ŷ������

Hey friends, long time no see�� Well I am to blame for that as under pressing circumstances, I got sidetracked from this wonderful addiction ;P

Well, let's talk about this new book that I just finished

This is the best book I've read so far folks and I'm not exaggerating. Well if an armchair economist, as the title suggests, can observe things the way Steven has done, I wonder what would an active economist running here and there will pull off. If you stop right wherever you are and go back in time, you would realize that there have been many instances when you have faced an argument, contrary of which would've seemed impossible because of the unpopularity of the it but still you were left with a nagging sensation. The problem you faced in such a situation was that you were unable to concoct a simulation based on the principles, just opposite to what is popularly believed in order to check whether populist opinions are right or wrong. For ex�� Once we used to believe that earth is flat or earth is the centre of universe/solar system, in order to check whether this was true, it was required to give an equal opportunity to the contrary versions of these beliefs as well in order to empirically verify as to which of the two belief is factually correct. We all know how people like Copernicus and Galileo were treated when they suggested the same. Maybe mankind is not doomed yet as there are few who always think differently and are immune to the herd mentality. Well, this book will to help you to think differently by presenting you with those simulations with a bend of economics at every turn

I will provide you with some of the insights and questions that I faced while reading and I would be more than happy to have discussion on any of these:-

1) Selfish Gene--> I have come across this idea plenty of times and across disciplines be it economics or evolutionary biology. It states that human genes are selfish in nature i.e. they compel the organism to undertake only those actions which have an incentive attached to them. The incentive can be biological in nature(Making as many copies of one's genes as one can--> If you know what I mean!!) or monetary in nature. Monetary incentives are dealt by the economists and as the book suggests, people don't respond to instances, events, policy decisions or any other such thing but only to incentives. The best example of this is the riddle of seat belts. We believe that making it mandatory for people to wear seat belts is equivalent to increasing their safety but it can have opposite results as well. How? Well wearing seat-belts can ensure that in an accident, seat-belts will reduce the probability of your death. But can it control the rate of accidents itself? What if we assume that seat-belts in-fact are acting as an incentive to the driver to drive faster than usual as he/she knows that he/she has better chance to survive that accident? How is this wrong?

2) Truth or Consequences--> Meaning of these two words and especially their attribution to an occurrence are often confused. Lets directly jump to an example�� Shareholders of a listed company want to see their invested money in the company, multiply. In order to this risky job, management and executives are employed. Logically speaking, their performance should be linked to the pay package. Now since the expectations of the shareholders are always sky high, more often than not it happens that executives fail to deliver on their promise of increasing the business by x%. Following the logic, this would mean that they will have to take riskier decisions to increase the business by x% and we all know that risk is directly proportional to returns. Now higher the risk, higher the probability that the decision might backfire. Thus, these executives are provided with a golden parachute/higher compensation packages as their salary is directly linked to their performance. Now it's very famous to protest against higher packages awarded to the senior management of the company. This is an indirect protest against sky high expectations of shareholders. Do we realize this? Debatable

3) The Indifference Principle-->"Unless you are unusual in some or the other way, nothing can make you happier than the next best alternative" Lets unravel this. If there are 2 options in the world to choose from, for instance, whether to go to a fair or to go to a park then the only way you will feel special about your choice of going to either of the places depends of the fact that it has to be relatively unique. This means that suppose you choose to go to the fair, then going there holds that special value to because not everyone else chose that option. Isn't this equivalent to enslaving our satisfaction at the hand of others?

4) Why money is good?-->There is one instance shared by the author in which he and his wife fight over the movie to be watched while having dinner. They come up with a novel solution to decide which movie will play and the method of selection will create a win-win situation. Both of them allotted an amount of money to their choice of movie. Whichever amount will be higher will win and that movie will be played. Here's the catch, the winner will have to pay the smaller amount to the loser. The decision has been reached upon by the simple logic that how much monetary value does one attribute to the movie or how much money are you willing to lose to watch that movie. Novel, isn’t it?

What is common in all of these rubrics? For one, they all invite healthy discussion and most importantly, if the proponent cannot prove it right, the dissenter cannot prove it wrong either so that makes all of these topics a moot point
Every book has something or the other to offer, but the most important take away from this book is that it will keep you safe from the subliminal indoctrination of belief systems inside you which you might be able to realize only when it'll be too late. So, I would suggest all of you to read as it'll come handy to you no matter what background you come from

"The hallmark of science is a commitment to follow arguments to their logical conclusions whereas the hallmark of certain kinds of doctrine is a slick appeal to logic followed by a hasty retreat if it points in the other direction "�� Steven Landsburg