I finished this book by Tim Harford over Christmas holidays. Harford has another successful book a few years ago called “The Undercover Economist” which I’ve not read. From the style of “The Logic of Life”, I’d guess his early book would also be interesting. The theme is to discover a general pattern from small things, and to give them an overall explanation based on human rationality. This approach is very similar to the two other successful books “Blink” or “The Tipping Point”, both written by another famous author Malcolm Gladwell.
Overall speaking I still enjoy this book, though not as much as the other two books by Malcolm Gladwell. There are still insights from some of the author’s observations and explanations of human behavior through the microscope of rational thinking, particularly in the first half of the book. The chapter on game theory is enjoyable, providing in layman’s term an overview of the theories of game ranging from playing poker to war games between superpowers. The discussion of “focal point” in negotiation scenario, as proposed by Thomas Schelling is insightful. At least I will try to use it in future negotiation. The chapters on dating and marriage, and the one on the economics of discrimination are also good. The reasoning of how the balance of supply and demand affects the eventual selection of a dating partner borders on common sense. But the subsequent extrapolation to explaining the phenomenon why there are always more females in big cities more than compensates its earlier banality. (Having said that, the statement that females now are doing better than males academically because they need to improve their chance of finding a better mate is rather unconvincing.) There’s been mention of many economic theories and experiments, and I find all of them very interesting. The laboratory experiment by Roland Fryer at the University of Virginia provides very good insight into how discrimination can start somehow randomly. The tournament theory stipulating why bosses are always overpaid, not based on their own merit, but rather as a prize incentive for those who work under them is really funny. And I have to say it carries some truth.
However the book suddenly turns into a downward spiral in the second half. I just managed to scramble through the last three chapters without really trying to understand what the author tries to say. It’s quite boring and one-sided, very much like a lecture or monologue from the author. There is a little bit of reasoning but the overall logic is rather weak. Maybe he was under a publishing deadline or something, but the last three chapters turn the book from Grade A to B.
So overall I enjoy the book. It is for the inquisitive minds who want to understand more about life. And the ability of the author to pull out so many little theories and experiments from the body of economic research to explain phenomena in life is admirable.
There are a few final comments though. First, I never understand why these life observations and reasoning process are the job of an economist. To me some of these subjects should come under the realm of sociology and other social science subjects instead of economics. (Were I to know economics cover that many areas I might have chosen it as my subject of study for my first degree! Now it’s too late.) Second, just like any other economic or financial theories, the assumption that human being is a rational entity is dubious. As so many recent incidents in the world economy and financial markets show, people are not just rational beings. At best it is a combination of logical reasoning and human psychology that drives their behaviors and decisions. At worst they might just follow their instincts or demonstrate herd behavior. Therefore the effort to explain a trend in human history based purely on logical reasoning is doomed to fail. The rise of status of women around the world over the past 50 years certainly is not due just to the invention of more effective and convenient birth control tools such as pills or condom. And that leads to my third comments: When two events have correlation, they don’t necessarily have a causal relationship, i.e. one thing may not lead to another. That’s something you should keep in mind when reading this book.
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