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 | Hidden logic revealed!

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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 37 reviews view larger image
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Learn to go past knee-jerk explanations to a deeper understanding of our world

Increasingly, economics is being used to explain the actions people take outside of their financial lives and then turned into books that are readable and, dare I say, interesting for lay people. Harford's latest work is the best of this crop that I've read so far.

What Harford does so well is pick interesting everyday topics, some big and some small, explain the rationale typically used to explain why things are the way they are, and then paint a new picture of what is driving peoples' actions. Harford explains why people will pay more to live in cities and why new tele-commuting technology will make cities more attractive, not less. He digs into the sadly explainable roots of racial discrimination in hiring and why some students are making the rational choice when they conciously decide not to study. The reasons may surprise you, but you will enjoy his explanations and frequently end up nodding in agreement or shaking your head in frustration with the inescapable but lousy conclusions.

The greatest thing about Harford's book is how clearly it demonstrates the value that economics can deliver. Done right, economics is a powerful tool for identifying the root causes of both good and bad trends. If a trend is good (Harford explains historic growth in wealth) you can learn how to promote it further. If a trend is bad (the decline of a city like New Orleans or Detroit) you can figure out how best to deal with it. Economics gives its users a tool for objective, clear thinking that is tough to come by.

Highly recommended for anyone who wants to develop their thought process. You'll come away a smarter voter, wiser consumer of news and thinking more clearly all-around.

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Hidden logic revealed!

"The Logic of Life" is as fun a read as Harford's "The Undercover Economist"--I found his analysis of racism, romance, and addiction particularly fascinating. He tackles a dizzying array of topics without sacrificing rigor, humor, and stories that prove the adage, truth is stranger than fiction. In short, this is what I look for in a book--entertainment and enlightenment!

Eco Prof

The book is much like Freakonomics, but I liked it better than Freakonomics. If you loved Freakonomics, you love Logic of Life.

The sex market

Readers interested in an economic description of human behavior might enjoy a novel about sex tourism in Haiti: Naked in Haiti: A sexy morality tale about tourists, prostitutes & politicians.

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The problem is the uncertainty and randomness of life

The author of this book is an economist.That is the problem with the book .His economics training leads him to try to emphasize a neoclassical,Bayesian,subjectivist view of a world comprised of ultimately rational decision makers making risky choices based on the probabilities and the rewards(the outcomes which provide the incentives or motivation to act)available to them at a particular point in time.This is a very narrow deductive approach to decision making.It basically ignores two extremely important constraints on rational decision making ,as viewed from the neoclassical perspective, that J M Keynes and F Knight emphasized in the first half of the 20th century and D.Ellsberg emphasized in the second half.First,the vast number of applications discussed in this book actually involve some degree of uncertainty and are not just situations of risk.Uncertainty involves attempting to make a rational decision in situations where one can't figure out the risk-reward ratio in any reliable manner.One does NOT know the odds in a clearcut way.The odds have to be represented by fairly wide intervals.The decision context is open and inductive and not closed and deductive.Second,economists essentially ignore the very significant role that luck(randomness)plays in life.Again ,the neoclassical view ,that a decision maker knows the odds ,is suspect.Two excellent books by N N Taleb,Fooled By Randomness(2004) and The Black Swan(2007), serve as an effective counter balance or antidote to the economist view of decision making to this book.Luck and the impact of single,unique events(last emphasized by Keynes) plays a predominant role in the real world.Buying either one of Taleb's books will allow a reader to decide for himself which view of the decision maker (struggling to survive in an uncertain world or choosing the optimal course of action in a risky world) is primarily correct.
Finally,the reader should note that the socalled " new behaviorist" approach is really only a footnote to the work of Keynes,Knight,and Ellsberg that is mistaken in viewing decision makers as acting in an "irrational" way.It is incorrect to claim that decision makers,who resort to heuristics or rules of thumb in situations of uncertainty,where the relevant information,data,and knowledge available in the real world is very incomplete ,are acting irrationally.

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reviews: 1, 2, 3, 4, 5, page 6, 7, 8

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