus). He is an intuitionist. He sifts through a pile of data to find
a story that no one else had found. He devises a way to measure an effect
that veteran economists had declared unmeasurable. His abiding interests
-- though he says he has never trafficked in them himself -- are cheating,
corruption and crime.
His interest in the homeless man's headphones, meanwhile, didn't last
long. ''Maybe,'' he said later, ''it was just testimony to the fact I'm
too disorganized to buy a set of headphones that I myself covet.''
Levitt is the first to say that some of his topics border on the
trivial. But he has proved to be such an ingenious researcher and
clear-eyed thinker that instead of being consigned to the fringe of his
field, the opposite has happened: he has shown other economists just how
well their tools can make sense of the real world.
''Levitt is considered a demigod, one of the most creative people in
economics and maybe in all social science,'' says Colin Camerer, an
economist at the California Institute of Technology. ''He represents
something that everyone thinks they will be when they go to grad school in
econ, but usually they have the creative spark bored out of them by
endless math -- namely, a kind of intellectual detective trying to figure
Levitt is a populist in a field that is undergoing a bout of
popularization. Undergraduates are swarming the economics departments of
elite universities. Economics is seen as the ideal blend of intellectual
prestige (it does offer a Nobel, after all) and practical training for a
high-flying finance career (unless, like Levitt, you choose to stay in
academia). At the same time, economics is ever more visible in the real
world, thanks to the continuing fetishization of the stock market and the
continuing fixation with Alan Greenspan.
The greatest change, however, is within the scholarly ranks.
Microeconomists are gaining on the macro crowd, empiricists gaining on the
theorists. Behavioral economists have called into doubt the very notion of
''homo economicus,'' the supposedly rational decision-maker in each of us.
Young economists of every stripe are more inclined to work on real-world
subjects and dip into bordering disciplines -- psychology, criminology,
sociology, even neurology -- with the intent of rescuing their science
from its slavish dependence upon mathematical models.
Levitt fits everywhere and nowhere. He is a noetic butterfly that no
one has pinned down -- he was once offered a job on the Clinton economic
team, and the Bush campaign approached him about being a crime adviser --
but who is widely appreciated.
''Steve isn't really a behavioral economist, but they'd be happy to
have him,'' says Austan Goolsbee, who teaches economics at the University
of Chicago's Graduate School of Business. ''He's not really an old
price-theory guy, but these Chicago guys are happy to claim him. He's not
really a Cambridge guy'' -- although Levitt went to Harvard and then
M.I.T. -- ''but they'd love him to come back.''
He has critics, to be sure. Daniel Hamermesh, a prominent labor
economist at the University of Texas, has taught Levitt's paper ''The
Impact of Legalized Abortion on Crime'' to his undergraduates. ''I've gone
over this paper in draft, in its printed version, at great length, and for
the life of me I can't see anything wrong with it,'' Hamermesh says. ''On
the other hand, I don't believe a word of it. And his stuff on sumo
wrestlers -- well, this is not exactly fundamental, unless you're Japanese
and weigh 500 pounds.''
But at 36, Levitt is a full professor in the University of Chicago's
economics department, the most legendary program in the country. (He
received tenure after only two years.) He is an editor of The Journal of
Political Economy, a leading journal in the field. And the American
Economic Association recently awarded him its John Bates Clark Medal,
given biennially to the country's best economist under 40.
He is a prolific and diverse writer. But his paper linking a rise
in abortion to a drop in crime has made more noise than the rest combined.
Levitt and his co-author, John Donohue of Stanford Law School, argued that
as much as 50 percent of the huge drop in crime since the early 1990's can
be traced to Roe v. Wade. Their thinking goes like this: the women most
likely to seek an abortion -- poor, single, black or teenage mothers --
were the very women whose children, if born, have been shown most likely
to become criminals. But since those children weren't born, crime began to
decrease during the years they would have entered their criminal prime. In
conversation, Levitt reduces the theory to a tidy syllogism:
''Unwantedness leads to high crime; abortion leads to less unwantedness;
abortion leads to less crime.''
Levitt had already published widely about crime and punishment. One
paper he wrote as a graduate student is still regularly cited. His
question was disarmingly simple: Do more police translate into less crime?
The answer would seem obvious -- yes -- but had never been proved: since
the number of police officers tends to rise along with the number of
crimes, the effectiveness of the police was tricky to measure.
