Tuesday, January 29, 2008

Undercover Economist in Action Again.

I am immersed into the second adventure of our undercover economist, Tim Harford, in his attempt to unravel The Logic of Life: The Rational Economics of An Irrational World, using rational choice theory of mostly Gary Becker and Thomas Schelling.

He describes the tool as follows:
"In the hands of economists, "rational choice theory" produces an X-ray image of human life. Like any X-ray, rational choice theory does not show everything. Nor is the picture necessarily very pretty. But it shows you something important, and something you could not see before" --page xiii
My favorite is chapter six, The Danger of Rational Racism, that tells how you, out of your perfectly rational thought, can become a racist even before you realize it --assuming, ex ante, you are not a racist by heart and/or there is no such thing as racist culture or psyche.

Nevertheless, overall, the book is fun, very well written, and the reading enjoyable. Highly recommended for both economists and non economists, no Econ 101 prerequisite required.


  1. Rizal, thanks for the review. I just ordered the book. Lucky me, I got discounted price. My reservation price is actually higher after your review :-)

    Anyway, I'd love to read the paper (or the like) of LPEM-UI on subsidy cut of gasoline and its effet(s) on poverty. Could someone out there give me a hand? Bang Dede perhaps, or Aco. That would be nice.

    What I have with me is a working paper on this but minus the complete model; have yet to find the "ghost behind the machine" (ie., the mechanics) of the so-called INDOCEEM computable equilibrium model.

    Vielen Dank!

  2. Sonny, I am afraid I can't be of help since I don't have that old paper with me now.