The Logic of Life: The Rational Economics of an Irrational World | Tim Harford

The Logic of Life: The Rational Economics of an Irrational World | Tim Harford | Logical Economics

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The Logic of Life:...

	The Logic of Life: The Rational Economics of an Irrational World Tim Harford Random House, 2008 - 272 pages average customer review:based on 29 reviews view larger image
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highly recommended

Life sometimes seems illogical. Individuals do strange things: take drugs, have unprotected sex, mug each other. Love seems irrational, and so does divorce. On a larger scale, life seems no fairer or easier to fathom: Why do some neighborhoods thrive and others become ghettos? Why is racism so persistent? Why is your idiot boss paid a fortune for sitting behind a mahogany altar? Thorny questions?and you might be surprised to hear the answers coming from an economist.

But Tim Harford, award-winning journalist and author of the bestseller The Undercover Economist, likes to spring surprises. In this deftly reasoned book, Harford argues that life is logical after all. Under the surface of everyday insanity, hidden incentives are at work, and Harford shows these incentives emerging in the most unlikely places.

Using tools ranging from animal experiments to supercomputer simulations, an ambitious new breed of economist is trying to unlock the secrets of society. The Logic of Life is the first book to map out the astonishing insights and frustrating blind spots of this new economics in a way that anyone can enjoy.

The Logic of Life presents an X-ray image of human life, stripping away the surface to show us a picture that is revealing, enthralling, and sometimes disturbing. The stories that emerge are not about data or equations but about people: the athlete who survived a shocking murder attempt, the computer geek who beat the hard-bitten poker pros, the economist who defied Henry Kissinger and faked an invasion of Berlin, the king who tried to buy off a revolution.
Once you?ve read this quotable and addictive book, life will never look the same again.

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Best of the current crop of pop-economic books

I've read a lot of books lately on human behavior, the economics of daily life, and game theory.

Although "Freakonomics" by Steven D. Levitt and Stephen J. Dubner is the most famous recent book of pop economics (and I did quite enjoy it), I think the best of the current lot is this one: "The Logic of Life: The Rational Economics of an Irrational World" by Tim Harford, a columnist for The Financial Times and Slate.

Harford takes on fascinating topics -- starting with the increase in the number of teenage girls performing oral sex! -- and explains why each behavior is strictly rational in an economic sense.

Now, yes, the behavior may not be what some people want -- but that's the point of the book: unless social engineers understand why it makes sense for individuals to behave as they do (and Harford's thesis is that almost all people do what makes best sense for them under their specific circumstances), any hope of changing that behavior is doomed to failure.

Other topics tackled include why it makes rational sense for companies to pay their CEOs what seem to most of us to be obscene amounts of money, and the various forces that contribute to the continuing disadvantaging of African-Americans.

It's a fascinating read, and it's also extremely well-written: clear, witty, and well-organized. Highly recommended.

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Logical Economics

If you enjoyed Freakonomics by Stephen Levitt you will love this book. The author will take you below the surface of reality and show why things are the way they are. This book does have some shocking things. (Like why oral sex increased dramatically among teenagers in the last few years:because of the fear of Aids). He explains why it costs so much to live in Manhattan versus rural areas, supply and demand, people chose to live in big cities for the opportunities that they provide. He also discusses that most of the time people make logical decisions based on reward and punishment. Yes even criminals the majority of the time think about the risk of getting caught and the severity of the punishment. The author backs up his conclusions with many notes and cites studies and facts to back up his conclusion. Why do CEOs and vice presidents make so much? Is anyone really worth the millions they make? The author argues no, a vice president's compensation is more of an incentive to motivate all the assistant vice presidents to work very hard to achieve the next level than it is a reflection of the current VPs worth. The author believes that most corporations run more on a tournament system where the employees that are winners on promotions win big with pay and that is the underlying motivation for all instead of current pay.
I found the book very enjoyable and hard to put down. If you love free market capitalism, economics, or psychology you will enjoy this book. Also check out Tim Harfords other book The undercover economist for more interesting and thought provoking reading.

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Very Readable, and Interesting

ON the whole a fairly interesting book. I have read a lot of economics books and this is one of the better treatments of behavioral economics. The author is not an economist per se, so there isn't much new here, but rather an overview of other people's work, but he presents it in a very understandable and interesting way. The chapter on racism probably being the best example. My biggest criticism would be that he never really defines his terms. He never says was rationalism is, nor does he address the ways that people may not act rationally, so the book never really has a coherent thesis, but rather becomes a series of independent thoughts.

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Good collection of recent work

This is a good collection of recent behavioral economics work by other economists. The chief benefit of Harford's book seems to be his order and thematic premise: people make logical decisions. However, this is not a new idea. Rather, it is a soft-handed defense of the central premise of economic thought: people make logical decisions.

The book reads very quickly and the various studies and papers are presented in an easily digestible format. Worthwhile reading for anyone with a passing interest in economics. Serious readers should go for the articles in the bibliography instead.

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reviews: page 1, 2, 3, 4, 5, 6

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