Levitt needed a mechanism that would unlink the crime rate from police
hiring. He found it within politics. He noticed that mayors and governors
running for re-election often hire more police officers. By measuring
those police increases against crime rates, he was able to determine that
additional officers do indeed bring down violent crime.
That paper was later disputed -- another graduate student found a
serious mathematical mistake in it -- but Levitt's ingenuity was obvious.
He began to be acknowledged as a master of the simple, clever solution. He
was the guy who, in the slapstick scene, sees all the engineers futzing
with a broken machine -- and then realizes that no one has thought to plug
Arguing that the police help deter crime didn't make Levitt any
enemies. Arguing that abortion deterred crime was another matter.
In the abortion paper, published in 2001, he and Donohue warned that
their findings should not be seen ''as either an endorsement of abortion
or a call for intervention by the state in the fertility decisions of
women.'' They suggested that crime might just as easily be curbed by
''providing better environments for those children at greatest risk for
Still, the very topic managed to offend nearly everyone. Conservatives
were enraged that abortion could be construed as a crime-fighting tool.
Liberals were aghast that poor and black women were singled out.
Economists grumbled that Levitt's methodology was not sound. A syllogism,
after all, can be a magic trick: All cats die; Socrates died; therefore
Socrates was a cat.
''I think he's enormously clever in so many areas, focusing very much
on the issue of reverse causality,'' says Ted Joyce, an economist at
Baruch College who has written a critical response to the abortion paper.
''But in this case I think he ignored it, or didn't tend to it well
As the news media gorged on the abortion-crime story, Levitt came under
direct assault. He was called an ideologue (by conservatives and liberals
alike), a eugenicist, a racist and downright evil.
In reality, he seems to be very much none of those. He has little taste
for politics and less for moralizing. He is genial, low-key and
unflappable, confident but not cocky. He is a respected teacher and
colleague; he is a sought-after collaborator who, because of the breadth
of his curiosities, often works with scholars outside his field -- another
rarity for an economist.
''I hesitate to use these words, but Steve is a con man, in the best
sense,'' says Sudhir Venkatesh, a sociologist at Columbia University.
''He's the Shakespearean jester. He'll make you believe his ideas were
yours.'' Venkatesh was Levitt's co-author on ''An Economic Analysis of a
Drug-Selling Gang's Finances,'' which found that the average street dealer
lives with his mother because the take-home pay is, frankly, terrible. The
paper analyzed one crack gang's financial activities as if it were any
corporation. (It was Venkatesh who procured the data, from a former gang
member.) Such a thing had never been tried. ''This lack of focus,'' Levitt
deadpanned in one version of the paper, ''is perhaps partly attributable
to the fact that few economists have been involved in the study of
Levitt speaks with a boyish lisp. His appearance is High Nerd: a plaid
button-down shirt, nondescript khakis and a braided belt, sensible shoes.
His pocket calendar is branded with the National Bureau of Economic
Research logo. ''I wish he would get more than three haircuts a year,''
his wife, Jeannette, says, ''and that he wasn't still wearing the same
glasses he got 15 years ago, which weren't even in fashion then.'' He was
a good golfer in high school but has so physically atrophied that he calls
himself ''the weakest human being alive'' and asks Jeannette to open jars
around the house.
There is nothing in his appearance or manner, in other words, that
suggests a flamethrower. He will tell you that all he does is sit at his
desk, day and night, wrestling with some strange mountain of data. He will
tell you that he would do it free (his salary is reportedly more than
$200,000), and you tend to believe him. He may be an accidental
provocateur, but he is a provocateur nonetheless.
He takes particular delight in catching wrongdoers. In one paper, he
devised a set of algorithms that could identify teachers in the Chicago
public-school system who were cheating. ''Cheating classrooms will
systematically differ from other classrooms along a number of
dimensions,'' he and his co-author, Brian Jacob of the Kennedy School of
Government, wrote in ''Catching Cheating Teachers.'' ''For instance,
students in cheating classrooms are likely to experience unusually large
test-score gains in the year of the cheating, followed by unusually small
gains or even declines in the following year when the boost attributable
to cheating disappears.''
