The Logic of Life- The Rational Economics of An Irrational World

Tim Harford

Rationality of human-being is a striking issue for behavioral economists. Almost all theories in economics assume that we are rational, so that we try to maximize our benefits in limited conditions. Economic behaviors are basically explained by this utility maximization rule. On the other hand, it is observed that we make a lot of biased decisions and not all our decisions are the right one for our well-being. Lately, researchers focus on our “irrational decisions” rather than assuming that all of our behaviors based on a rational consideration. Tim Harford suggests that even if some decisions may seem irrational, all of the decisions made has a rational cause and he supports this idea with some examples in different areas.

  • There is no doubt about how we prefer to stay our “comfort zone” most of the time. Being in the comfort zone may be evaluated as a plus and we may choose the “safe” and less beneficial options.
  • The time of consequences may also affect our decisions. We behave differently while making short-term and long-term decisions. We prioritize the pleasure in short term but benefits in the long term.

There are a lot of determinant of a decision which may escape our notice. People try to maximize their benefits and that is the essential rule in life. Even if it is not beneficial for the society, we tend to choose the right options for ourselves.  Sometimes, we cannot explain even ourselves to why we make “such a decision”. However, it does not mean that we make decisions regardless of the knowledge and experience we have. Even if consequences are not the expected ones, it does not make the decision irrational. Because, we do not have all the information about consequences while making decisions. Life is mostly uncertain, and we try our bests.

Tim Harford explains the idea of being rational with interesting examples such as divorce, racism, spread of HIV and crime. He shows that all decisions are based on a logic even if we cannot see it at first glance. It was a book that you cannot stop thinking about. You will probably read it all at a sitting and think about it for a long time.

  • I would highly recommend this book to ones who are interested in psychology and/or economics and who are curious about the rationality of life.
  • I would not recommend this book to ones who are not even interested in the reasons behind their decisions and behaviors.   

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