The Logic of Life: The Rational Economics of an Irrational World - Book Report/Review Example

?Introduction The sociological functions in society remain one of the many studied sciences, specifically because of patterns, behaviors and other actions which take place among individuals and groups. Understanding why specific actions occur as well as how individuals determine different focuses within their life is one which is often questioned and which is based on several theories of why behaviors form among groups of people. In Tim Harford’s “The Logic of Life: The Rational Economics of an Irrational World,” there is an understanding of the sociological processes of marginalized groups as well as larger trends. The patterns which Harford points out summarize how different groups of people which seem to act illogically are finding rationale within given situations. Examining the rational viewpoint of Harford’s theory on how rational actions are taken with epidemics which many consider irrational becomes the main ideology that is a part of the book. While Harford is able to explain specific processes with irrational behaviors and trends, there are also missing points of evidence which show that the theories are correct. Thesis of the Logic of Life The main ideology which Harford states in his book is based on the concept of logic that is use in life situations. Harford states that every behavior which an individual takes is done specifically because there is a belief that there will be a trade off. By having this trade off, an individual begins to act in what others would find as irrational behavior. This particular behavior is one which Harford points out is not always consciously known but is instead formed by the sociological trends and behaviors within society. “Rational people respond to trade – offs and to incentives. When the costs or benefits of something change, people change their behavior. Rational people think – not always consciously – about the future as well as the present as they try to anticipate likely consequences of their actions in an uncertain world” (Harford, 4). This main thesis is then identified by the understanding that sociological behaviors, trends and attitudes is what determines individual actions and expectations, specifically because individuals find a trade – off that takes place within the sociological sector. An element which is defined by Harford in his main thesis is the theory of life as economics. There are several statements which point out that each individual decides to move into a certain action because of rational and economical changes which occur. The theme which he identifies is approached as a metaphor of how economic fluctuations also change trends and behaviors. The rational approach is one which is based on the understanding that if there is a rise in prices, individuals find the better deal or the lower price. This same ideology is pointed out with social behaviors. An individual will find the area that has the most trade offs and the least risk with attitudes and behaviors. The trends which are created in society are then based on the ability of finding the least risk and the best benefit, specifically because this provides a better trade off for the individual. The rational choice theory is one which is used, which states that an individual in a given environment has to choose the best outcome with the least risk to remain in that given environment (5-7). While the main thesis of Harford is one which can be seen with basic logic, he also points out the weakness with his own theory. There isn’t an understanding of the complexities which come from diversity, background, psychology and individual belief systems. There also isn’t an examination of various marginalized groups, but only a look at the main trends which occur among given groups. The lack of information outside of trends as well as the assumptions which are made from the economic perspective causes the ideology to become based only on a single ideology while disregarding other philosophies which may change or support the theory in a different manner. However, the rational of using life examples and proving that there are logical answers to trends is one which readers can identify with by understanding the common sense choices which arise. Las Vegas and Rational Choice The first example which is given by Harford is those who go to Las Vegas for gambling and to live the fast life. The example is first displayed through the winnings of Chris Ferguson, which Harford points out as the Jesus of Las Vegas because of his crown in World Poker Champion. When Ferguson went to Vegas to reclaim this status, it was after a bar fight had broken out and which he had to flee from in order to avoid charges. There were also other personal problems which were arising in his life through relationships. The rational which Harford points out is based on Ferguson’s decision to go back to Vegas, even though he had already won several championships and was not interested in this particular lifestyle. The timing which the championship arose also led to more benefits with the Las Vegas hotels and casinos that Ferguson was aware of. This included entertainment corporations that were moving into Vegas as well as more casinos which were being added into the strip and advertised for several. The change led to more business and advertisements as well as the need to find ways to heighten the stimulus to come to Vegas. These two ideologies collided when Ferguson came to Vegas which led to the 2000 championship. The importance of this story is one which is dependent on the outcome of giving Ferguson the title and of creating drama around his story as well as the championship of 2000. For Ferguson, this was a way to reclaim his title, gather fame and to overcome the situation which he had to run from with the bar fight that he had lost. The most logical approach was to take a chance so his name could be recovered and so he would not face police charges for a problem which had arisen. For the casinos in Vegas, this was doubled with the ability to advertise because of Ferguson’s name. The links to the advertising were also inclusive of looking at the conditions of the casinos and entertainment aspects while showing that Vegas was safe. It was noted that this event created a landmark which now leads several to the hotel to experience the history which occurred during this time. For both the business and Ferguson, there is an application of the rational thinking as a part of the Vegas game and the need to gamble (32-64). While this particular aspect is true and shows rationale from the viewpoint of the hotel and from Ferguson, there are also missing links. This is one story out of several with individuals who find themselves in given