Levitt used test-score data from the Chicago schools that had long been
available to other researchers. There were a number of ways, he realized,
that a teacher could cheat. If she were particularly brazen (and stupid),
she might give students the correct answers. Or, after the test, she might
actually erase students' wrong answers and fill in correct ones. A
sophisticated cheater would be careful to avoid conspicuous blocks of
identical answers. But Levitt was more sophisticated. ''The first step in
analyzing suspicious strings is to estimate the probability each child
would give a particular answer on each question,'' he wrote. ''This
estimation is done using a multinomial logit framework with past test
scores, demographics and socioeconomic characteristics as explanatory
So by measuring any number of factors -- the difficulty of a particular
question, the frequency with which students got hard questions right and
easy ones wrong, the degree to which certain answers were highly
correlated in one classroom -- Levitt identified which teachers he thought
were cheating. (Perhaps just as valuable, he was also able to identify the
good teachers.) The Chicago school system, rather than disputing Levitt's
findings, invited him into the schools for retesting. As a result, the
cheaters were fired.
Then there is his coming ''Understanding Why Crime Fell in the 1990's:
Four Factors That Explain the Decline and Seven That Do Not.'' The entire
drop in crime, Levitt says, was due to more police officers, more
prisoners, the waning crack epidemic and Roe v. Wade.
One factor that probably didn't make a difference, he argues,
was the innovative policing strategy trumpeted in New York by Rudolph
Giuliani and William Bratton.
''I think,'' Levitt says, ''I'm pretty much alone in saying that.''
comes from a Minneapolis family of high, if unusual, achievers. His
father, a medical researcher, is considered a leading authority on
intestinal gas. (He bills himself as ''The Man Who Gave Status to Flatus
and Class to Gas.'') One of Levitt's great uncles, Robert May, wrote
''Rudolph the Red-Nosed Reindeer'' -- the book, that is; another great
uncle, Johnny Marks, later wrote the song.
At Harvard, Levitt wrote his senior thesis on thoroughbred breeding and
graduated summa cum laude. (He is still obsessed with horse racing. He
says he believes it is corrupt and has designed a betting system -- the
details of which he will not share -- to take advantage of the
corruption.) He worked for two years as a management consultant before
enrolling at M.I.T. for a doctorate in economics. The M.I.T. program was
famous for its mathematical intensity. Levitt had taken exactly one math
course as an undergraduate and had forgotten even that. During his first
graduate class, he asked the student next to him about a formula on the
board: Is there any difference between the derivative sign that's straight
up-and-down and the curly one? ''You are in so much trouble,'' he was
''People wrote him off,'' recalls Austan Goolsbee, the Chicago
economist who was then a classmate. ''They'd say, 'That guy has no
Levitt set his own course. Other grad students stayed up all night
working on problem sets, trying to make good grades. He stayed up
researching and writing. ''My view was that the way you succeed in this
profession is you write great papers,'' he says. ''So I just started.''
Sometimes he would begin with a question. Sometimes it was a set of
data that caught his eye. He spent one entire summer typing into his
computer the results of years' worth of Congressional elections. (Today,
with so much information so easily available on the Internet, Levitt
complains that he can't get his students to input data at all.) All he had
was a vague curiosity about why incumbents were so often re-elected.
Then he happened upon a political-science book whose authors claimed
that money wins elections, period. ''They were trying to explain election
outcomes as a function of campaign expenditures,'' he recalls,
''completely ignoring the fact that contributors will only give money to
challengers when they have a realistic chance of winning, and incumbents
only spend a lot when they have a chance of losing. They convinced
themselves this was the causal story even though it's so obvious in
retrospect that it's a spurious effect.''
Obvious, at least, to Levitt. Within five minutes, he had a vision of
the paper he would write. ''It came to me,'' he says, ''in full bloom.''
The problem was that his data couldn't tell him who was a good
candidate and who wasn't. It was therefore impossible to tease out the
effect of the money. As with the police/crime rate puzzle, he had to trick
Because he himself had typed in the data, he had noticed something:
often, the same two candidates faced each other multiple times. By
analyzing the data from only those elections, Levitt was able to find a
true result. His conclusion: campaign money has about one-tenth the impact
as was commonly accepted.
An unknown graduate student, he sent his paper to The Journal of
Political Economy -- one professor told him he was crazy for even trying
-- where it was published. He completed his Ph.D. in three years, but
because of his priorities, he says, he was ''invisible'' to the faculty,
''a real zero.'' Then he stumbled upon what he now calls the turning point
in his career.
He had an interview for the Society of Fellows, the venerable
intellectual Harvard clubhouse that pays young scholars to do their own
work, for three years, with no commitments. Levitt felt he didn't stand a
chance. For starters, he didn't consider himself an intellectual. He would
be interviewed over dinner by the senior fellows, a collection of
world-renowned philosophers, scientists and historians. He worried he
wouldn't have enough conversation for even the first course.
