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The Logic of Life

Uncovering the New Economics of Everything

By Tim Harford

(13)

| Paperback | 9780349120416

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The Logic of Life: Uncovering the New Economics of Everything

In The Logic of Life Tim Harford offers an entertaining survey of applications of "rational economics" to aspects of everyday life and politics. He presents work on sex and drug-dealing, poker tournaments, divorce and marriage, pay scales, neighbourh ... (read full critics)

dannyreviews published on Wed, 25 Aug 2010

2 Reviews

If Harford's 'The Undercover Economist' has not disappointed you already, you sure will with this one. The moral of the story is do not buy books simply because it's on a promotion table.

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Dora Tsang said on Apr 14, 2009 | Add your feedback

I should have learned a lesson after reading Tim Harford's first bestseller "The Undercover Economist": that Harford is good at throwing out an eye-opening premise at the outset and building his discovery of strange pattern around a theory, which is nothing but simple logic. He did it again in "Th ... (continue)

I should have learned a lesson after reading Tim Harford's first bestseller "The Undercover Economist": that Harford is good at throwing out an eye-opening premise at the outset and building his discovery of strange pattern around a theory, which is nothing but simple logic. He did it again in "The Logic of Life".
I must admit that the introductory chapter is very interesting, but it all goes down from here. In the first chapter, Harford set the scene of his "great discovery" of the logic of life, which is fraught with illogical phenomenon. Basically, he said that the rational choice theory of economics explains most irrational behaviours of human beings, and we are rational beings after all. Rational choice theory, despite its high-sounding intonation, is in fact very simple: that rational people respond to incentives, make decisions by weighing up the overall costs and benefits, consider the future consequences of present choices, and have intelligible motives. Harford introduced this concept to explain today's corrupt and immoral behaviours ranging from teenage sex, prostitution to juvenile delinquency. I have to say I never thought that such social problems can be explained by economics and found the first chapter very interesting.
But thereafter, Harford's theory and analysis become repetitive, convoluted and above all, silly. The most anticipated chapter on "Why your boss is overpaid" is a flop. I kind of understand what Harford was trying to get at: that a reward system based on competition (i.e. the tournament theory) encourages staff to back-stab one another and drag others down rather than work hard or improve oneself. For senior positions (e.g. MD or VP) whose success depends more on luck than individual merits or efforts, the pay disparity from the next lower level has to be big enough to drive the subordinates to perform better with the hope of taking over their boss' job. But then it just doesn't make sense that the management of any company would design their remuneration system for the said reasons, because this is irrational! Harford did not elaborate further but instead talked about why stock options do not produce performing CEOs (because of the "split-the-bill" problem), leaving me baffled and unsatisfied.
For the rest of the book, Harford looked at gambling, marriage, divorce, ghettos and racism etc. and used rational choice theory to explain seemingly irrational behaviour. He cited a lot of laboratory, experiments and studies to prove his point, but I think he has way overdone it. His so-called rational choice theory is just common sense (although I admit common sense is not very common and some people don't have it, e.g. your overpaid idiot boss). It's the basic instinct of human beings to act that way - driven by incentives, consider costs and benefits and think about consequences. What's the big deal? Harford is just making simple logic complicated. Sometimes after quoting one research after another, he lost track of his analysis (and readers became lost too).
The final chapter on "A million years of logic" is even more implausible. Harford concluded that more population would give rise to more brains, more inventions and higher technology and hence, better chances for us to see out the next million years. Now what kind of insight is that? Isn't that a tautology?
On the whole, the book is disappointing. But the first chapter is enjoyable and worth reading, and it is only 32-page long. You can finish that at the bookstore.

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Tracy W said on Feb 17, 2009 | Add your feedback