Interview: Chad Troutwine of ‘Freakonomics’

Who could have imagined that economics would become cool? Often referred to as “the dismal science,” economics has long been associated with formulas filled with little Greek letters and articles that propose valuing human life at x. But Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, by economist Steven D. Levitt and journalist Stephen J. Dubner, has become a blockbuster best-seller with a sequel and now a major theatrical release documentary with top documentary makers each taking on a different chapter of the book. I would not be surprised if the next development is a Broadway musical or a PlayStation game.

The Steves had a couple of great ideas to capture readers’ attention. First, there’s that “rogue” idea, right there in the title of the book. We’re always interested in rebels; even if they’re wrong, there will be some fights to sort it all out, and even intellectual battles are fun. And second was chutzpah; they were willing to take on conventional wisdom and widespread assumptions and back up their controversial findings with data and hard-core analysis. That extends even to the marketing of the movie itself; they are experimenting with economic incentives like a “pay whatever you want” screening and an unprecedented simultaneous release in theaters, on demand, and on iTunes.

Producer Chat Troutwine is a lawyer and entrepreneur, and I had a blast talking to him about making the film.

What is different about the way economists look at why we do what we do?

Steven Levitt is not the typical economist. There is not anything unique about his tools; what is fascinating is the things that interest him. He has applied his lens to areas that have mostly gone ignored, and he struck a chord. He’s an odd bird. He brings a playfulness to his work, but he is respected as an academic. He has captured the popular fancy with the books and blog and radio show and he maintains a deep respect from his colleagues. He was recently called the most influential and powerful voice among the esteemed group at the University of Chicago.

There are a lot of different kinds of economists. What category would you say Levitt is in?

He really is in some ways an applied or empirical sociologist. He just tends to use the tool kit that you typically associate with economists. He loves big pools of data and using regression analysis, seeing if he can shine a light into areas that were previously darkened.

Probably the best example of that was his rigorous analysis of the data on sumo wrestlers. As in many other cases, he was able to bring clarity to a counter-intuitive conclusion.

That’s right. It was an inescapable conclusion that there was collusive behavior, match-rigging, and rampant cheating in sumo culture. He showed an almost statistical certainty; there was no mathematical likelihood of those results if they were randomized. As soon as those results came out, they created a bit of a scandal in Japanese culture. Generally speaking, the reaction was, “That can’t be accurate.” But within two years there were several investigative reports proving abuse and match-rigging phenomena. Had Levitt not done his investigative work, we might still think that sumo culture was as pristine as Shinto culture.

I think that’s what’s compelling about his work, uncovering perverse incentives.

If you don’t, then you reap what you sow and you will be surprised because you did not understand what you were sowing. You’ve created an incentive scheme that will lead to what in hindsight should have been predictable results. There were also some surprising conclusions. That’s the great thing about Levitt and Dubner; they will devote a great deal of time to learning about these things and they don’t shape the facts to fit what they hope will be revealed.

Given the rigor of their analysis of incentives and options, how did you persuade them to turn over their work to someone they had never met?

Handing over their baby, all their work to someone they had just met — it took some months to win them over. I reached out to them within a few months after the book was published. I wrote them a long, personal note describing almost exactly what, four years later, we produced. They wrote back warmly and told me to work with their agent. The agent was a little chillier and said I should keep an eye on the trades because they were close to a deal with a studio. But that didn’t materialize so I circled back and won them over.

What they had to trust me to do was make the material engaging and entertaining but still take the same position they do, as a kind of intellectual referee. Levitt and Dubner do not take sides. People try to assign a slant or position to them, but I don’t want a label on it at all. The work speaks for itself.

Each of our directors is strong-willed and has a point of view. Occasionally our film diverges, subtly or sometimes even more aggressively veers away from the book. One example is the sumo wrestler segment we were just talking about. Alex Gibney sees real parallels between the financial services community and investors and the way the sumo culture let down the Japanese culture. But Levitt had not done the research to back that up, so that’s a more speculative association.