Instead, he was on fire. Whatever subject came up -- the brain, ants,
philosophy -- he just happened to remember something pithy he'd read. His
wit crackled as it had never crackled before. When he told them about the
two summers he spent betting the horses back in Minnesota, they ate it up!
Finally -- disquietingly -- one of them said: ''I'm having a hard time
seeing the unifying theme of your work. Could you explain it?''
Levitt was stymied. He had no idea what his unifying theme was, or if
he even had one.
Amartya Sen, the future Nobel-winning economist, jumped in and neatly
summarized what he saw as Levitt's theme.
Yes, Levitt said eagerly, that's my theme.
Another fellow then offered another theme.
You're right, Levitt said, that's my theme.
And so it went, like dogs tugging at a bone, until the philosopher
Robert Nozick interrupted. If Levitt could have been said to have an
intellectual hero, it would be Nozick.
''How old are you, Steve?'' he asked.
Nozick turned to the other fellows: ''He's 26 years old. Why does he
need to have a unifying theme? Maybe he's going to be one of those people
who's so talented he doesn't need one. He'll take a question and he'll
just answer it, and it'll be fine.''
he University of Chicago's economics department had a famous
unifying theme -- the Gospel of Free Markets, with a conservative twist --
and would therefore not have seemed the most likely fit for Levitt. As he
sees it, Chicago is about theory, deep thinking and big ideas, while he is
about empiricism, clever thinking and ''cute but ultimately insubstantial
But Chicago also had Gary Becker. To Levitt, Becker is the most
influential economist of the past 50 years. Long before it was
fashionable, Becker brought microeconomic theory to offbeat topics, the
family and crime in particular. For years, Becker was demonized -- a
single phrase like ''the price of children'' would set off untold alarms.
''I took a lot of heat over my career from people who thought my work was
silly or irrelevant or not economics,'' Becker says. But Chicago supported
him; he persevered, winning the Nobel Prize in 1992; and he became Steven
Levitt's role model.
Becker told Levitt that Chicago would be a great environment for him.
''Not everybody agrees with all your results,'' he said, ''but we agree
what you're doing is very interesting work, and we'll support you in
Levitt soon found that the support at Chicago went beyond the
scholarly. The year after he was hired, his wife gave birth to their first
child, Andrew. One day, just after Andrew turned a year old, he came down
with a slight fever. The doctor diagnosed an ear infection. When he
started vomiting the next morning, his parents took him to the hospital. A
few days later he was dead of pneumococcal meningitis.
Amid the shock and grief, Levitt had an undergraduate class that needed
teaching. It was Gary Becker -- a Nobel laureate nearing his 70th birthday
-- who sat in for him. Another colleague, D. Gale Johnson, sent a
condolence card that Levitt still quotes from memory.
Levitt and Johnson, an agricultural economist in his 80's, began
speaking regularly. Levitt learned that Johnson's daughter was one of the
first Americans to adopt a daughter from China. Soon the Levitts adopted a
daughter of their own, whom they named Amanda. In addition to Amanda, they
have since had a daughter, now almost 3, and a son. But Andrew's death has
played on, in various ways. They have become close friends with the family
of the little girl to whom they donated Andrew's liver. (They also donated
his heart, but that baby died.) And not surprisingly for a scholar who
pursues real-life subjects, the death also informed Levitt's work.
He and Jeannette joined a support group for grieving parents. Levitt
was struck by how many children had drowned in swimming pools. They were
the kinds of deaths that don't make the newspaper -- unlike, for instance,
a child who dies while playing with a gun.
Levitt was curious and went looking for numbers that would tell the
story. He wrote up the results as an op-ed article for The Chicago
Sun-Times. It featured the sort of plangent counterintuition for which he
has become famous: ''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.''
Trying to get his mind off death, Levitt took up a hobby: rehabbing and
selling old houses in Oak Park, where he lives. This experience has led to
yet another paper, about the real-estate market. It is his most
Chicago-style paper yet, a romp in price theory, a sign that the
university's influence on him is perhaps as strong as his influence on it.
But Levitt being Levitt, it also deals with corruption.
