Transcript Freakonomics Ch 6

Perfect Parenting Part II: Would Roshanda,
by any other name, smell as sweet?
Does the child’s name matter when it
comes to the child’s potential economic
success?
NO
(well, kind of)
Based on Data by Roland Fryer Jr., we know three
things:
1.) names chosen by black and white parents are
extremely dissimilar.
2.) a child’s name is not a determinant of success
but rather a predictor because of what it conveys
about a child’s parents (and what it means for the
child’s “likely” economic success.
3.) names tend to cycle through socio-economic
strata over time, moving from higher to lower
strata and eventually out of favor with most
parents.
So Mr. Martinez, what does any of this
have to do with economics???
(fantastic question sir, I am so happy you
asked)
1.) CORRELATION VS. CAUSATION
-We must be careful to distinguish between the two.
-While we may believe that a child’s name determines it’s success, it
is actually the relationship between the child’s prospects for success
and the parents socio-economic characteristics.
-***On a related note, it is worth considering whether a person’s name
could contribute to discrimination against that person.
2.) The “SNOB effect” in consumer purchasing:
-SNOB effect: when consumers may purchase a higher-priced brand of
some item simply to demonstrate social superiority.
-***this is cited as the ONE exception to demand unless you consider it
to be a matter of “tastes and preferences.”
- When high socioeconomic parents name their children eccentric names,
the kids tend to grow up to be successful as well.
-**compare this to “consumer income” and “buying” a name for your
child with names as “normal goods.”
-Normal/low socioeconomic parents tend to choose the names of people
they see as successful for their children (i.e. the eccentric ones)
-**like “number of consumers,” as they increase, so does the demand
for a specific eccentric name.
-And the pattern repeats…
3.) Relative Scarcity
-As the use of a name increases and, consequently, it becomes less scarce,
its market “value” decreases, and with it, the willingness of anyone to bestow
it upon their child.
-Now my ladies and gents, (Are you with me?) here is where we get down to
the nitty gritty…
1.) First, consider the “demand”
curve for a particular name.
- Because there is no “price” to
name your child, marginal cost is
zero
- The curve itself, represents the
marginal benefits of each additional
occurrence of the name.
-Since, there is no “price” for naming your child, you can change the “price’
axis of the graph to value, as in the “value” of the name in socio-economic
terms.
-Incidence of the name takes the place of “quantity.”
-Now, when high socio-economic parents name their child (ahem!) “Achilles”
for instance, the graph for that name is born (D1). And it is likely that Achilles
becomes something along the lines of a “baller.”
-As the “taste and preference” for
that name increases (because of
(1) the “snob effect” and (2) the
number of lower income parents
who choose that name to enhance
their child’s chances for success),
the demand curve shifts to the
right (D2)
- However, as time goes by and the name becomes more prevalent its relative
scarcity declines and it is no longer associated primarily with upper-income
families, its marginal value and “demand” decrease to D3.