Review: The Economic Naturalist: Why Economics Explains Almost Everything

I just finished reading The Economic Naturalist: Why Economics Explains Almost Everything. I read it in part because I’m interested in big picture ideas and why things are the way they are, and partly because it’s coming from the same approach and school of thought as another book I read last year – Freakonomics

Not that Freakonomics and The Economic Naturalist are teaching exactly the same subject or entirely in agreement, the ‘school of thought’ I refer to is to examine cultural, historical and environmental mindsets and events and try to determine the reasoning behind such things.

I’ll start by saying it’s a good book and it did cause me to learn a few things, but I didn’t find it as good a read as Freakonomics. For a start I found the first few chapters to be shallow in terms of depth of understanding and plainly ignored or forgot factors such as ‘herd instinct’, scotomas or other practical and cultural factors. One such example given is the reason for all cabs in New York being painted yellow (reasoning being visibility for hailing) however, this just doesn’t explain why all cabs in London are black (or even carry full body cover advertisements)!

Of course the reason for sticking plainly to economic explanations can be understood because as the author, Robert Frank explains, these are adapted economic student essays. In fact early on Frank issues a disclaimer as such in that the answers provided are “hypotheses suitable for further refinement and testing”. So I shouldn’t be too harsh on the answers which seem to miss vital points of consideration.

As I said I did learn some things, including the meaning and application of opportunity cost, rational choice theory and pricing hurdles. The book does get much better after the first few chapters and there are some explanations that have caused me to see things in a different light. Good answers are found for the differences between worker salaries and contractors, why tobacco CEO’s (and probably Bank CEOs too) are willing to endure public humiliation and why workers usually vote for safety regulations but ignore them given the choice. The book also helps you to frame things in a different light, did you know for example, that women who wear high heals are competing in an arms race?

The Economic Naturalist is a worthwhile read and it will help you to think, however I think the reader should bear in mind the answers given are not always the end of the story.