By William Harms
Photo by Sally Ryan

The primary reason I took this class is because of the research and reputation of Professor Levitt...What he does when he teaches is to show how things are connected.”
—Aditya Tata, fourth-year

Students in his upper-level College class on “The Economics of Crime” watched intently as Levitt, the William B. Ogden Distinguished Service Professor in Economics and the College, did what he does best, using economics to challenge people’s perspectives on conventional ideas.

Levitt drew up “An Economic Model for Crime” using three equations: “C is for the Benefits of Crime,” he said, his hand moving fast. “L is for legitimate business,” he continued, and “P is for the probability of being caught.”

“What we do in economics is to simplify things,” Levitt told the class, though that turns out to be a complex and challenging lesson. As Levitt’s original work has brought him national prominence—including his two best-selling Freakonomics books, a New York Times blog, and a recent documentary film on his approach—he says teaching undergraduates remains one of his greatest rewards. In part it’s because he can see an immediate impact on young students, when they drop preconceptions about well-trod subjects such as crime and start peppering him with fruitful questions.

“The biggest impact of Freakonomics has not been on other economists, but on young people,” Levitt said in an interview. “Most of all, we wanted people to challenge conventional ideas. There is a sort of mythology around some ideas because that’s what we want to think.”

College students say they eagerly seek out Levitt’s popular class because of his reputation for clarity, rigor, and provocative ideas. His classroom skills earned Levitt the 1998 Llewellyn John and Harriet Manchester Quantrell Award for Excellence in Undergraduate Teaching.

“I’m taking this class to learn to think like an economist,” said Natalie Hall, a fourth-year in public policy. “He uses examples to show the unexpected.”

Drawing on the Work of a Mentor

“This is the Becker model,” Levitt said at one point to his class, explaining the work of his mentor, Gary Becker, University Professor in Economics—who, like Levitt, expanded the use of economics to explain social behavior.

Levitt then walked the class through how economic principles can shed light on the complex subject of crime prevention. One challenge, he said, is to spend the right amount of money to decrease crime, by determining when the investment in additional police officers no longer provides a return in crime reduction. “You could hire a million police officers to fight crime, but at some point the additional police officers don’t have anything to do,” Levitt said.

And how do you discourage crime at the least cost? Levitt said one idea emerged just across campus in 1970, when Becker had lunch at the Quadrangle Club with another future UChicago Nobelist, George Stigler.

During their conversation, Stigler proposed the notion of marginal deterrence. Take this example: suppose passengers on a subway are being robbed on a regular basis. Is the best idea to hire more police to patrol the subway cars or to monitor the turnstiles? It turns out that people who rob passengers are likely to be the same ones who jump over turnstiles, so guarding the turnstiles can be an efficient approach.

That sort of reasoning drew Aditya Tata, a fourth-year economics major, to Levitt’s class. “The primary reason I took this class is because of the research and reputation of Professor Levitt,” Tata said. “I’ve read his books—what he does when he teaches is to show how things are connected.”

From Freakonomics to the Classroom

In his research, Levitt mines data to find effects and trends that few would have thought possible; in effect, using economics as a tool to reveal “the hidden side of everything,” as the book puts it. By studying the results of standardized tests in Chicago, for instance, he discerned a pattern of responses that suggested teachers were cheating by filling in some answers for students.

His creative work emerges from a constant appetite for new questions.

“I have a set of questions, and for every 100 questions that I have, maybe I can only find data on 15,” Levitt said of his process at a 2010 screening of the Freakonomics documentary. “That’s more of a sieve or strainer through which the ideas get separated out from the ones that are good and the ones that aren’t.”

John List, the Homer J. Livingston Professor in Economics, said one of Levitt’s current projects, looking at the impact of advertising on sales, demonstrates an aspect of Levitt’s personality that isn’t always evident to people: his tenacity as a researcher.

“He is looking at the topic from all kinds of angles. It’s not just a matter of doing the research so he can read everything that’s been written about the subject, it’s a matter of pursuing the questions, to keep asking them, to make sure he understands the issue completely,” List said. “He will keep looking at this issue until he feels he has really figured out if advertising does have an effect on sales.”

Scholars from around the world come to Chicago to work with Levitt, who is director of the Becker Center on Chicago Price Theory at the University of Chicago Booth School of Business. Jan Stoop, a postdoctoral student at the Erasmus University in Rotterdam, the Netherlands, followed Levitt’s class on microeconomic empirical research and was encouraged “to take the extra step to go beyond the obvious.”

But Levitt also gave Stoop a lasting piece of career advice: Set aside 30 minutes each day, just to brainstorm ideas. “Although I don’t have time to take that advice literally,” he concedes, “I do take about an hour each week to just sit on a chair and think.”

And in many ways, prodding people to think may be Steven Levitt’s most lasting lesson.