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3.9 out of 5 stars
The Logic Of Life: Uncovering the New Economics of Everything
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55 of 60 people found the following review helpful
on 4 February 2008
Just finished "The Logic of Life", the second book by Tim Harford of "Undercover Economist" fame, and recommend it to anyone with an interest in economics and/or how the world works.

The book's essential premise is that you're not as stupid as you look: or, to put it another way, that human behaviour is the product of rational choices, however seemingly irrational, destructive or absurd the outcomes of those choices may be. The book then ranges across subjects as diverse as the causes of the industrial revolution, institutional racism and teen America's fondness for oral sex to prove the case. (Incidentally I tip my hat the poor sap who, one assumes, wagered that Tim couldn't work the phrase "teenage fellatrices" into the first few pages of a book of popular economics - and lost.)

"The Logic of Life" uses the tools (and research) available to the professional economist to make clear a number of seemingly-intractable puzzles: why in a seemingly democratic political system governments consistently favour small interest groups with huge subsidies (it's not worth the trouble for the voters to co-ordinate themselves to save a couple of cents each in taxes, but it's well worth the trouble of agribusiness to coordinate itself to demand millions of dollars in subsidies); whether colonial rule benefited the colonised territories (yes, when it left them with the institutions that are necessary to create wealth already in place); and whether it's a good idea for people who dine regularly together to take it in turns to pick up the bill (contrary to Tim's previous advice in his "Dear Economist" column for the FT, almost certainly - no one diner cares enough about a bill split ten ways to watch out for the restaurant ripping the party off, but if you take it in turns to pick up the tab the guy whose turn it is to pay will put a quick stop to unordered bottles of wine arriving at the table).

Probably my favourite part of the book, however, is the summary of William Nordhaus's work on measuring how improvements in technology from one period to another translate into economic gains. Nordhaus considered, and attempted to measure, the labour required to light a room of a house, using for the purpose first a pile of wood he had chopped, carried and ignited himself; then a Roman oil lamp; and finally a modern lightbulb. He concluded, perhaps not surprisingly, that the Roman oil lamp was not only easier and cheaper to light but produced a sensationally better quality of light, and that of course the modern lightbulb offered the same benefits over the Roman oil lamp again. Over to Tim:

"Nordhaus's experiments suggested that as far as light was concerned, economic growth has been underestimated not by a factor of two or three but ten thousand times over. A modern lightbulb, illuminating a room from 6pm until midnight every night for a year, produces the same amount of light as thirty-four thousand candles from the early nineteenth century. In the early nineteenth century, earning the money to buy thirty-four thousand candles would have taken an average worker all year. When I remind myself to turn off unnecessary lights, I am saving light that would have taken my grandfather's grandfather all his working hours to provide. For me, the saving is too small to notice."

Confirmation, if any more were remotely needed, that this is the best time in the history of the world to be alive. To - quite deliberately - mangle the words of that fool Cecil Rhodes, always remember that you are living in the C21st and have therefore come first in the lottery of life.

"The Logic of Life" is not only an excellent summary of the current state of the art in behavioural economic research and a treasure-trove of fascinating factoids, but a warm and engaging book, a rational man's attempt to share with the reader his obvious love of the world and its rational foundations. Perhaps the truth won't make you free, but understanding how the world works through the lens of "The Logic of Life" will make you appreciate it a whole lot more.
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20 of 22 people found the following review helpful
on 6 April 2008
I quite enjoyed the Undercover Economist, but I was less impressed by Tim Harford's second book The Logic of Life. I guess it's primarily about asserting rational choice as a (the?) major force in human history and society. This comes at a time when behavioural economics is on the rise and challenging (successfully or otherwise) economic assumptions about rationality.

I think Harford does quite a good job at arguing back against the behavioural approach (though this isn't a stated objective). He makes the point early on that much of the research that suggests we make 'irrational' decisions comes from labatory experiments utilising more abstract ideas. However when we are in the real world (or in our comfort zone as Harford puts it) we are more likely to act rationally. Experience makes us more able to make the rational choice. In contrast when we are in a new and unusual situation - interestingly he uses the example of deciding how much to save for a pension - we find it much harder to act rationally.

He then goes on to apply the rational choice perspective to various different issues. The section on bosses' pay is interesting, and presents a fairly convincing argument both for why management pay is probably undeserved and why shareholders in companies with high pay may not bother to challenge it. I liked the comparison to splitting the bill at a meal. (He could have added the principal-agent problem of the investors not typically investing their own money).

I found the section on 'rational' racism particularly interesting/depressing. It describes how the impact of racism can become a vicious circle - if black kids don't see an advantage in education (because employers don't take them on anyway) they won't bother, and in turn that will reinforce employer prejudices about the educational standards of black kids. There's also some interesting stuff about how neighbourhoods end up very segregated because of a relatively mild preference to not live in an area where people of your ethic group are a small minority. This actually looked familiar to me - I think Paul Ormerod covered similar ground in Why Most Things Fail.

