The Economic Approach refers to analyzing human behavior and societal issues through the lens of incentives, costs, benefits, and trade-offs. It assumes that individuals and organizations respond predictably to incentives and make decisions aimed at maximizing their utility. In SuperFreakonomics, this approach is central to the authors’ approach of exploring unconventional topics such as sex work, climate change, and healthcare by identifying hidden incentives and unintended consequences. For example, the book examines how poorly designed incentives can backfire, as with environmental regulations that lead landowners to destroy the habitats of endangered species. Ultimately, the economic approach in SuperFreakonomics reveals that seemingly irrational or complex behaviors can often be better understood by applying the principles of economics.

Supply and demand are foundational economic concepts describing the relationship between the availability of goods or services (supply) and the desire for them (demand). Prices and behaviors in markets are shaped by the interplay of these forces; when demand exceeds supply, prices rise, and when supply exceeds demand, prices fall. In SuperFreakonomics, these principles are applied to unconventional topics like sex work, where high demand for services and limited supply allow individuals like Ally to command premium earnings. The book also explores how the concept of supply and demand influences broader societal issues, such as the cost of healthcare and environmental resources.