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The Conference Board Review® Article
Examining Why We Do What We Do
By Susan Webber
The Logic of Life :The Rational Economics of an Irrational World
By Tim Harford
Random House, $25.00
Susan Webber is founder of Aurora Advisors, a New York-based management-consulting firm. Her last article was "The Dark Side of Optimism," the Jan/Feb cover story.
Pop economics books are clearly good for those who write them; it is less clear that they are a plus for the discipline.
In The Logic of Life, Tim Harford looks at a range of phenomena — voter apathy, teenage oral sex, skyrocketing CEO pay, high divorce rates, workplace discrimination, racial segregation — and argues that all reflect responses to incentives. He makes a bold claim: "People are motivated by all kinds of normal human emotions . . . but our responses to them are rational."
Harford, a London-based economist and columnist for Slate and the Financial Times, is upbeat and appealing, and an easy read. But in the end, his efforts to support such a sweeping thesis rest on one-sided, questionable interpretations that seriously undermine the integrity of his work.
That isn't to say that The Logic of Life won't be popular with lay readers — perhaps to the degree of the author's bestselling debut, The Underground Economist. It has the fit and finish of a good book — lively writing, with a breezy mix of anecdote, historical reference, and research. It provides an engaging introduction to quite a few concepts, including game theory, Giffen goods, Thomas Schelling's work on neighborhood composition, and tournament theory.
But although Harford adds color to his subjects, the economically literate will find relatively little that's novel — and much that's annoying. Too often, the author's stories and factoids take the fore and, as in his chapter on the importance of cities in the information economy, get in the way of reaching a conclusion. His style, well suited to a blog or column, proves less successful in a longer format.
At times, Harford expends considerable energy to prove the obvious. After putting marriage under the microscope, he concludes that the divorce rate has risen because better access to employment allows women
to exit bad marriages — hardly a fresh insight. Elsewhere, he is overly simplistic. For instance, he repeatedly asserts — mostly with tongue not in cheek — that a single vote is worthless and therefore that voter apathy and ignorance are sensible and even laudatory. Yet in a book arguing that behavior is fundamentally rational, how does he explain places such as Australia, where, overwhelmingly, citizens are knowledgeable and engaged about politics near and far? Yes, voting there is mandatory, but that shouldn't matter — more votes make any one person's choice even less valuable. By Harford's construct, it simply makes no sense that, for instance, over 6 percent of Sydney's population — a significant number of people — took the time to publicly demonstrate against the war in Iraq, thousands of miles away.
But what is more troubling is Harford's insistence that the only lens for viewing human behavior is that of rational economics. It's an odd and crippling choice. Harford could have written much the same book and merely argued that rational economics provides an illuminating perspective. His dogmatic stance is contradicted by the vast literature on cognitive bias, well-documented findings of behavioral economics, and brain research, which shows that the limbic brain, the emotional center, often trumps the cerebral cortex, the seat of reason.
Comments? Write a letter to the editor.
Return to the March/April 2008 The Conference Board Review® issue.
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