Tim Harford. The Logic of Life: Uncovering the new Economics of Everything.
|Article Type:||Book review|
|Subject:||Books (Book reviews)|
|Publication:||Name: Pakistan Development Review Publisher: Pakistan Institute of Development Economics Audience: Academic Format: Magazine/Journal Subject: Business, international; Social sciences Copyright: COPYRIGHT 2010 Reproduced with permission of the Publications Division, Pakistan Institute of Development Economies, Islamabad, Pakistan. ISSN: 0030-9729|
|Issue:||Date: Spring, 2010 Source Volume: 49 Source Issue: 1|
|Topic:||NamedWork: The Logic of Life: Uncovering the New Economics of Everything (Nonfiction work)|
|Persons:||Reviewee: Harford, Tim|
Tim Harford. The Logic of Life: Uncovering the new Economics
of" Everything. London: Little, Brown, 2008.272 pages, Price 12.99
The Logic of Life, Tim Harford looks at everyday experiences of people from economic perspective. The book talks about the rational foundations of human behaviour. The central theme of the book is that human behaviour is based on rational concepts and that rational behaviour is much wider than one can expect. However, a rational choice does not always mean a feasible outcome rather the outcome may be random. The author argues that if one cannot understand the rational behaviour, s/he cannot understand the world. To explain the logic behind human behaviour, the book covers a wide range of situations such as the causes of the higher divorce rates, marriages, smoking, drug-dealing, high pays to corporate officers, industrial revolution, role and importance of cities, sugar subsidies, sex, splitting the bill at meal, institutional racism, to explain the theory of rational behaviour. The author convincingly argues, without employing the rigour of mathematics and statistics, that human behaviour in aforementioned situation is almost always rational.
For instance, the author explains how racism can become a vicious circle for the society. If a Black person, with sound education, fails to find decent jobs he is not likely to pay enough attention towards education of his children. This in turn, will strengthen employer discrimination towards blacks. Similarly, while explaining why corporate officers are overpaid and many talented employees are underpaid, the author describes that this problem occurs due to the lack of information about talent, honesty, hard work, and difficulty in measuring the contribution of the employees accurately, particularly when there is subjective performance evaluation system in the company. The book shows that making rational decisions in our routine life causes economic growth.
The book is an outstanding summary of the latest research in the, as yet, developing field of behavioural economics. It highlights that despite making irrational decisions in laboratory experiments, in real world we are more likely to act rationally. The author argues that we may act irrationally when confronted with a new or abnormal situation but then the experience crafts us into making rational decisions. The book shows that standard economics explains the novelties of life. It recommended to all those with an interest in understanding the economic rationale of human behaviour.
|Gale Copyright:||Copyright 2010 Gale, Cengage Learning. All rights reserved.|