Armchair Economist: Economics & Everyday Life

-- Joe Queenan, The Wall Street Journal

The Armchair Economist is a wonderful little book, written by someone for whom English is a first (and beloved) language, and it contains not a single graph or equation...Landsburg presents fascinating concepts in a form easily accessible to noneconomists.

-- Erik M. Jensen, The Cleveland Plain Dealer

...enormous fun from its opening page...Landsburg has done something extraordinary: He has expounded basic economic principles with wit and verve.

-- Dan Seligman, Fortune

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All Customer Reviews
Average Customer Review:
0 of 0 people found the following review helpful:

Food for thought ..., 2008-09-23
If you want answers ... look elsewhere. The author addresses many questions from "everyday life", but seldom provides credible answers.
Of course, he seldom claims to; what he does is point out the flaws in conventional wisdom, e.g. regarding why popcorn is expensive in movie theaters. Sometimes he provides multiple theories, sometimes none at all.

I'd advise taking the harsher reviews with a grain of salt: the author doesn't claim to reveal any profound new economic theories, and the wise reader will recognize that that sort of thing is to be found in peer reviewed academic journals, not pop-econ books.

The author points out the flaws in some generally held truths, provides some solid, fundamental tools of economic thought with which to address them, and leaves the reader to his own devices.
What he accomplishes is to provide the reader with interesting puzzles to ponder, and some guidance on how to begin.

The end result is less like an economics textbook, and more like one of those "philosophy puzzles" books (e.g. http://amazon.com/o/ASIN/0312314523).

If you want to learn economics proper, start with the Schaum's outlines on Micro/Macro/International economics, or a good econ text. If you just want some extremely enjoyable, light reading that will make you really think, Landsburg delivers.


0 of 0 people found the following review helpful:

The Economic Mindset, 2008-05-05
This is the rare book that will have you thinking about it months after reading it. The author presents some of the most basic principles of economics in an accessible format. For anyone who missed out on taking econ in college, this book is a useful read.

However, a few things keep this book from getting 5 stars. The author's hyperbole often borders on distracting, and a few of his conclusions seem unsupported by the evidence presented. Also, the author did not always distinguish between his opinions and economic analysis. In a book like this, the line between theory and opinion should be clear.

If you liked Freakonomics and you are looking for more economic reading material then you will probably like this book.


4 of 5 people found the following review helpful:

I don't even know where to start., 2008-02-11
This book isn't even something I would typically refer to as a book. It is more a cobbling together of blog-like material, short articles, rants against things and people in the popular media that the author doesn't like, bad examples of economic thought-processes that simply collapse at the first poke of logical analysis, and contradictory arguments.

Don't get me wrong - I absolutely love economics, one of the most beautiful and fascinating sciences we have. I am not an economist, but am a successful business owner, fairly smart, well educated, and no slouch when it comes to analytical thought.

This book falls flat, not because of the subject matter, but because of the way it is presented. It seems more an attack on everything that ever annoyed the author. Ideas that might otherwise have been well presented seem somehow warped to serve the authors underlying opinions and politics, and the ideas suffer for it.

The author also displays a good bit of ignorance of things outside the field of economics, which damage the examples he uses to show economic ideas.

For example, much of the book amounts to rants that point out, directly or indirectly, his views on the stupidity of "environmentalists" and the "religion of environmentalism." There are places where he makes assertions which are scientifically wrong, then draws conclusions from them. I found myself wishing he had done even a little research on basic biology and ecology.

This isn't an issue of pro- or anti-environmentalism. Whichever side of the fence you fall on in regards to the issues, you will be disappointed with the lack of thought or knowledge behind much of this book.

That said, the author obviously has a good understanding of the tools and theories of economics (he is after all an economist), and if you are willing to set logic and critical thinking on the shelf for a bit, you may get some benefit from this book, but you will have to wade through an awful lot of ego and narcissism to get it.

More likely, you will end up with the impression that the author knows how to use the tools but uses them to create constructs that simply collapse.

Chances are, if you've read the excerpts and marketing material for this book and think it sounds like something you would like to read, what you are really looking for is more likely to be found in "the undercover economist" or "naked economics."

(This is where I would normally end a review, so you can stop reading here if you like - the rest is my personal reaction to a few specifics.)

A couple specific issues:

I normally try not to address specific issues as part of a review, because I know my personal responses may not apply to other readers. I do have a few specific responses that I just can't resist bringing up.