situations and has to respond. If the scenario were altered, a different outcome would occur. For instance, one may decide to gamble or to cause a bar fight because of an internal or psychological relationship which is created that leads to an emotional or cognitive response. There may also be links with the casino responding, not only to heighten publicity, but also because of other components to the internal environment which are creating problems or responses. There isn’t an examination of the deeper levels of pay – offs in this particular story. While it can be seen as true that there are pay offs, there also isn’t a relationship created to other psychological components, relationships to the environment and other factors which may arise. This also does not point to an understanding that another individual or casino may have not decided on this outcome or choice because of different rational thinking. In this way, the author is limiting both possibilities as well as an examination of why the actions were carried out and how these may have been different in another given situation. Examining Divorce The same rational explanations by Harford are given with marriage, divorce and dating. The theme remains the same with the rational choice theory which is used. However, this relates to the institution of the family and the proponents which are associated with this. The divorce is examined with the understanding that the divorce rates have more than doubled in the past fifty years and is now considered as a social phenomenon (78). Harford asks why this trend is occurring and what the benefit or rational explanation is if one decides to go through a divorce. The concept of divorce is one which Harford relates to the trends in society and the pay off which occurs. He attributes this first to the no – fault divorce that was introduced in 1989 by Ronald Reagan, allowing men to find different alternatives for divorce without being responsible for their wives. He also links the change to women who had the ability to wait to have children and found the wait a time frame which could help in exploring and understanding whether the marriage could work. As more women began to work, there was not the need to be dependent on men to live, making the divorce a rational option if things were not working out. The ideology leads to the conclusion that divorce is a way of empowering women economically and in term of relationships. “It has truly been a revolution, and the price of the revolution is more divorce and less marriage. That price is very real – but it is almost certainly a price worth paying” (87). The main thesis which Harford introduces in terms of divorce is that it is a better option for both women and men because there is little to no danger either economically or personally. It also assists with a sense of empowerment without leaving either side at fault making it a more viable option than divorce. The idea of benefits and interactions which occur in society is one which Harford creates rationalization for with dating, marriage and divorce. The statement of trends is one which is based on the attitudes toward sex, choices by women in terms of education and the use of birth control and the responses which many have on the market. The theory which Harford points shows that most women and men prefer not to get married because there are more possibilities if one decides to stay single. The ideology is pointed to the birth control pill and the ability to enjoy single life while getting the most benefits. “The pill also meant women felt more able to postpone marriage – why hurry? They could enjoy sex and career without rushing to get married. And as more intelligent women delayed getting hitched, that meant that more intelligent men would be floating around, unattached. The dating scene became a more interesting place to dip in and out of for a decade or so, and the risk of being left on the shelf plummeted” (67). This particular theory is one which combines the trends of birth control, expectations by women and the movement which has occurred with more dating, less marriage and the hike in divorce rates which continues to remain at a higher level because most are seeing benefits from the given situation. The theory which Harford makes, while making sense at an economic level, does not examine the deeper issues or beliefs about dating, marriage or divorce. The first mistake which is made is based on the trends that are in society that are currently rising. Examining divorce from the rise in numbers and trends does not necessarily depict the individual intent or ideologies about marriage or divorce or how individuals respond. Instead, the theory is based on an explanation which leaves out the examination of other meanings behind dating, marriage or divorce. There is not an understanding of the family beliefs which may create changes with how one responds or the individual psychology which one is going through when deciding to get married or divorced. The lack of looking at the emotions, psychology and the deeper trends with relationships and marriage leads to a large number of questions with the main theory that Harford points out. Unless the intent of each individual is determined, the trends can not depict how the rational is based for individual actions. Another fault with this particular part of the theory is based on assumptions which are made with why one decides to get a divorce. Harford targets all men for getting a divorce because of the no – fault agreement, which makes it easier for men to get a divorce. He also states that women find that this option is better before having children and is a way of becoming empowered within their own lives because of potential monetary benefits and other psychological changes which may be initiated with divorce. What Harford does not consider is the divorce which occurs with individuals who have been married and have children, individuals that have affairs or the responses which occur to given situations. There are many instances where the fault is one which can not be reliant on a sense of logic, specifically when the theory is expanded to include personal stories instead of numbers about trends. When looking at individuals that have been through divorce, as opposed to looking at basic trends, interviews, numbers or belief systems, it can be found that the concept of marriage and divorce has a variety of levels that Harford does not consider with his main argument. Work Places The next part of Harford’s theory is based on bosses who get paid higher than others within the work environment. The main approach which Harford takes is based on the understanding that a boss is overpaid with logical explanation. According to the rational choice theory, this works in