Book Report-Entry 2_Freakonomics

The second chapter in the book “Freakonomics focuses on fear tactics, and information hoarding. We will get to the details a little later first I’d like to go through the chapter and summarize what I’ve read. The chapter starts out giving information about the Ku Klux Klan. It explains why the organization was formed and what its purpose was. It then goes into detail and explains that the KKK then develops into a larger terrorist organization. During the turn of the early 20^th century the KKK was a mysterious organization that nobody could seem to learn about. It kept its information shrouded in passwords and secrecy. The KKK operated under secrecy until a man named Stetson Kennedy came along. He came from the same lineage that probably would have otherwise would have influenced him to join the KKK. He thought the KKK to be small minded and heavily bigoted, he sought to fight against them by infiltrating their organization and exposing their secrets. He posed as a clansman and gained access to their most intimate secrets and learned of their inner workings. One important thing that he found in the KKK that is the running theme in this chapter was that the KK used fear and information hoarding advance their goals. The graph of the lynching of Africa American citizens within the United States illustrates this principle well. The decreasing lynching’s and increased membership of the clan shows that the majority of clan’s terrorist activities are based around fear and not action. This type of behavior was also found within several other groups in this chapter which I will discuss later. The KKK ended up becoming exposed through a radio broadcast series that used their secrets within the program itself. This led to an organizational collapse in the KKK because the clansmen were losing faith in the organization and lost control of the information they had. This decreased membership by a large margin and held of the KKK from being revived.

The second half of the book explores different groups that use the information hoarding and fear to their advantage. The first group was very brief and that was the business of term life insurance. This example presents more of what occurs when information cannot be contained and the advantage are lost by experts. The term life insurance price went down dramatically due to the internet. Internet provided people or in this case customers with the ability to search out the lowest price on term life insurance. This forced competitors to drop prices to low levels and made it such that they could no longer make huge profits off of their expertise and fear. We explore this theory more with the industry of real estate agents and how they manage their client’s houses. Real estate agents end up selling their clients house for much lower in some cases because the extra revenue generated by the sale is not worth working for in the agents mind. In most cases it ends up being a sum of a few hundred extra dollars. On the other hand when agents got to sell their own home they often keep it on the market ten extra days and use different language to advertise the home than they would advertise a client’s home. Some terms are a tip off to buyers, because it is considered to be a language of the real estate agent. Terms such a “spacious” and “well maintained” do not hold the same value of those as “corian” or “granite” which are fancier and more luxurious terms to use. However even with this information advantage real estate agents are still dealing with a closing information gap due to none other than the internet. The internet is a vast place with a lot of information available. It also can fall victim to the theory of information hoarding and fear itself. The end of the chapter explores this phenomenon in a social light. It looks at the online dating services provided by websites. It shows that the majority of people lie about their statistics. This is quite common among online users of dating services for a number of reasons. Some want to make their attributes more attractive or what have you. This relates to information hoarding because it shows us how we gain an advantage in a social context using information that others do not have. In essence perfect information may be impossible from attaining, and there is always going to be an advantage gap even if it is minute and small.