These are MUCH more personal than my general review above, so please take them with a grain of salt.

1.
One chapter describes how the author and some buddies have lunch (he said every day) and discuss "big mysteries" that seem to have stumped them. One of these questions is why ticket prices don't go up for certain performances that regularly sell out and have lines of people camping to buy tickets. He points out some economic principles, then mentions a theory that somebody offered to him, which seems pretty sensible. He then concludes by saying that this theory could be the answer, but nobody really knows. It's this type of mystery that economists theorize about and try to solve every day.

Honestly, when I was done laughing, this nearly made me put the book down. I know the author is discussing theory, but it reminds me of a statement by Alan Greenspan (I forget where he wrote/said it, but it stuck with me ) that he was shocked by the number of economists that have trouble differentiating between theoretical models and the real world of people, decisions, and data.

I strongly suspect that if Alan Greenspan wanted to know why ticket prices don't go up under certain circumstances, he'd have a first-year intern pick up the phone, hunt down some of the people responsible for setting ticket prices for these performances, and ask them. Sure, you may not get an economically sound theory dropped into your lap this way, but it should get you a lot closer than endless pontificating over coffee and bagels.

2.
In another chapter, the author uses the Simpsons to illustrate a few points about benefits and fixed resources. The argument goes something like this: The only thing to do in Springfield is go to the park, so the city of Springfield puts in a new, publicly funded aquarium, which is free to visit.

Now the Simpsons can go to the park or the aquarium, which initially sounds great. However, since the "cost" of standing in line at the aquarium will exactly balance the enjoyment of going to the aquarium over the park (short line, people join, long line, people leave, causing equilibrium), the Simpsons gain absolutely no benefit from going to the aquarium over the park. In fact, nobody gets any benefit from it, or any other publicly owned resources, because economic benefit comes only from owning fixed resources.

This may be economically sound theory and modeling (I think some economists might disagree), but I suspect that if you asked the people of Springfield, you might find that they assign some value to the CHOICE of whether to go to the park or the aquarium, or the ability to alternate, rather than just go to the park every day.

I'm not sure if, technically, choice itself is a fixed resource, but people do derive benefit from the ability to make choices. This is clearly shown in the business world. Also, while the Simpsons may be cartoons, most families and people are a bit more complex and can't just be load balanced like a busy network server.

Real world people and families have attributes like boredom, enjoyment of new things, drug dealers at the park, a daughter who just saw "finding Nemo" and demands to see fish for her birthday no matter how long she has to stand in line.

This isn't a problem with the model, which is great for describing an idea or making a point, or predicting something to be verified by empirical methods. It's a problem with the authors seeming certainty that this simple model can then be taken and successfully applied to the complex real world.

You could also point out that, since the park is also publicly funded and is not a fixed resource, by the same logic it also adds absolutely no benefit to anyone over just staying home and staring at the wall all day.

If you wanted to stretch this logic a bit, the author seems to be saying that your choice between a day at the park, a day at the aquarium, a day at the beach, a day at a national park like Yellowstone or Yosemite, a cruise on the ocean, or any other activity that utilizes public (not fixed) resources adds absolutely no benefit to you or anyone else over just sitting home counting the number of times your ceiling fan goes around.

3.
When you get right down to it, this isn't a book about economics, it's a book about the authors opinion on environmentalism. There is nothing wrong with that in itself, but this book makes a promise, that it is a book on economics, which it fails to keep.

I fall somewhere in the middle on environmental issues, but positions aside, if you are looking for an interesting book on economics, this probably isn't it.

What discussion on economics you find here is mainly buildup for the main argument, which is an angry tirade against anything and everything environmental, which ends (literally, the end of the book) in a letter that the author purportedly wrote to a kindergarten teacher, chastising her for teaching children about recycling.

Ironically, the author talks a lot about equilibrium and balance in this book, in terms of economics. The only real balance I find here is that he seems to exactly balance out the rabid people that you find out on the extreme edge of environmentalism (as on the extreme edge of anything), by being almost exactly like them, only with an opposing anti-environmental opinion.

He seems completely impassioned, angry, ignorant (though not of economics), and certain that anyone with a differing opinion must simply be stupid, since he is so obviously right.

Again, there's nothing wrong with that, since it's his book.

However, as a reader, I don't like to pick up a book that presents itself as an interesting romp through some light economics and then discover that it's really an angry sounding, extremist argument from either end of the enviro-political spectrum.