everyone’s favor, including those that are underpaid. The boss which is overpaid is not given a position because of skills but because of favor to fill a specific role. The employees underneath are able to maintain specific dynamics in the organization because of the role that is filled and the characteristics that are associated with this, which makes their job safe. The overpaid amount of the boss is then justified because the personality protects others in their job. This is followed by the company which is able to keep making the same decisions and sustain the business, specifically because the individual in the position does what is required in the position and is able to receive a salary that is believed to match this (88). Similar to the other points in the rational choice theory, Harford’s theory is limited by an expectation that all organizations work in the same way. However, Harford doesn’t examine the personalities in the work place, different environments which are created, diverse work areas and the changing personalities of bosses and how this affects the environment. The deeper conditions that are associated with the work environment as well as the expectations with the building of the organizational environment as a whole both alter the understanding of how the work environment is formed. When moving outside of the economic assumptions that explain rationality, there is the ability to see that there are deeper levels which are based on responses that are given and the assumptions which many have toward their boss and the payment plans which are made. In the Neighborhood The logic which follows into the next section of Harford’s book is noted as being in the neighborhood. This looks at the trends and movements which occur when one decides to move to a given area. The basic understanding is that the geography and the available resources are the main reason why many decide to move into a city region, such as New York City or LA. The concept which is given is based on the understanding that people live to the places which are most logical to be in, either because of the population or the desires which one has. For instance, if one wants knowledge, then they will move to a location such as a city because it provides more opportunity. The same intent and application occurs with safety, well – being and helping families to receive the right education. The example given is of a woman who moves to a space similar to a ghetto; however, she remains there because there is knowledge that if she is attacked, more individuals will watch her. “Jane Jacobs – an unconventional observer of economies, especially city economies – tiunously argued that successful neighborhoods provide eyes on the street to protect us from crime” (120). The main observation is based on the understanding that the lifestyle is one which is not only depicted by circumstances, but is inclusive of trends that are a part of society and which lead an individual to live in a given location. This particular part of the thesis of Harford is stronger than others, specifically because one can see trends that alter according to intent and the sociological relationships. If there is an individual that notes a specific neighborhood or area has different opportunities or resources, then it is likely that individuals will move to this region to look at the different points. The lifestyle is easier to change and there are more options which one can increase their well – being. However, what Harford doesn’t consider is other conditions which may be associated with this. For instance, one may live in an inner city and in the ghetto area. According to Harford’s point of view, this is specifically because of safety measures. However, if the individual has grown up in an uneducated family, has not been provided opportunities to gain basic education and has a low paying job, then they may be living in a neighborhood for economic reasons or because of circumstance. The circumstances, individual intent and the understanding of why an individual may move to a neighborhood are not observed from these other viewpoints. Instead, Harford limits this to a combination of trends and a viewpoint that fits specifically with the main thesis. When looking outside of this, it can be seen that there are psychological relationships, individual intent and belief systems that also factor into the main aspect of living in a given neighborhood or city. Rational Racism The rational racism which Harford is one which is based on more politically correct observations of why individuals practice racism as well as the benefits of this. The beginning of this chapter is one which Harford shows the weakness of his viewpoint by stating that there is not rationalization or justification for racism. However, he then justifies the concepts of racism and shows why it works for segments of society. The first type of racism which Harford point out is statistical racism, which is specifically identified as one not working in a job because of the diversity or the conditions. The other is which Harford refers to as rational racism, which is when an individual rationally decides that an action should not be taken because it is dangerous or may lead to problems because of the profile of an individual. The scenario which Harford uses is when an individual avoids an all black neighborhood because it may not be as safe as another route, specifically because the neighborhood is renowned for gang activities. While this may appear as a type of racism, it is also justified by the means that one takes. The same rational is stated in environments, such as within the work force or other social areas. This point is similar to the others in the rational showing one side but not looking at others. The rational explanation of racism can be seen from a limited perspective, specifically with the concept of safety and the beliefs which one holds about a given situation. However, Harford ignores the other associations that are a part of the idea of racism and how this affects individuals. There is no relationship to the history of racism and how it has moved into the 21st century problems. There are also few explanations that are built in terms of past social movements and how many identify with this. The concept of identity, which is at the heart of the conflict of racism are also left out of the main picture. Many identify and profile individuals based on the racist beliefs or expectations. However, these profiles most often turn to be false. This does not come from rational explanation, but comes from what many are taught and how this relates to how they should or should not act. The main concept is based on institutions, families and individuals that have taught others how to divide against others. This