Friday, July 29, 2011

The Logic of Life by Tim Harford

Tim Harford published The Logic of Life, his defense of human rationality, in 2008. This was after he made his name and his reputation with The Undercover Economist, but before he wrote his brilliant Adapt: Why Success Always Starts with Failure.

I read it after the both of them, so it is perhaps unfair of me to be slightly disappointed that it doesn't show the same freshness of The Undercover Economist or the same unity of purpose as Adapt. If The Logic of Life has a common thread linking its anecdotes and explanations, it is that human beings apply rationality and logic in making decisions, even if they don't generally appear to be doing so.

Whether human beings are truly as rational as economists say has been a topic of debate, and it is a debate that I am not interested in pursuing, because I feel it hinges more on semantics than philosophy and psychology. Take the classic example of a person who buys a pair of brand-name jeans that are three times as expensive as generic jeans of comparable quality, because he feels there's something intangible about the brand-name jeans that makes them better. Is that rational? I don't know, but I bet any discussion will boil down to how, precisely, one defines 'rational', and I don't care enough to suffer through that discussion.

So what we've got is a collection of anecdotes and studies. Make no mistake, it's a well-written and interesting collection of anecdotes and studies. I was midway through when I decided it was the perfect book for the kind of person who likes to bond with you at cocktail parties by spouting fascinatingly unconventional and contrarian points of view that, upon a moment's reflection, make more sense than the conventional wisdom. In fact, reading Tim Harford's prose here is like finding yourself talking to an outgoing example of that sort of person. I wonder what he's like at cocktail parties.

I perked up at the latter chapters as Harford delves into politics, where he explains how it is that in many industrial countries, particularly the U.S. and Western Europe, rural areas are able to essentially siphon money and resources from urban areas using agricultural subsidies.

The basic reason is that because a subsidy benefits a small group of people in a big way, they have no trouble mobilizing their political resources to make sure they get what they think they deserve. And as for the vast majority who derive no benefit from the subsidy (or negative benefit - take sugar subsidies, which Harford feels are harming the overall U.S. economy), the cost is dispersed over too many people for anyone to really get up in arms over it.

The dynamic doesn't necessarily have to be rural vs. urban. It was the exact reverse in some developing countries in the '60s and '70s that had recently achieved independence, where most people lived in rural areas (and tended to be ill-informed) and the national government was a direct successor to the old colonial authorities who had milked the countryside for all they could get.

Anyway, can I recommend The Logic of Life, Harford's awkward middle child of a book? Sure, why not. At the very least, it'll supply you with food for thought, not to mention material for your next cocktail party.

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