0 of 1 people found the following review helpful:

Great Read!, 2008-01-12
This is an accessable, fun read. I also read Fair Play and More Sex is Safe Sex by Landsburg. He is the best author in this area.


10 of 14 people found the following review helpful:

Bad economics, bad writing, or both?, 2007-12-15
Before I review the book, I have to provide a digression (I have to lay down these foundations before I can critique the book): There is nothing wrong with economics, it is a beautiful social science (I am a Ph.D. student in economics myself). What one has to bear in mind is that economics explains certain aspects of human behavior and how society works, it is a science, but not one without bounds. When applied methodically and correctly, it gives powerful insights in the subjects it studies. But one must understand that it is not without limitations, to name just a couple: economics is the study of "homo economus", it is by definition anthropocentric. I am not saying this is right or wrong, but certainly there are people who do not share the same view (environmentalists may think, for example, other species have rights too); another foundation of economics is that people are rational, but even economists admit that under certain conditions humans can be "unpredictable" or appear "irrational", and their preferences can be unstable (e.g. see Richard Thaler's works).

Now back to the book. Landsburg labels himself as a libertarian economist, and he takes such doctrine as "free market" as religion. It is true that under perfect competition, low transaction cost, etc., free market will achieve the most efficient allocation of resources. However, we must not forget that the real world is full of obstacles to competition and transaction costs can be forbiddingly high. But though Landsburg claims that he is trying to apply economic principles to "real world" problems, but more often than not, he retreats into the simplistic assumptions of first year college microeconomics.

Parts of the book are simply bad economics. For example, when one reader complains about the quality of air is getting unbearable in the city he lives, Landsburg comments: the fact that he did not move away proves that he is indifferent (between living there and moving away) after all (I actually couldn't locate this in the book at the moment, but I am pretty certain he said something along that line), completely ignoring elasticity (people are not perfectly mobile and can't just move from one city to another on a whim) and transaction costs.

Parts of the book are bad writing. I've read the chapter about popcorns at theaters at least 3 times, to date I am still trying to figure out what he tried to say. Also as other readers point out, his arrogant and snobbish attitude permeates the whole book. He sounds like as if he's the only one who knows the answers to all the questions of the universe. Anyone who does not accept his logic is simply branded "unscientific". One gets the impression that Landsburg is not just impatient, but also a deeply insecure person.

Parts of the book are not easy to tell whether they are bad economics, bad writing, or both. For example, in Chapter 7, he says that he is not sure why he spends a 3 cents worth of effort to grab a one-dollar bill. I understand that the whole chapter is about cost-benefit analysis, but to say that he "is not sure why" is misleading to say the least, because his private gain from this action is 97 cents so it makes perfect sense to do so. I am sure Landsburg actually understands this, but the way he tells the story is just a bad presentation and will make the layman scratch his head (as Landsburg puts it himself): are economists really so "dense"?

Landsburg's attitude toward environmentalism and conservation is appallingly ignorant. He calls environmentalism "the religion of ecology" to imply how unscientific it is, but his own stubborn hatred toward the environment (not just environmentalism) and single-minded faith in libertarian economics are not a shred less unreasonable or zealous than any religious beliefs. I don't consider myself to be in the environmentalist group, and certainly extreme environmentalism has its pitfalls. But from Landsburg's writing, it is apparent that he never bothered to read the other side's arguments at all. For example, he says that if "you want large forests, your best strategy might be to use paper as wastefully as possible" (yes, he actually said "wastefully", chapter 24), but that is assuming people strictly care about the number of trees, and not the composition (diversity of the biota, native species vs. introduced species, etc.) of the ecosystem, not to mention the disturbance, distress and destruction logging can cause to the environment. To an environmentalist, a coastal Californian redwood surviving from Aristotelian times may well give her more "utility" (to use economists' jargon) than newly planted timber crop from lumber companies. It is pretty clear that Landsburg has not the faintest idea about these issues. In the same chapter, he also suggests that "we can pick up a lot of valuable knowledge by wiping out a few species to see what happens", well, have we humans been doing that for, uh, the last few centuries? Need we count the number of species that have been wiped out and are being wiped out everyday? Have we not learned anything yet? (certainly not Landsburg).

Actually, one should not equate Landsburg with the word "economist". Fortunately for us, there are other economists with more reasonable, patient and perhaps humble minds. For example, for the topic of environmental economics, I suggest the reader (and Landsburg) read John Krutilla's "Conservation reconsidered" for a more sophisticated and reasoned argument about conservation.

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