EXCERPT: 'SuperFreakonomics,' by Steven Levitt and Stephen Dubner

Read an excerpt of Steven Levitt and Stephen Dubner's new book.

ByABC News
October 16, 2009, 4:34 PM

Oct. 20, 2009— -- Economist Steven Levitt and journalist Stephen Dubner are at it again in the "freakquel" to their best-selling book, "Freakonomics." The duo managed to spin dense, dry data into best-selling cocktail party fodder by using crack dealers, sumo wrestlers and baby names to explain what people want and how things work under the law of unintended consequences.

"SuperFreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance" follows suit, exploring questions like: what does a street prostitute and a department store Santa Claus have in common? What's the best way to catch a terrorist? Can eating kangaroo meat save the planet?

Read an excerpt of the book below.

These days there is essentially a consensus among climate scientists that the earth's temperature has been rising over the long term and, increasingly, agreement that human activity has played an important role. "[W]e are now so abusing the Earth," writes James Lovelock, the renowned environmental scientist, "that it may rise and move back to the hot state it was in fifty-five million years ago, and if it does most of us, and our descendants, will die."

But the ways humans affect the climate aren't always as obvious as they seem. It is generally believed, for instance, that cars and trucks and airplanes contribute an ungodly share of green house gases. This has recently led many right-minded people to buy a Prius or other hybrid car. But every time a Prius owner drives to the grocery store, she may be canceling out its emission- reducing benefit, at least if she shops in the meat section.

How so? Because cows -- as well as sheep and other cud- chewing animals called ruminants -- are wicked polluters. Their exhalation and flatulence and belching and manure emit methane, which by one common measure is about twenty- five times more potent as a green house gas than the carbon dioxide released by cars (and, by the way, humans). The world's ruminants are responsible for about 50 percent more greenhouse gases than the entire transportation sector.

Even the "locavore" movement, which encourages people to eat locally grown food, doesn't help in this regard. A recent study by two Carnegie Mellon researchers, Christopher Weber and H. Scott Matthews, found that buying locally produced food actually increases greenhouse-gas emissions. Why?

More than 80 percent of the emissions associated with food are in the production phase, and big farms are far more efficient than small farms. Transportation represents only 11 percent of food emissions, with delivery from producer to retailer representing only 4 percent. The best way to help, Weber and Matthews suggest, is to subtly change your diet. "Shifting less than one day per week's worth of calories from red meat and dairy products to chicken, fish, eggs, or a vegetable- based diet achieves more greenhouse- gas reduction than buying all locally sourced food," they write.

You could also switch from eating beef to eating kangaroo -- because kangaroo farts, as fate would have it, don't contain methane. But just imagine the marketing campaign that would be needed to get Americans to take up 'roo-burgers. And think how hard the cattle ranchers would lobby Washington to ban kangaroo meat. Fortunately, a team of Australian scientists is attacking this problem from the opposite direction, trying to replicate the digestive bacteria in kangaroos' stomachs so it can be transplanted to cows.

An incredibly simple dilemma lies at the heart of global warming. Economists fondly call it an externality.

What's an externality? It's what happens when someone takes an action but someone else, without agreeing, pays some or all the costs of that action. An externality is an economic version of taxation without representation.

If you happen to live downwind from a fertilizer factory, the ammonium stench is an externality. When your neighbors throw a big party (and don't have the courtesy to invite you), their ruckus is an externality. Secondhand cigarette smoke is an externality, as is the stray gunshot one drug dealer meant for another that instead hit a child on the playground.

The green house gases thought to be responsible for global warming are primarily externalities. When you have a bonfire in your backyard, you're not just toasting marshmallows. You're also emitting gases that, in a tiny way, help to heat the whole planet. Every time you get behind the wheel of a car, or eat a hamburger, or fly in an airplane, you are generating some by- products you're not paying for.

Imagine a fellow named Jack who lives in a lovely house -- he built it himself -- and comes home from work on the first warm day of summer. All he wants is to relax and cool off. So he cranks the air conditioner all the way up. Maybe he thinks for a moment about the extra dollar or two he'll pay on his next electricity bill, but the cost isn't enough to deter him.

What he doesn't think about is the black smoke from the power plant that burns the coal that heats the water that turns to steam that fills the turbine that spins the generator that makes the power that cools the house that Jack built.

Nor will he think about the environmental costs associated with mining and trucking away that coal, or the associated dangers. In the United States alone, more than 100,000 coal miners died on the job over the past century, with another estimated 200,000 dying later from black lung disease. Now those are externalities. Thankfully, coalmining deaths have plummeted in the United States, to a current average of about 36 per year. But if Jack happened to live in China, the local death externality would be much steeper: at least 3,000 Chinese coal miners die on the job each year.

