The Logic of Life by Tim Harford

Tim Harford is an English economist and journalist.  He was born in England in 1973 and now resides in London. He writes economics books and a column in the Financial Times,  He was educated at Aylesbury Grammar School, Berkshire and then at Brasenose College, Oxford where he got his undergraduate degree in Philosophy, Politics and Economics and his Masters degree in Economics.

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I’ve been trying to increase my understanding of economics lately, and found The Logic of Life really interesting.  The author asks that if humans are clever, why do we smoke and gamble, take drugs, or even fall in love.  He questions whether this is rational behaviour. He deudces that the behaviour of almost all individuals complies with economic logic. He takes into account future costs and benefits, and explains we are rational beings after all.  Now that I have read this book, I feel a lot more informed about the world: also better equipped to view my surroundings from new perspectives.

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This book is fantastic!  The author has a knack for delivering complex information in an entertaining way.   He also deals with issues that are relevant to every body.  His main point is that the decisions we make are rational.  With this assumption, he explains all kinds of interesting incentives to which humans respond.  Harford also claims that we respond to incentives that go beyond mere monetary considerations including sex, neighbourhoods, basically, anything that has a consequence, he suggests, can also be an incentive. 

Harford says that what he calls “rational choice theory” becomes controversial because it enters everyday human behaviour. For me, I do not think we can call every individual rational in the sense that we all respond to reasonable incentives: because we do not. Obviously we respond to incentives, but I am not sure how logical these incentives are.

This book is about working out what incentives we respond to in particular situations. I do not think that an aggregate number that points to a particular incentive really tells us much about whether a particular individual is responding to that incentive. That is why I think the incentives the author highlights are enlightening and useful, but that he should stop short of labeling life logical.  This is one of those rare beasts, an economics book that I understood!  I highly recommend it.

Valerie Penny

 

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