The Logic of Life: Uncovering the New Economics of Everything
By Tim Harford
Little, Brown £18.99, 288 pages

In a world where you can watch a 30-second commercial for 25 seconds before you know what it is selling – or where newspapers spend more time on politicians’ personalities than their issues – it is refreshing to read a book that argues that people are more, rather than less, rational than we thought.

In The Logic of Life, FT economics writer Tim Harford demonstrates that not only do consumers and voters exercise common-sense logic in weighing their choices – but so do society’s more “irrational’’ types, such as lovers, prostitutes, teenagers, addicts and, well, New Yorkers.

“Actor rationality’’ is the foundation of economics. Harford expands on this principle to say that such rational weighing of costs and benefits goes on not just in theoretical models, but in the most mundane – and personal – details of our lives.

In The Undercover Economist and now The Logic of Life, Harford argues that rationality, and therefore economics and game theory, are necessary tools by which to understand the complete human experience.

And so, Harford continues, marshalling behavioural studies to prove it, if you dig deep enough, you can find logic beneath even the most crazy decisions. Teenage boys commit crimes not because they are impulsive and maniacal, but because they know that juvenile detention isn’t the threat that prison is. Prostitutes sometimes forgo condoms not because they are stupid; to the contrary, they have (correctly) weighed the chances of contracting Aids against the certainty of higher take-home pay. Even sky-high rent-payers, says Harford, have not been duped into some romantic myth of cosmopolitan living – they are actually paying for “ideas in the air’’, or the bustling innovation of city life.

So while society may often feel irrational, the truth is that it is constantly animated by billions upon billions of individual, calculated choices.

This is no minor thesis. Society has spent a long time relying on the belief that whole classes of people are irrational. As Harford explains, when white people blame African-American crime on “black culture’’, for example, they are writing off the possibility that African-Americans’ choices could be as reasonable as their own. Or, I would add, when men stereotype women as “emotional’’ or “hysterical’’, they are casting women out of the “normal’’, rational playing field altogether.

In essence, Harford calls for a widening of the gates, a welcoming back of erstwhile outcasts to the realm of reason. The burden is on us, he suggests, to look harder to find hidden rationality, instead of exiling what (and who) we don’t understand. In that sense, The Logic of Life is a plea for the essential, rational humanity of us all.

Ideologues on both sides of the aisle will find support in the book for many of their pet issues. Liberals will be delighted to find that immigrants really do boost productivity, CEOs are wildly overpaid and cities are environmental utopias. At the same time, conservatives will be pleased that prisons really do deter crime, sexuality can be influenced, and a strict male/female division of labour may be what once saved our species.

Harford doesn’t dwell on stale left-right battles; if anything, his insistence on everyone’s rationality may offer a more fine-tuned way to solve problems in an increasingly diverse world. Because, frankly, if society’s “freaks’’ are as rational as we are, social problem-solving takes on a very different orientation.

Just look at terrorists (which, surprisingly, Harford does not). As long as we think of suicide bombers as deranged individuals, we will remain astonished by the havoc they can cause. But if we accept that most are neither desperate nor down-and-out, but rather educated and relatively prosperous, we will see that their world view, while cold and callous, is highly rational.

The bottom line is that being rational doesn’t make people perfect, but it does make them more predictable. Policymakers, marketers, politicians and others who would influence people’s behaviour might do well to keep a close eye on reason.

Fans of The Tipping Point and Freakonomics will find some of the stories in The Logic of Life familiar – for example, you may already know about the effect of high-rises on urban crime, or that employers discriminate against black-sounding names. But if you loved those books, you’ll love this one. And, even better, you may find yourself working to discover the rationality in all kinds of people’s behaviour – your kids, your colleagues or your mother-in-law – that you used to just write off as crazy.

E. Kinney Zalesne is co-author of ‘Microtrends: The Small Forces Behind Tomorrow’s Big Changes’ (Twelve)