Sometimes I think he overplays it. At one point he asserts in passing that obesity in wealthy societies might be a 'rational' response to the ease of getting food, and time required to undertake exercise. Maybe, and maybe it's much more complicated than that. Why are some people obese and others not? Is it just because those people who are obese are responsing to different incentives - or are other factors at play?

And its little examples like this that bother me about the book. They remind me that as seductive as rational choice is as a perspective for explaining what is going on it has its limitations. Though I finished the book more convinced by some ideas (the stuff about unreliable political regimes and their impact on economies can surely be applied to places like Zimbabwe) I didn't find it anything like as illuminating as I thought I would.
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29 of 33 people found the following review helpful
on 5 February 2008
A lively and thought-provoking follow-up to Harford's debut book The Undercover Economist, which used textbook economics to throw new light on everyday life. In this second book Harford moves well beyond the textbook to take us on a tour of some cutting edge research and thinking that's emerging from what he calls a "new breed of economists". Among them is Steve Levitt, whose Freakonomics popularised the notion that economists can have interesting things to say about areas you wouldn't normally expect them to be poking their noses into - but Levitt is only one of many academic researchers who are cheerfully roaming over other people's turf from their economics labs, so Harford's book serves as a timely overview of a newly sexy subject.

The result is a startlingly diverse collection of insights and anecdotes which are all held together by one central premise - that you can explain a lot about life by starting from the simple assumption that people are fundamentally rational. This is not an uncontroversial assertion - among the "new breed of economists" are those melding economics with psychology into a fledgeling discipline of behavioural economics, which focuses on our irrational quirks. Harford's view is not to dismiss these human foibles, but to argue persuasively that they shouldn't be overstated, and that in most important situations we behave rationally - that is, subconsciously evaluating costs and benefits and responding to incentives - to a remarkable extent.

Harford's writing is a joy to read, especially when he's impishly puncturing pomposity - my favorite is the "why your boss is overpaid" chapter, which discusses several theories that could rationally explain the obscenely high wages commanded by modern CEOs (hint: none of them are "because they're worth it"). One great lesson made clear by this book is that individually rational decisions can lead to socially horrible outcomes, a conclusion never clearer than in the discomfiting chapter on "rational racism". It's a valuable reminder that economics is a means not an end - rational choice theory doesn't dictate what society should be like, rather it teaches how we can harness rationality by changing incentives to shape the society we want.
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8 of 9 people found the following review helpful
on 17 February 2008
If I suggested that this was 'a stonking good read' you might think this is the wrong term to use. You would call a novel 'a page turner' and describe it as 'a stonking good read', but not a non-fiction book, let alone a book about economics. Yet, this is no ordinary economics book. Like his previous book 'The Undercover Economist' you don't need to be an economist to read it. Indeed, if there is a prerequisite, it to be interested in life rather than have a head for numbers.

Yes, there are other books that try to make economics interesting; the difference with this book is that the author doesn't try too hard. He uses economics to explore what is puzzling, sometimes irrational and bizarre - like racism, why your boss is overpaid (a personal favourite), and a subject that must have been chosen for the press releases, oral sex. Whilst still as wide ranging as his previous book, this one does not skip through so many economic theories and feels better for it. Having read it, I now have another way to think about those things that seem irrational and illogical, and that is not just limited to the examples in the book.

I would recommend it to anyone who read The Undercover Economist, but you don't need to have read that book, read the Financial Times, or have any previous knowledge in economics no matter how popular it is becoming. This book is easy to read, it doesn't patronise but it's interesting, because it has shares a joyful interest in life.
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14 of 16 people found the following review helpful
Many of the popular books about economics seek to convince you that human beings are wildly illogical. Why? Because the dollars and sense of what people say and do don't always match up well. Tim Harford gets past that problem by mostly ignoring the academic studies that seem far removed from reality by emphasizing what people do when they are new to something.

The book is at its best when he's explaining how systemic biases can create large shifts in human behavior. For instance, a slight preference for having neighbors who are like oneself can lead to quite substantial segregation along race, religion, education, and economic lines.

For me, the book lacked any big "gotcha" like the finding that abortions may have contributed to lowering crime.

In almost every section, I thought that Mr. Harford was arguing (or at least haranguing) beyond the limits of his evidence.

When he moves beyond being an observer into someone trying to convince you what people are like, I found he was often offensive. There's a section about how those who aren't native to Africa "solved" the problem of dying from malaria by transferring slaves from Africa to milder climates that's insensitive at best.

To Mr. Harford's eye, we are so much creatures of economics, comfort, and the pursuit of gain that there's no role for any other human motives. That's a too limited view of people . . . and hardly an uplifting one.

