The Armchair Economist

Economics & Everyday Life

Steven E. Landsburg

• Publisher: Simon & Schuster UK
• Year: 2012
• Print ISBN:
  9781471101311
• eBook ISBN:
  9781471112232
• Topic: Business
• Subtopic: Business General
• Index: Business

Air bags cause accidents, because well-protected drivers take more risks. This well-documented truth comes as a surprise to most people, but not to economists, who have learned to take seriously the proposition that people respond to incentives.

In The Armchair Economist, Steven E. Landsburg shows how the laws of economics reveal themselves in everyday experience and illuminate the entire range of human behavior. Why does popcorn cost so much at the cinema? The 'obvious' answer is that the owner has a monopoly, but if that were the whole story, there would also be a monopoly price to use the toilet. When a sudden frost destroys much of the Florida orange crop and prices skyrocket, journalists point to the 'obvious' exercise of monopoly power. Economists see just the opposite: If growers had monopoly power, they'd have raised prices before the frost.

Why don't concert promoters raise ticket prices even when they are sure they will sell out months in advance? Why are some goods sold at auction and others at pre-announced prices? Why do boxes at the football sell out before the standard seats do? Why are bank buildings fancier than supermarkets? Why do corporations confer huge pensions on failed executives? Why don't firms require workers to buy their jobs? Landsburg explains why the obvious answers are wrong, reveals better answers, and illuminates the fundamental laws of human behavior along the way.

This is a book of surprises: a guided tour of the familiar, filtered through a decidedly unfamiliar lens. This is economics for the sheer intellectual joy of it.

Table of contents

• Cover
• Half-title page
• Title page
• Copyright page
• Contents
• Preface to the Second Edition
• Introduction
• I. WHAT LIFE IS ALL ABOUT
• 1. The Power of Incentives: How Seat Belts Kill
• 2. Rational Riddles: Why U2 Concerts Sell Out
• 3. Truth or Consequences: How to Split a Check or Choose a Movie
• 4. The Indifference Principle: Who Cares If the Air Is Clean?
• 5. The Computer Game of Life: Learning What It's All About
• II. GOOD AND EVIL
• 6. Telling Right from Wrong: The Pitfalls of Democracy
• 7. Why Taxes Are Bad: The Logic of Efficiency
• 8. Why Prices Are Good: Smith versus Darwin
• 9. Of Medicine and Candy, Trains and Sparks: Economics in the Courtroom
• III. HOW TO READ THE NEWS
• 10. Choosing Sides in the Drug War: How the Atlantic Monthly Got It Wrong
• 11. The Mythology of Deficits
• 12. Unsound and Furious: Spurious Wisdom from the Media
• 13. How Statistics Lie: Unemployment Can Be Good for You
• 14. The Policy Vice: Do We Need More Illiterates?
• 15. Some Modest Proposals: The End of Bipartisanship
• IV. HOW MARKETS WORK
• 16. Why Popcorn Costs More at the Movies: And Why the Obvious Answer Is Wrong
• 17. Courtship and Collusion: The Mating Game
• 18. Cursed Winners and Glum Losers: Why Life Is Full of Disappointments
• 19. Random Walks and Stock Market Prices: A Primer for Investors
• 20. Ideas of Interest: Armchair Forecasting
• 21. The Iowa Car Crop
• V. THE PITFALLS OF SCIENCE
• 22. Was Einstein Credible? The Economics of the Scientific Method
• 23. New Improved Football: How Economists Go Wrong
• VI. THE PITFALLS OF RELIGION
• 24. Why I Am Not an Environmentalist: The Science of Economics versus the Religion of Ecology
• Appendix: Notes on Sources
• Index
• About the Author