The Logic of Life: The Rational Economics of an Irrational World
By Tim Harford
Random House / 254 pages / $25.95
On speed dates, 20 young men and 20 young women gather together, usually at a bar. Each of them gets a name badge, a pen and a checklist. When the host rings a bell, the strangers pair up on a first date, which lasts no longer than three minutes. After half an hour, all the guys and girls have met each other. The next day, they log on to their Internet accounts to learn who has chosen them for a second date. Women tend to pursue one out of every 10 of the men they meet on speed dates, while men make an offer to one woman in five. Surprisingly, these numbers don't change even if the room happens to be full of short, fat, cigarette-smoking high school dropouts - even though every unsatisfied customer is entitled to another try, on the house.
Whether or not they're looking for Mr. Right, according to Tim Harford, a columnist for The Financial Times and Slate magazine, and the author of The Undercover Economist, daters factor in availability as they set their standards. Scarcity is power. "Love is not rational," Harford writes, "but lovers are." And speed dating is an example of "the economics of everything." Although human beings retain "irrational quirks and foibles," Harford argues, they usually respond to incentives, weigh alternatives and make rational choices.
In The Logic of Life, Harford draws on the research of "rational choice" economists to illuminate the "reasonable" decisions they make every day, at home, in bed and at work. Smart and seductive, The Logic of Life is full of counterintuitive case studies. Tobacco and alcohol addicts, Harford demonstrates, are sensitive to price. Clerks at supermarket check-out counters are more productive when colleagues on their shift work hard, unless their co-workers can't see them. And yuppies are on solid ground when they pay steep premiums to live in cities.
The book's breezy charm, and some of its claims, however, rest on a gauzy definition of the word "rational." Harford begins with big concessions. Citing the baseball player who runs at the crack of the bat to the spot where the ball will land, he suggests that rational decisions "can be made without conscious calculation." Finally, Harford acknowledges that the logic people use, and the costs and benefits they apply, depend on how the issue is framed.
Rational behavior, then, may be "more widespread than you would expect." But the theory's reach exceeds its grasp. Consider, for example, the finding that both men and women who have a relative with AIDS are less likely to have sex with men, or to indicate that they are attracted to men. They're scared, of course. But, then, again, having a relative with AIDS has no bearing on the likelihood of anyone else getting the disease. Harford deems it "rational behavior of a strange and limited kind." Wouldn't it have been just as rational if they decided not to modify their behavior at all?
The same reservations apply to Harford's assertion that the speed daters' conclusions about scarcity are rational. And to his claim that it is "perfectly rational" for black kids to ostracize a classmate who is "acting white" by studying hard. "Disadvantaged and clustered together in ghettoes," he suggests, they realize they can't rely on someone who is acquiring the ability to escape. It's easy to understand why this response is prevalent in some inner cities. But would it be irrational for some of the brightest kids in the class to begin "acting white," too?
People almost always have reasons for their actions. Sometimes they're good reasons. Sometimes, they're the real reasons. And sometimes they're the right reasons. When Americans decide to vote, buy a lottery ticket, or support the elimination of the "death tax," they often weigh costs and benefits, after their own fashion. But, for good and ill, their choices tend to be more and less than "rational."
Glenn C. Altschuler is the Thomas and Dorothy Litwin professor of American studies at Cornell University.
EXCERPT
"A new breed of economists is discovering something new about sex, crime, gambling, war, marriage, ghettos, racism, politics, and the last million years of human history. These economists are using the assumption of rational behavior as a way of focusing on something important about all these subtle, complicated topics. ... Economists hope that their way of simplifying the world will provide more insight than it destroys."