While negotiating to buy old houses, he found that the seller's agent
often encouraged him, albeit cagily, to underbid. This seemed odd: didn't
the agent represent the seller's best interest? Then he thought more about
the agent's role. Like many other ''experts'' (auto mechanics and
stockbrokers come to mind), a real-estate agent is thought to know his
field far better than a lay person. A homeowner is encouraged to trust the
agent's information. So if the agent brings in a low offer and says it
might just be the best the homeowner can expect, the homeowner tends to
believe him. But the key, Levitt determined, lay in the fact that agents
''receive only a small share of the incremental profit when a house sells
for a higher value.'' Like a stockbroker churning commissions or a bookie
grabbing his vig, an agent was simply looking to make a deal, any deal. So
he would push homeowners to sell too fast and too cheap.
Now if Levitt could only measure this effect. Once again, he found a
clever mechanism. Using data from more than 50,000 home sales in Cook
County, Ill., he compared the figures for homes owned by real-estate
agents with those for homes for which they acted only as agents. The
agents' homes stayed on the market about 10 days longer and sold for 2
Late on a summer afternoon, Levitt is in his office, deep inside
one of the university's Gothic behemoths. The ceiling is stained, the
plaster around the window crumbling. He is just back from sabbatical at
Stanford, and his desk is a holy mess: stacks of books and journals, a
green sippy cup and a little orange squeeze hippo.
This is his afternoon to meet with students. Levitt drinks a Mountain
Dew and talks softly. Some students come for research assignments, some
for advice. One has just written her undergraduate thesis: ''The Labor
Market Consequence of Graduating College in a Bad Economy.'' For a thesis,
Levitt tells her, it's very good. But now she wants to have it published.
''You write like a college student, and that's a problem,'' he says.
''The thing is, you're telling a story. There's foreshadowing going on,
all those tricks. You want the reader going down a particular path so when
they get the results, they understand them and believe them. But you also
want to be honest about your weaknesses. People are much less harsh on
weaknesses that are clear than weaknesses that are hidden -- as they
Be honest about your weaknesses. Has there ever been a
prize-winning scholar as honest about his weaknesses as Steven Levitt? He
doesn't understand economics, he claims, or math. He's a little thinker in
a world of big thinkers. He can't even open a jar of spaghetti sauce at
home, poor guy.
Friends say that Levitt's self-deprecation is as calculated as it is
genuine. Within academia, economists take pride in being the most
cutthroat of a cutthroat breed. Anyone who writes papers on ''Weakest
Link'' (contestants discriminate against Latino and elderly peers, Levitt
concluded, but not blacks or women) and sumo (to best manage their
tournament rankings, wrestlers often conspire to throw matches) had better
not also be arrogant.
Or maybe it is not self-deprecation at all. Maybe it is
self-flagellation. Maybe what Steven Levitt really wants is to graduate
from his ''silly'' and ''trivial'' and ''shallow'' topics.
He thinks he's onto something with a new paper about black names. He
wanted to know if someone with a distinctly black name suffers an economic
penalty. His answer -- contrary to other recent research -- is no. But now
he has a bigger question: Is black culture a cause of racial inequality or
is it a consequence? For an economist, even for Levitt, this is new turf
-- ''quantifying culture,'' he calls it. As a task, he finds it thorny,
messy, perhaps impossible and deeply tantalizing.
Driving home to Oak Park that evening, his Cavalier glumly thrumming
along the Eisenhower Expressway, he dutifully addresses his future.
Leaving academia for a hedge fund or a government job does not interest
him (though he might, on the side, start a company to catch cheating
teachers). He is said to be at the top of every economics department's
poaching list. But the tree he and Jeannette planted when Andrew died is
getting too big to move. You get the feeling he may stay at Chicago
There are important problems, he says, that he feels ready to address.
For instance? ''Tax evasion. Money-laundering. I'd like to put together
a set of tools that lets us catch terrorists. I mean, that's the goal. I
don't necessarily know yet how I'd go about it. But given the right data,
I have little doubt that I could figure out the answer.''
It might seem absurd for an economist to dream of catching terrorists.
Just as it must have seemed absurd if you were a Chicago schoolteacher,
called into an office and told that, ahem, the algorithms designed by that
skinny man with thick glasses had determined that you are a cheater. And
that you are being fired. Steven Levitt may not fully believe in himself,
but he does believe in this: teachers and criminals and real-estate agents
may lie, and politicians, and even C.I.A. analysts. But numbers don't.
Stephen J. Dubner is the author, most recently, of ''Confessions of a
Hero-Worshiper.'' He is writing a book about the psychology of