The New York Times-20080125-Those Sweet Mysteries of Life- Deciphered- -Review-
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Those Sweet Mysteries of Life, Deciphered; [Review]
Full Text (970 words)THE LOGIC OF LIFE
The Rational Economics of an Irrational World
By Tim Harford
255 pages. Random House. $25.
The world is a crazy place. It makes perfect sense only to conspiracy theorists and economists of a certain stripe. Tim Harford, a columnist for The Financial Times and the author of The Undercover Economist, is one of these, a devotee of rational-choice theory, which he applies ingeniously and entertainingly to all kinds of problems in The Logic of Life.
The premise is simple. Human beings are rational creatures who respond to incentives and rewards. No matter how bizarre a choice might seem, there is logic at work, and Mr. Harford intends to expose it.
People smoke and gamble, he writes. Fools fall in love. Offices are run by morons. City neighborhoods boom or collapse for no apparent reason. To the keen eye of an economist it all makes sense, in the counterintuitive way exploited so successfully by Steven D. Levitt and Stephen J. Dubner in Freakonomics.
Smoking provides Mr. Harford with one of his more arresting examples. Nicotine patches and nicotine gum, intended to wean smokers from their dangerous habit, actually seem to encourage teenagers to take the first puff, for reasons that any economist might have predicted. Since there are now products to help smokers quit, it becomes less risky, as a purely rational proposition, to pick up the habit.
Similarly, a rational cost-benefit analyst lures single women to big cities like New York, where prospects of finding a mate with a big income are greater than in small towns. There they overpopulate the marriage market and suffer the Carrie Bradshaw blues. A look at an economic model called the Marriage Supermarket might give them pause.
Imagine 20 men and 20 women in a room. Those who pair off and leave the room together receive a prize of $100, with the money to be shared by the partners by negotiation. When the two sexes are equal in number, everyone finds a partner and the split is 50-50. Subtract one man from the equation, and competition for the remaining 19 inexorably drives down each woman's share of the $100 to one penny -- except for the 20th woman, who gets nothing at all. This is why Mr. Big wears a smirk.
The Marriage Supermarket provides a stark illustration of the power of small demographic shifts to produce grossly distorted outcomes. Mr. Harford provides another one when he shows how mild preferences for living among people of one's own race or culture can produce neighborhoods so segregated that, at first glance, only virulent racism could seem to account for the result. Even though each person makes rational choices, the result can be something that none of them wanted; you might say that rational behavior by individuals can produce irrational results for society, Mr. Harford writes.
Flitting provocatively from topic to topic, Mr. Harford explains why gargantuan executive salaries make sense, although not in the way one might expect, and why a booming service economy indicates economic sophistication, not decadence. He makes a hopeful argument for the future of megalopolises like New York and Los Angeles, which are destined to prosper, he asserts, for many of the same reasons that cause environmentalists and futurologists to wring their hands in worry.
When Ted Baxter, on The Mary Tyler Moore Show, said that he planned to have six children in the hope that one of them might solve the overpopulation problem, he was on precisely the right track, Mr. Harford argues. People say they come to New York for the culture, but what they really pay a premium for, in high rents and expensive food, is access to other people and their knowledge. The more the better.
Mr. Harford has a knack for explaining economic principles and problems in plain language and, even better, for making them fun. He loves to overturn conventional thinking on matters as small as playing a poker hand and as large as the reasons behind the Industrial Revolution, which have nothing to do, he maintains, with a so-called entrepreneurial culture in Protestant Northern Europe. It all boiled down, he writes, to a calculated and deliberate response to high British wages and cheap British coal, which led inevitably to steam power and labor-saving technology.
Like some of the Texas Hold 'Em experts he describes, Mr. Harford occasionally overplays his hand, and he can be a little shifty. It makes some sense to explain the large increase in the number of young people who, between 1994 and 2004, reported engaging in oral sex as a rational-choice proposition: Oral sex reduces the risk of contracting AIDS and other sexually transmitted diseases. It seems blinkered to ignore the cultural factors at work, however, notably widely available pornographic images and mainstream Hollywood films that have helped normalize sexual behavior once considered risque or even taboo.
Finally, a poke in the eye. Mr. Harford, in the coolest possible language, sets out to prove that there was no point in voting for Al Gore in Florida in 2000. There's no point in voting at all, for that matter, as a purely logical act. So if you stayed home that day, relax. If you really want to make a difference, buy lottery tickets -- your chances of hitting the jackpot are roughly equal to your chances of swinging an election -- and devote your winnings to political lobbying.
And don't bother to read up on the issues, either. Because the chance of any individual's vote making any difference to the result is tiny, the benefits of turning an uninformed vote into an informed vote are also tiny, Mr. Harford writes. Rationally speaking, why bother?
Go ahead, fume. Mr. Harford enjoys it. He never claimed that things are right or fair. Just logical.
[Illustration]PHOTO (PHOTOGRAPH BY FRAN MONKS)