
Ever wondered why suicide bombers should buy life insurance? "SuperFreakonomics" - the #1 NYT bestseller praised by Bill Gates - applies rogue economics to prostitution, terrorism, and climate change, revealing counterintuitive truths that sparked both scientific controversy and millions of dinner-table debates worldwide.
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Let's start with a fundamental principle that drives human behavior: incentives. People respond to incentives, often in unexpected ways. Take, for example, the case of prostitution in Chicago. We found that a street prostitute earns roughly $27 per hour, while a high-end call girl can make $400 or more. Why such a disparity? It's all about incentives and market forces. The street prostitute faces higher risks - violence, arrest, disease - and thus demands a wage premium. But she also operates in a saturated market with little differentiation. The high-end escort, on the other hand, offers a premium experience with lower risks, allowing her to command a much higher price. This isn't just about sex work; it's a lesson in how incentives shape markets across all industries. Consider another example: suicide bombers. Why would someone buy life insurance if they plan to die? It turns out that some terrorist organizations encourage their bombers to purchase policies to avoid suspicion and provide for their families. This counterintuitive behavior reveals how even the most extreme actions can be influenced by economic incentives.