Those Sweet Mysteries of Life, Deciphered

William Grimes in The New York Times:

THE LOGIC OF LIFE: The Rational Economics of an Irrational World

By Tim Harford

Timharford190 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.

More here.