The Logic of Life

Andrea Diaz

Period 5

October 24, 2011

Subsection Summaries

Subsection One

In his book, The Logic of Life, economist Tim Harford discusses the “rational economics of an irrational world” through which he gives the reader an understanding of how every action is precedent to a process of rational thinking in which costs and benefits have been analyzed. Harford acknowledges that on a superficial perspective, the actions committed by prostitutes, teenagers, and traders may seem irrational to us as individuals. He claims this is due to the lack of understanding we have behind the implications of their particular actions. However, prostitutes became prostitutes, oral sex among teenagers increased, and pin traders traded what they traded after and because of a process of rational thinking in which costs and benefits were analyzed by the person at stake. Rational thinking is a universal skill, but the way each one of us uses is subjective.

Subsection Two

In this second subsection, Tim Harford argues that even criminals in Chicago and prostitutes in Mexico are capable of thinking in a rational manner. For argument’s sake, an experiment performed in the 1990’s proved that even mice are capable of thinking rationally. Harford therefore moves on to analyzing what particular measures are the ones that discourage juveniles from becoming criminals and prostitutes from accepting sex without the use of a condom. Harford suggests that certain costs (either monetary or physical), in comparison to certain benefits, have been analyzed by these people and, depending on which one of the two outcomes the other, juveniles either stop or continue committing crimes or prostitutes adapt to their clients’ requests or demand the use of a condom.

Subsection Summaries with Quotes

Subsection Three

In this third subsection, Tim Harford insists that rational thinking is found everywhere and that it can be used to one’s advantage when dominated. In order to make his argument stronger, Harford invites the readers to think of poker in Las Vegas. Theoretically, poker has nothing to do with math and is nothing but a game of bluffing and luck. As Harford himself says it, “Las Vegas isn’t the sort of place one links with the word rational” (page 33). However, there is a point to this. Harford makes reference to Joseph von Neumann’s work in the Theory of Games, in which the mathematician proves that there is rational thinking behind a poker game and that, if mastering the skill of thinking ahead of your opponent and balancing costs and benefits, one is most likely to win. Harford reaffirms, though, that this would only be possible if played by professionals. According to Harford, “… experience can produce rational decisions, even if the decision makers are not necessarily conscious of the rational basis for all their actions.”

Subsection Four

After informing the reader on von Neumann’s Theory of Games, Harford describes professional poker player Chris Ferguson’s case in the 2000 World Series Championship. Ferguson was able to win the World Series using von Neumman’s theory half a century after his book was published and only because he was playing against an incredibly experienced player. Harford uses this event for supporting von Neumman’s theory. According to him, “Game theory assumes rational players… The very fact that Ferguson’s achievement was so hard-won and that the level of his game was not notably better than that of Cloutier (his opponent) is exactly what game theorists need to assume” (page 45). The author then complicates matters further when he moves on applying von Neumman’s work behind the game of world dominance; “But (game theory) was not true in the most important ‘game’ to which game theorists applied their thinking in the twentieth century- the game of world dominance, played by the United States and the Soviet Union.” (page 47). In other words, Harford insists that human beings act in irrational ways when placed in uncomfortable situations and that maybe no theory can explain that.

Agreeing, Disagreeing, or Both

Subsection Five

In this subsection, Tim Harford discusses the implications behind single women and the environment they live in. According to him, women are more likely to flock into big cities where men have juicier salaries and more stable jobs. Men like these are scarce, and so women will complain about the lack of available men. However, women would rather complain and keep searching for the right instead of moving to Alaska, for example, where there are a lot more men. This is because the men in Alaska and other margined populations are more likely to have smaller salaries. I have never thought about this before, and now it all makes a little more sense to me. Although I do not agree with Harford’s generalizations about women moving to perfect-men-nestling cities on purpose, I accept the evidence used in his arguments and agree that a successful, good looking man from New York is far more attractive than a less successful, probably better looking one from Alaska. I personally do not wish to move to a certain place because I think I will find the “right guy” there but because the place offers me something tangible and more important. I believe that it is mere coincidence that New York is a more attractive place to live in than Alaska or any other tiny town in which opportunities, in general, are smaller.

Subsection Six In this next subsection, Harford goes deep in the topic of divorce. The author argues that marriage, regardless of how much love it lays in, is a business arrangement. He claims that successful marriages turn out to be the most rational ones. Common economic activities found helpful in a marriage include the division of labor, specialization, and trade. Harford then skips into the topic of divorce by connecting it with economic interests gone wrong within those marriages and with economic events going on outside the marriage, such as an increase in divorce rates when women’s rights skyrocketed in the 1970’s. Being as rational as I am and as the book suggests that I be, I agree with Harford’s claims upon marriage being a business arrangement (when analyzed beyond love). I believe that economic ties are stronger than affectionate ones, and when it comes to raising kids, business arrangements have been found to be more successful in case the love dies. Furthermore, Harford is surely right on the implications of marriage; my experience with my own parent’s 23 year-long marriage confirms it. My parents practice division of labor in raising my sister and I and, aside from being mathematically more successful than any other system, I find it quite perfect. Moreover, I believe that out of logic, a couple should work as a team and focus on the activity he/she is more comfortable and productive with. This way, their children will be raised in a more complete environment.