With Morgan Spurlock , who did the baby-name segment, he actually went to another economist, who has been a critic of some of Levitt’s work, and it goes in both directions; Levitt has in a nice academic way taken apart some of his work as well. But Morgan thought it was important to bring it into the film. We weren’t afraid to bring into the film not only people who are closely allied with Levitt’s work but those who come up with some contrary conclusions.

Why did you decide to use different directors for each chapter?

As I read the book the chapters were disconnected but with similar themes about incentives and better decision-making and looking inside Levitt’s mind. I thought perhaps it would be fun and the best way to understand the material to bring on different film-makers to each take on one subject. I wanted to keep people engaged and entertained without dumbing down the material in any way and I thought the different visual styles would help make that work. Each segment will be completely different and visually arresting. And the interstitial material is some of the best of what’s in the film. I always cringe when I see the comparisons in reviews, but it is very satisfying that each segment has been highlighted by at least one critic as the best. But it was a challenge! I don’t want to say it was like making five movies but in terms of the resources and time and stress, it was more challenging than making a single feature.

You had some of the top documentary directors working on this film, each with a very individual style — how did you decide which director did which segment?

It worked out perfectly. I met Morgan Spurlock socially when I was getting close to getting the rights to the book and asked him if he would be interested. He said, “I’m in!” We just shook hands on it. That enabled me to pluck up my courage and go to Alex Gibney, the dean of non-fiction film-makers. He was in immediately and had a fondness for the sumo segment. He had lived in Japan. No one understands cheating and corruption and bringing that to life on film than he does. Heidi Ewing and Rachel Grady had some interest in the abortion and crime segment. Eugene Jarecki had a full-developed pitch for that one; he said he saw parallels to “It’s a Wonderful Life.” We can go back and imagine a world had their not been legal abortion. He wanted to do it animated to soften the emotionalism of any discussion of abortion. That gave Heidi and Rachel a chance to do what they do best, verite, with the new material on the experiment in Chicago for giving kids cash for good grades.

You are using economic principles and theories to help you design an unprecedented distribution model for this film.

Most of my family comes from very rural parts of Missouri. One reason I wanted “Freakonomics” to be available on many different distribution platforms is I wanted to democratize the process as much as possible. This is the first time a movie has been available on iTunes before its theatrical release. For people who read the book, there is a great section about a man who sells bagels in offices here in Washington DC. He leaves a wooden box and people pay what they want, the honor system. He has tracked it meticulously at different locations every day, every year. And people in the most expensive offices pay less. Radiohead made their album “pay what you want.” A lot of people thought it was a failure because they made two pounds, a little less than four dollars, per download. But there were no middlemen, and they are convinced that they were able to reach dramatically more consumers and expand their concert sales. We gave people the chance to buy their tickets online in ten cities on a single night, one screening. You logged on and filled out a very short survey and bought a ticket for anything from one penny to $100. We sold out of seven cities in three hours. The most popular choice? One penny. That was mostly for fun. I think some of the other parts of the experiment will have a more lasting impact, the fact that we made the film available on demand and on iTunes, that will be an important legacy.

Since the film focuses so much on incentives — how do you define your goals for this movie?

I had three goals for this film. First, I wanted it to stand alone artistically, to have people look at it and think it was a wonderful film as a work of art. Second, I wanted it to be financially successful so that I can continue to make other films. I put up half the budget personally and so I have a real financial stake, real skin in the game. Third, I am a total believer in this way of thinking. I am convinced that if we have the right data it will allow us to be better decision-makers. That doesn’t mean that we omit our moral compass or experience or other things that go into what we assign to intuition.

For example, the State of Illinois wanted to improve child literacy so they sent a book to every family. But the program failed. It based on good intentions but not on good data. It is very sweet and a bonding moment to read to your child, but it helps inspire him to read if you get him to read to you. Very often the conventional wisdom is accurate or at least consistent with the data. But sometimes it isn’t. Correlation is not the same as causality. I wanted to start that conversation.