The Logic of Life: The Rational
Economics of an Irrational World by
Tim Harford
The Process Of Making Logical Choices Rationally
A Message to Amazon Readers from Author Tim Harford Give yourself
a pat on the back. Youre not as stupid as everyone says you are, and now
theres a book that proves it. When I first conceived of The Logic of Life,
my aim was to show that a world full of smart people--people like you, that
is--doesn’t necessarily look logical on the surface. We eat too much and
worry about being fat; drink too much and cringe when we remember;
spend too much at Christmas and worry about the bills in New Year. And
that’s just the small stuff: what about crime, racial segregation, divorce,
big-money politics? And yet underneath it all there is a hidden logic. It
isn’t always pretty, but it’s there if you know how to see it. That is what The
Logic of Life is all about. But when Id finished the first draft, my editor
told me that he didnt think that people were as logical as Id said. He
wanted me to prove my point. At first, I thought it was my editor thinks

people are illogical because he works in the publishing business. Of
course life looks illogical if you do that. (In fact, life looks crazy in most
offices: see Why Your Boss is Overpaid, chapter four.) But then I realised
he was right. Id left the most important step out. So I went back and
made sure that I laid out all the amazing evidence. I looked at single
women hitting the dating scene in American cities; I looked at juvenile
delinquents across the US; I looked at Mexican prostitutes; I looked at
traders at a convention in Disney World; I looked at professional poker
players in Las Vegas and professional soccer players in Europe. I looked
at violent spouses, alcoholics, and school bullies. In every case I
discovered a story of hidden incentives and unexpected logic. And through
the process of writing--and living--the book, I discovered that this crazy
world of ours makes more sense than you might think.
Personal Review: The Logic of Life: The Rational Economics of
an Irrational World by Tim Harford
Tim Harford's The Logic of Life, is a fascinating look into life's
circumstances through the eyes of a British economist. Each chapter flows
seamlessly to the next, written in an appealing, conversational style. The
text is liberally peppered with the author's thought-provoking insights, and
relentlessly engaging tongue-in-cheek humor.
To make his points and share his economic wisdom, Harford introduces
the reader to numerous prominent economists, and other spicy characters,
through the recount of actual, real-life scenarios. His assertions sound
believable, and are backed up with an abundance of information.
Harford begins with a detailed, inspired analysis of why teenagers have
backed off on having actual intercourse, in favor of engaging in oral sex.
He explains the rationale (based on cost/benefit analysis) used by sexually
active teens to determine that oral sex is less risky than intercourse. This
lively topic launches the book into an novel discussion of an abundance of
topics, including: tradeoffs, incentives, rational and irrational decision-
making, opportunity costs, supply and demand, profit and loss, division of
labor, economies of scale, comparative advantage, positive and negative
externalities, and spillovers.
From the first chapter to the last, Harford grabbed my imagination with
expressive stories, which colorfully illustrated economic principles.
Harford's main point, as I understand it, is that rational and irrational
decision-making is based on incentives, pure and simple.
For example, he recounted an experiment with rats, where the rats were
conditioned, through exposure to a succession of changing states of
supply and demand opportunities, to make choices about the amount of
root beer or tonic water they chose to get by pulling a lever on a device,
which dispensed the liquids.

Harford also offered an overview of the simplicities and complexities of
Game Theory, auctions, and betting, to give evidence to his assertion that
people are compelled to evaluate opportunity costs, trade-offs, and
benefits, consciously or subconsciously, when making decisions.
A concept he has developed, which he refers to as the "Marriage
Supermarket", is particularly fascinating. The challenges inherent in
attracting a partner, making a long-term commitment, and parenting, was
rendered crystal clear through Harford's marketplace analogy. I found
Harford's discussion of marriage and divorce highly entertaining and
enlightening.
In Harford's discussion of addictions, he mentioned that apparent cures for
addictions actually reinforce addictive habits, because the cure is
available. I think his assertion is true, and that it also applies to other risks
people take knowing there are "cures" available. Abortion, divorce, credit,
and loans aren't typically thought of as "cures", but these things most
certainly are used as rationales for taking risks.
Harford offers sharp insights on the logic behind splitting the check at a
restaurant, the pitfalls of taxation, special interest groups, CEOs, and
shareholder relations. His discussion of why city life is more dangerous
due to tall buildings and the shortage of "eyes on the street", was
especially thought provoking.
This book has fueled my ever-growing passion for the ideas and principles
associated with economics. The study of economics is becoming an "art"
to me, a potent medicine laced with graphs and curves, a powerful tool on
the alchemical pathway to equilibrium.
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