Reacting to the way the free market was misrepresented and disrespected in the best-seller "Freakonomics" -- as a place where trickery, deceit and predatory behavior rules -- economist John Lott has given us "Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don't."

Lott, a prolific op-ed writer, is perhaps best known for his books "The Bias Against Guns: Why Almost Everything You've Heard About Gun Control Is Wrong" and "More Guns, Less Crime: Understanding Crime and Gun-Control Laws." He was at his office near Washington, D.C., when I talked to him Thursday, Aug. 16.

Q: There are lots of good economics books that extol the virtues of free markets -- why did you think we needed another one?

A: I’d like to think I have a lot of interesting applications and ideas other people haven’t thought of. A lot of this is based upon 25 years of academic research that I’ve done. I’d also like to think I have some advantage in maybe writing things and explaining things that other people have, too. To me, the basic notion of economics is that if something becomes more costly, people do less of it. Of course, the converse is that “incentives matter” -- the greater the incentive you get from something, the more that you do.

I really think that simple idea, over and over again, can explain so much of the world, whether it’s explaining why crime rates fall because it becomes riskier for criminals to commit a crime with higher arrest rates or higher conviction rates, to why out-of-wedlock births and single-parent families soared during the 1970s because premarital sex became less risky for people to engage in (there was a lower cost of engaging in it), to the impact that campaign-finance regulation has on getting incumbents re-elected, because it makes it relatively more costly for challengers to run relative to incumbents.

Q: What is the main point or theme of your book?

A: The main point is just to show how that simple idea in economics -- that if something is more costly you do less of it and that incentives matter -- can explain so much of the world around us. The other point is the fact that one of the benefits of the market is how it concentrates the costs and benefits of making decisions on the people who are making them.

Often when we see a problem with the market -- and I don’t argue that markets are perfect -- people often automatically say, “Well, we should have the government do something to fix it.” My point would be that many of the problems you can point to with regard to the market probably exist in spades with regard to the government doing it. The question is not the flawed, actual, real-world markets versus some perfection of an idea of the government doing it. You’ve got real-world situations in both. And often when you have some bureaucrat in Washington -- whose salary doesn’t vary on the basis of whether or not he makes the right or wrong decision -- making a decision that affects billions or tens of billions of dollars, there are some real-world problems that you have to take into account before you’d want to have the government make decisions on these things.

Q: How do you describe your politics and economics?

A: I suppose in many ways I probably agreed with the late Milton Friedman. Again, I think people make mistakes; markets make mistakes. The thing to remember, though, is that there are profits to be made in trying to solve those mistakes in different ways. While there are problems with the market, it’s kind of like the statement that people make about democracy -- there are lots of problems with it, but it’s better than the alternatives that are there. When we talk about regulation, we have to realize there are problems with the markets but there are also lots of problems that we have to remind ourselves exist with the government. So in many ways, I’d classify myself as a limited-government-type person who tries to make it so people are allowed to make decisions for themselves.

Q: What is the free market?

A: The free market is allowing individuals to make decisions for themselves. When you’re talking about trade, when I see two people trade, I assume that they both are made better off as a result of the trade. If you’re running a store and I give you money, I value the product you are giving me more than the money I am giving you, and the reverse is true for you. It’s the extent that we let people make decisions for themselves. In that case you bear all the costs and benefits of buying the product. That’s not saying you don’t make a mistake. I’m not saying that later on you don’t say, “Jeez, I wish I hadn’t bought that product.” But what I would say is that you are less likely to make a mistake because you know what your preferences are better than some guy in Washington is going to know, and you bear the costs and benefits of making that decision.

Q: What besides education and health care is an area where this country desperately needs a free market to operate? Continued...