Unless you are addicted to Mr. Harford's writing, skip this book. It won't tell you much that you need to know.
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TOP 1000 REVIEWERon 13 September 2011
There has been a debate within economics circles between behavioural economists who have tempered models and premises about decision making with psychological research findings and more classical ideas about rational choice making.

Harford, I get the impression, is definitely a proponent of the classical rational choice making theories and models, this book in fact sets out to investigate all the manners in which individuals who do not appear to be acting in as rational, utility maximising decision makers are, when you frame the investigation properly, behaving logically.

Possibly the most cited example from this book that I was familiar with prior to reading it is the scandal in the US about the increase in oral sex between adolescents. Harford explains how as a consequence of rising awareness, educational programmes about HIV for instance, this was a logical development or consequence rather than some fearful and unfathomable development. This is only about three or four pages long, if even that, at the beginning of the book and not even the best content in the book.

The book has a clear contents, index, it is structured well and the pace and style of writing make for a good accessible and interesting read. I believe that the general reader and economically interested or studious reader alike would appreciate this book and I would recommend it to either, it is better than Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, in my highly subjective opinion, definitely better than The Undercover Economist and Dear Undercover Economist: The Very Best Letters from the "Dear Economist" Column: The Undercover Economist Solves Life's Everyday Mysteries and Problems which preceeded and came after it.

I dont consider all the conclusions and content to be as convincing as that which I have read from behavioural economists such as in Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism (New in Paper) or Predictably Irrational: The Hidden Forces that Shape Our Decisions but it resembles them more than other economics books such as The Best Book on the Market: How to Stop Worrying and Love the Free Economy.
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10 of 12 people found the following review helpful
on 19 February 2008
I highly recommend this book. I really enjoyed reading about the theories and the evidence behind 'the new economics of everything', which looked at human behaviours from a perspective that was less familiar to me, as a psychologist, but which I found interesting, valuable and accesible. The biographical and historical details meant that 'logic of life' had a lovely story-like quality that only an accomplished social science writer like Tim Harford is able to achieve. Looking forward to his next book.
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on 19 January 2010
The book is about human decision making and why we are the way we are. Harford uses examples and studies by economists all over the world to explain why neighbourhoods and ghettoes spring up in the ways they do. Harford also talks about the 'rational' reasons behind racism; he's not defending it but reporting on some of the research that's been done. I found the book fascinating, although he did lose me occasionally. I suspect that even an attempt to make economics populist still can't disguise the fact that economics is a fairly hardcore, numbers-driven subject!

In the opening chapter, Harford talks about an American 'pandemic' of teenagers having more oral sex. Harford explains from an economist's point of view how this can be seen as a rational behaviour given some of the other pressures going on in the world. The example is a little sensationalist and I can see why he included it - a little bit of titillation but intriguing enough to draw the reader in. I can, however, see that some readers may be put off by this slightly tabloid-esque opener. I would recommend that you read on regardless because it's a good book.
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12 of 15 people found the following review helpful
After reading Harford's previous book "The Undercover Economist" I was looking forward to reading this one. Alas it was a disappointment.

Harford starts well enough and the first six chapters are more or less well reasoned. Thereafter it's all down hill and the quality of exposition falls apart. As far as I can see for the last three chapters Harford lets his writing style get the better of him and sacrifices clarity in favour of colloquiality. As a result these chapters gloss over their material and fail to sustain a coherent exposition. Readers not familiar with economics might be fooled but others are not :-(

The material in Chapter 7, "The World is Spiky", is annoyingly superficial and particularly irritating to a mathematically literate reader. Chapter 8, "Rational Revolutions" is hopelessly adrift in a laughable pseudo-analysis of first-past-the-post voting systems in which Harford confuses statistics and game theory. In Chapter 9, "A Million Years of Logic" he states, "... malaria is an unlikely candidate for being a cause of underdevelopment." This shows appalling ignorance. Despite this Harford bowls along in an ever more cocksure tone reminiscent of the deeply dismal Steven Landsburg whose works I have panned in other reviews.

Finally, and most laughably in a popular economics book, many of the further sources that Harford cites are in peer-reviewed economics journals and grey literature. Those of us who have access to academic libraries can follow up the references but how many others are in such a position?

This book was a huge disappointment. Harford can do and should have done much better.
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on 1 September 2009
This book seems to be mostly a review of the work of some economics researchers. It mostly looks at the rational motivations people have in some unusual (sometimes non-monetary) markets. Some of the ideas in the book are very interesting - racism in the jobmarket could be self-reinforcing, women may move to cities to be closer to rich men, etc - however I didn't feel there was enough detail to really convince me that the ideas proposed were correct. The book is really quick and easy to read, and I'd definitely prefer the book to have been more difficult and detailed, as it is you'll be able to pick lots of holes in it. But the book is definitely worth reading just for ideas that it sketches out, it won't blow your mind but it's fairly interesting.
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