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Rediscovering My Inner Economist

By Chris | November 20, 2007

The anticipation was too much. Discover Your Inner Economist, by Tyler Cowen, wasn’t available through interlibrary loan and I couldn’t wait. I went ahead and bought a used copy off Amazon. My expectations were really high going in. I had read and listened to a number of favorable book reviews and am a big fan of MarginalRevolution.com.

I wasn’t disappointed. The book has the same conversational tone that makes the blog so readable, yet explores issues more deeply and systemically than is possible in a blog. It was a great way to follow-up Steven Landsburg’s latest book, More Sex is Safer Sex, that I reviewed here. Landsburg uses economic logic to illustrate the irrationality of human behavior. In contrast, Cowen recognizes human nature’s quirks and offers economic incentives to overcome them. The difference between the two authors’ approaches might be best illustrated by their advice on giving to charity. Landsburg argues that you should  only give money to one charity: the one that offers humanity the greatest marginal benefit. Cowen approaches giving differently:

When should we give to such pleas [for charity]? The first rule is to give to causes that we will become attached to.  If our goal is truly help pepole, bad charities are not the foremost problem.  We—that’s right, you and I—usually are enemy number one.  Over time most people lose interest in charitable causes.  Not for any good reason, but we simply stop caring.

Tyler shows that whether you’re giving money, experiencing culture, or trying to get in shape, motivating and occasionally deceiving yourself is essential.  When relating with others, monetary compensation doesn’t always offer the right incentives.  Paying your child to get good grades or to do the dishes may destroy their own intrinsic motivations.  And, sometimes there is no substitute for making it to your son’s little league baseball game.

Certainly, the book contains some traditional economic wit.  You’ll learn where to find the best restaurants, what Tyler thinks about fair trade coffee, and what to order at a fancy restaurant.  But, the book focuses largely on economic psychology.  Clever economic models don’t always account for people’s humanity, but that hardly means economics is irrelevant in this realm.  Tyler Cowen delves into the human psyche and illustrates that incentives are just as powerful there.

Topics: Book Reviews, Economics, Education | 3 Comments »

3 Responses to “Rediscovering My Inner Economist”

  1. laura Says:
    November 25th, 2007 at 10:06 pm

    Since I was out of the town for Thankgiving, having no chance to touch the book. I am looking forward to reading something in economic psychology. When I was learning Game Theory by Robert Gibbons, I was confused that why those models are so inhuman. They assume that all people care is their own utility. I tried to simply extend one model by considering jealousy of human nature, which changed whole situation.

  2. music Says:
    January 8th, 2008 at 4:17 pm

    very interesting.
    i’m adding in RSS Reader

  3. music Says:
    January 31st, 2008 at 3:24 pm

    What do you mean ?

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