Discover Your Inner Economist: Use
Incentives to Fall in Love, Survive
Your Next Meeting, and Motivate
Your Dentist by Tyler Cowen
What Is Your Inner Economist?
Freakonomics revealed much about our society. Now, one of America’s
most respected economists reveals how individuals can turn economic
reasoning to their advantage in their daily life—at home, at work, even on
vacation. Tyler Cowen explains how understanding the incentives that
work best with each individual is the key to successful and satisfactory
daily interactions—from getting the kids to do the dishes to having a
productive business meeting, attracting a mate to finding a good guide in a
foreign country. Discovering your inner economist, Cowen suggests, can
lead to a happier, more satisfying life. What better carrot could you ask
for?

Personal Review: Discover Your Inner Economist: Use
Incentives to Fall in Love, Survive Your Next Meeting, and
Motivate Your Dentist by Tyler Cowen
As I was reading Tyler Cowen's book "Discover Your Inner Economist" I
wished that I had read it sooner.
The cover of the book and the table of contents did not give me good
reasons to buy the book. The cover invites potential readers to use
incentives to fall in love, survive their next meeting and motivate their
dentist. The contents page suggests that the book is about things like how
to control the world, possess all the great art ever made and practice the
art of self-deception. Since I do not aspire to be a master of the universe I
have given higher priority to reading other books, such as Tim Harford's
book about the economic logic of life and Dan Ariely's book about hidden
forces that can tend to make decisions predictably irrational (discussed
here).
If I had read some reviews of Tyler's book I would have discovered that it is
really about how your inner economist can help you to live a good life. I
would also have discovered that Tyler's inner economist does not try to
apply market place logic to all aspects of life. The book is full of parables
drawn from every day life and suggestions about how to live well -
including suggestions on how to make visits to art galleries and museums
more rewarding and how to eat well on a limited budget.
If someone had asked me to describe my inner economist before I had
read this book I would probably have said that it was the inner voice that
kept telling me things like: incentives matter; resources are scarce; don't
forget about opportunity costs; sunk costs are irrelevant to current
decisions; and human behavior is motivated by self interest. I would
probably have mentioned that, like any other sensible human, any sensible
economist also has other inner voices (e.g. the voices of ethicists,
psychologists and sociologists) questioning whether the advice of the inner
economist is appropriate to the circumstances. I might also have said that
there is always potential for an inner voice of reason to preside over this
inner babble and say things like "on the one hand ..." and "on the other
hand ..." and for an inner executive to conclude "on balance, it seems to
me ...".
One obvious problem with my initial perception of the inner economist is
that economists have a well deserved reputation for saying "on the one
hand" and "on the other hand". Good economics takes account of insights
from other disciplines where they are relevant - it involves more than just
an exploration of what might happen if people behave in the way
economists have often assumed that they will behave in simple models of
market behaviour.

Tyler sets up pattern recognition as the most important function of the
inner economist: "Your Inner Economist sees patterns that you might not
be seeing at first glance" (p 8). He argues against the view promoted by
some economists that monetary incentives, markets and property rights
should be applied to all aspects of life, including family life. "Our Inner
Economist knows that money cannot buy love, respect or peace of mind"
(p 3). But our inner economist can recognize the circumstances in which
monetary incentives will work well (e.g. where performance is highly
responsive to extra effort or where intrinsic motivation is weak).
Tyler identifies a major drawback of rewards and penalties as follows: "We
use them to influence the behavior of other people. And this is precisely
what makes those people feel a lack of control and a lack of freedom" (p
33).
If aspiring masters of the universe were the intended audience for this
book, I hope a lot of them have bought it. However, I doubt whether many
of them would have enjoyed reading it as much as I did.
[...]
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