After reading Freakonomics by Steven D. Levitt and Stephen J. Dubner, I find myself addicted to similar books that apply economic principles to understand simple, everyday situations.
Yoshio Yoshimoto (吉本佳生)’s book, 大杯星巴克比较划算 (Chinese translated) is one such example. Another would of course be Tim Harford‘s books. I read Harford’s The Undercover Economist some years back and just completed reading his new book, The Logic of Life recently.
Basically, what books like these do is that they make use of complex economic theories, defined in layman’s terms, to find surprisingly profound answers in simple social situations.
In The Logic of Life, Harford made use of economic principles to explain social topics like how come the bosses are always overpaid even though the worker bees below are the ones slaving; the similar rational choice pattern we make when we choose to smoke, gamble, take drugs or fall in love; how “being racist” when hiring employees is the result of rational choice at work too.
For the latter, Harford coined the term “rational racism” to define this behaviour. In a nutshell, through running a simple test by getting two groups of individuals to wear different coloured shirts to pretend to apply for a job; economists were able to establish that if a particular colour group was perceived to exhibit higher economic returns to employ, the hirer would rationally prefer this group over the other.
Logic kicks in to govern many choices we make, even seemingly irrational ones like taking drugs.
If you are also into these geeky facts like me, go grab a copy of the book. 🙂
For a quick demonstration of the book’s content, here’s a video of Harford explaining the economics of speed-dating, and asks, “are the romantics right about love, or are the economists right?” :
[YOUTUBE url=”http://www.youtube.com/v/JpU9XrQqYzc?fs=1&hl=en_US”]
About Tim Harford (via wikipedia):
Tim Harford (born 1973) is an English economist and journalist, residing in London. He is the author of four economics books, presenter of BBC television series Trust Me, I’m an Economist, and writer of a humorous weekly column called “Dear Economist” for The Financial Times, in which he uses economic theory to attempt to solve readers’ personal problems. His other FT column, “The Undercover Economist”, is syndicated in Slate magazine.
Harford studied at the University of Oxford, gaining a BA and then an MPhil in Economics in 1998. He joined the Financial Times in 2003 on a fellowship in commemoration of the business columnist Peter Martin. He continued to write his column after joining the International Finance Corporation in 2004, and re-joined the Financial Times as economics leader writer in April 2006. He is also a member of the newspaper’s editorial board.
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