It's hard to blame Jack for not thinking about externalities. Modern technology is so proficient that it often masks the costs associated with our consumption. There's nothing visibly dirty about the electricity that feeds Jack's air conditioner. It just magically appears, as if out of a fairy tale.

If there were only a few Jacks in the world, or even a few million, no one would care. But as the global population hurtles toward 7 billion, all those externalities add up. So who should be paying for them?

In principle, this shouldn't be such a hard problem. If we knew how much it cost humankind every time someone used a tank of gas, we could simply levy a tax of that magnitude on the driver. The tax wouldn't necessarily convince him to cancel his trip, nor should it. The point of the tax is to make sure the driver faces the full costs of his actions (or, in economist- speak, to internalize the externality).

The revenues raised from these taxes could then be spread out across the folks who suffer the effects of a changing climate -- people living in Bangladeshi lowlands, for instance, who will be flooded if the oceans rise precipitously. If we chose exactly the right tax, the revenues could properly compensate the victims of climate change.

But when it comes to actually solving climate- change externalities through taxes, all we can say is good luck. Besides the obvious obstacles -- like determining the right size of the tax and getting someone to collect it -- there's the fact that green house gases do not adhere to national boundaries. The earth's atmosphere is in constant, complex motion, which means that your emissions become mine and mine yours. Thus, global warming.

If, say, Australia decided overnight to eliminate its carbon emissions, that fine nation wouldn't enjoy the benefits of its costly and painful behavior unless everyone else joined in. Nor does one nation have the right to tell another what to do. The United States has in recent years sporadically attempted to lower its emissions. But when it leans on China or India to do the same, those countries can hardly be blamed for saying, Hey, you got to free- ride your way to industrial superpowerdom, so why shouldn't we?

When people aren't compelled to pay the full cost of their actions, they have little incentive to change their behavior. Today, people are being asked to change their behavior not out of self- interest but rather out of selflessness. This might make global warming seem like a hopeless problem unless -- and this is what environmental activists like Al Gore is banking on -- people are willing to put aside their self- interest and do the right thing even if it's personally costly. Gore is appealing to our altruistic selves, our externality- hating better angels.

One of the unlikeliest positive externalities on record came cloaked in a natural disaster.

In 1991, an eroded, wooded mountain on the Philippine island of Luzon began to rumble and spew sulfuric ash. It turned out that beloved old Mount Pinatubo was a dormant volcano. The nearby farmers and townspeople were reluctant to evacuate, but the geologists, seismologists, and volcanologists who rushed in ultimately persuaded most of them to leave.

Good thing, too: on June 15, Pinatubo erupted for nine furious hours.

The explosions were so massive that the top of the mountain caved in on itself, forming what is known as a caldera, a huge bowl- shaped crater, its new peak 850 feet lower than the original mountaintop. Worse yet, the region was simultaneously being lashed by a typhoon. According to one account, the sky poured down "heavy rain and ash with pumice lumps the size of golf balls." Around 250 people died, mainly from collapsed roofs, and more died in the following days from mudslides. Still, thanks to the scientists' warnings, the death toll was relatively small.

Mount Pinatubo was the most powerful volcanic eruption in nearly one hundred years. Within two hours of the main blast, sulfuric ash had reached twenty- two miles into the sky. By the time it was done, Pinatubo had discharged more than 20 million tons of sulfur dioxide into the stratosphere. What effect did that have on the environment?

As it turned out, the stratospheric haze of sulfur dioxide acted like a layer of sunscreen, reducing the amount of solar radiation reaching the earth. For the next two years, as the haze was settling out, the earth cooled off by an average of nearly 1 degree Fahrenheit, or .5 degrees Celsius. A single volcanic eruption practically reversed, albeit temporarily, the cumulative global warming of the previous hundred years.

Pinatubo created some other positive externalities too. Forests around the world grew more vigorously because trees prefer their sunlight a bit diffused. And all that sulfur dioxide in the stratosphere created some of the prettiest sunsets that people had ever seen.

Of course it was the global cooling that got scientists' attention. A paper in Science concluded that a Pinatubo- size eruption every few years would "offset much of the anthropogenic warming expected over the next century."

Even James Lovelock conceded the point: "[W]e might be saved," he wrote, "by an unexpected event such as a series of volcanic eruptions severe enough to block out sunlight and so cool the Earth. But only losers would bet their lives on such poor odds."

True, it probably would take a loser, or at least a fool, to believe a volcano could be persuaded to spew its protective effluvia into the sky at the proper intervals. But what if some foolish people thought Pinatubo could perhaps serve as a blueprint to stop global warming? The same sort of fools who, for instance, once believed that diseases like polio could actually be conquered, that worldwide famine was not foreordained?

While they're at it, could they also make their solution cheap and simple?

And if so, where might such fools be found?

Excerpt from "SuperFreakonomics," provided and reprinted by permission by William Morrow/ An Imprint of HarperCollins Publishers.

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