is followed upon with the understanding that the actions can be justified because other actions may not be as safe or could lead to problems and difficulties. While many believe that this is a beneficial way of acting, it is also limited and does not create responses which are related to the realities or conditions of belonging to a race. Revolutions and Rational History The last main approach which is taken with Harford and the theme which is created is linked to history and the revolutions which have occurred through time, including economic, social and political changes which have occurred. Harford accounts for specific ideologies which are associated with the revolutions and how these were based on pushing to the next logical step. The logic was based on explanations of how one could remain protected and gain prestige and strength within society, specifically by revolutionizing or changing the main trends and expectations in society. This particular concept is one which is further defined by Harford by each individual being able to benefit. For instance, the Industrial Revolution is one which followed the Great Depression and was used to heighten the economy and to assist individuals with changes within society. This became a rational way of both development and enlightenment while changing components of history. The idea is to show how evolution is responding rationally to given situations and to form new answers and solutions to given areas of expertise (200). The main concept which Harford gives is one which is credible because there is an understanding that evolution is depicted by trying to make different situations better and to find better benefit from the given situation. The concept which Harford initiates is one which can be seen with sociological movements and historical events which have occurred. This holds more prestige than the other arguments, specifically because it can only be defined by the main trends and events. While the other arguments move into personal situations and beliefs, this particular aspect is able to identify with the main trends while not trying to move into individual or personal understanding of a given situation without regard to the other angles which may initiate different ideologies. If there were instances of individual ideologies with the historical and revolutionary functions, then it would lead to the same weaknesses of the argument. Strengths and Weaknesses of Book The book by Harford is one which tries to examine life from an economic, or freakonomic perspective. The strengths of the book are based on giving fresh insights into the newer trends and concepts that are occurring in society. When Harford is able to combine the statistics with historical events and basic movements, then the rational explanations work in favor of the book. The areas which rationalize this include the movements and revolutions which occur in history as well as how this has affected several individuals. This is combined with explanations that show how responses and other concepts are based on finding pay – offs and benefits in a given situation. This is one theory which can be seen as basic logic and which each individual will look toward in finding the best solutions for given problems and conditions which may arise in a given society. While the basic concept of examining trends works with Harford, there are also a wide variety of gaps in his thesis. The first problem comes with his idea of adding in personal situations as a trend and economic theory. The idea of dating, marriage and divorce is one of the areas which lead into explanations that don’t examine the depth of why this occurs and what is related to this. Harford does not look at the individual triggers which may cause responses, including both emotional and psychological development and components. Harford also does not look at family values, social and cultural values and individual perspectives which may alter outside of the trends. There is also not an understanding of the marginalized beliefs which are associated with this. These different perspectives are well – known within society and are examined at deeper levels. By Harford taking these out of the theory, there isn’t the ability to understand the realities of personal concepts, which instead turns into a misleading explanation of why circumstances may occur. The danger with only looking at the economic perspective with the sociological explanations is that an individual who decides to practice this theory will follow blindly in given circumstances. Harford makes all statements by showing that rates have gone up or down in given circumstances then defines this to a personal situation that relates to the overall environment. If an individual acts on what Harford is saying without considering the psychological, cognitive, emotional or attitudes and beliefs, then they will have difficulties and may end up in circumstances which are not desired. For instance, Harford makes statements about rational racism for protection or to build the diversity of a company in a given way. However, if this were stated or practiced with the explanation that it is rational, then there is not the ability to create the right environment. More important, those that consciously begin to practice with these statistics will most likely be sued with the explanation of the response being logical becoming one that is immediately disregarded because of the sensitivity of the situation. When looking at rational explanations of responses which would occur if these problems were approached from this manner, it can be seen that the theory does not hold and leads to more complexities and issues because of the deep roots that Harford takes and minimizes. Conclusion The concept of rational choice theory is one which is examined by Harford from several perspectives and angles. While some instances hold true, such as examining history and social movements, there are also many gaps in the theory. The rational explanations become only one of several viewpoints that are defined. By not examining the other explanations, including personal choice, psychological relationships and other belief systems, Harford leads to several gaps in his theory. This causes the reader to easily be led to misinterpretations of what logical and reasonable responses should or should not include in a given circumstance. The inability to examine several perspectives about the theory then causes the theory to become irrelevant and one which can not be applied to individual circumstances or trends without further examining the realities of why decisions are made in given circumstances. References Harford, Tim. The Logic of Life: The Rational Economics of an Irrational World. Random House Publishing: New York, 2008. Read More