The Logic of Life 

by Tim Harford 

As suggested by the grandiose title, Harford makes clear his ambitious aim to explore the rational behaviours behind all the many different facets of life. Ranging from the economics of crime, office politics as well as the entire evolution of humans, Harford provides many examples of ‘rational choice theory.’ He investigates the various rational decisions that people make that shape our world. He demystifies the complexities of the world by considering human behaviour and its consequences. 

 

Summary 

In the introduction, Harford sets out the premise of the book and explains in turn his occupation. The message of the book is that we all act rationally or logically by responding to certain, sometimes hidden, incentives consciously or more interestingly, subconsciously. He explains that economics is a combination of various other academic subjects including psychology, history, geography and many others. Contrary to popular belief, economics is not only the study of financial documents or the stock market but can also include the study of human behaviour (behavioural economics). He wishes to explore why humans act in a certain way and the effects on the wider world in doing so. In a particularly resonating quote he summaries the role of economists; “A world explained by economics is not a world lacking love, hate, or any other emotion. Yet it is a world in which people can generally be expected to make rational decisions, and where those rational decisions suggest some astonishing explanations for many of life’s mysteries.’  

In chapter one, Harford presents an astonishing case study in which lab rats were used to prove the existence of rationality in economics. They were each offered root beer or tonic water and could access it by pulling a lever. Once they had got accustomed to accessing the two drinks their environment was changed to see the effect of a change in ‘price’ or ‘income.’ For example, the rats preferred the root beer, however this was more expensive and the rats received a smaller volume. Yet, if the price of the tonic water increased, the rats would continue buying the tonic water, though they didn’t like it. This is simply because they had to balance their budget, or their total liquid consumption, with their ‘income’; in this case how many times they could press the lever. This particular example proved the existence of Giffen goods. An economic construct which is a good, like the tonic water, that when the price rises, in contrast to the norm, demand also rises. The experiment also proved that if rats were able to comprehend and respond to incentives, humans too are always responding to incentives around us.  

 

Throughout the rest of the book, Harford provides different examples where rational and logical behaviour can be seen. For example, in chapter 3, he explains the economics behind a rise in divorce rates. In conjunction with human geography, Harford explores the various incentives for a divorce, as well as the supply and demand of individuals. The empowerment of women allows them more growth in the workplace and more protection from domestic discrepancies that previously would not have existed. As more women are able to get jobs and/ or higher paying jobs, they become more independent. It is now financially viable to get divorced. This results in a rise in divorce rates. If more people are divorced, the market for potential marriage partners increases, which encourages others to get divorced. This starts a cycle. Since divorce is a possible option, women preserve their career options. As women preserve their career options, divorce is now an option.  

 

My opinion 

 

The logic of life is an eye-opening book, providing new and refreshing perspectives. It urges the reader to look at the world around us through a different light and really consider the rational decisions behind them. Harford presents various examples, many of which were truly exciting.  

One of my favourite chapters, ‘Why your boss is overpaid,’ explores the politics behind raises and promotions and the incentives of not only managers but also shareholders in shaping the monetary framework within a business. The chapter goes into depth to explain an ideal situation in which the most deserving individuals are rewarded and the least deserving are punished. However, Harford suggests that this cannot exist due to the incentives of your boss. Defining a most deserving candidate is difficult, so to simplify this task, managers purposely provide vague and unspecified targets which leads to tournament theory. Peers compete against one another for a prize that can encourage complacency and sabotage as the criteria for the reward is ultimately subjective. 

However, the book does lay out a few hypotheses that suggest a correlation between two, on the face of it, unrelated phenomena to arrive at a seemingly implausible conclusion. This is epitomised in the final chapter, ‘A million years of logic.’ Harford aims to summarise the rational decisions that led to some civilizations thriving and others dying. He includes a strong merchant class and rules of law as possible explanations. It is difficult to point out a few specific factors that led to this result primarily due to the grandness of the claim. No single, condensed theory can prove why an entire civilization failed or prospered.  

Often straying into the ideological, Harford loses the reader in these comparisons. While he provides a fair amount of reliable data to support his claim, correlation does not mean causation. The fundamental premise of the book is that life is logical and can be explained. A bold claim that was always going to be challenging to prove. Perhaps due to the ambitious conclusion, a vast amount of evidence may be need it to support it. Perhaps due to this lack of depth, the book can at times feel rushed and unsatisfying. 

Overall, an interesting and enlightening read that encourages the reader to question and explore the world around them. What are the incentives and rational choices that make up our actions?