adventures of my mind

My Inner Economist

August 15th, 2008 by | Word Count: 1144 | Reading Time 4:35 1,605 views

Being an economist at heart, I recently bought and have just finished reading the book “Discover Your Inner Economist” by Tyler Cowen. The tagline for the book proudly states, “Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist.” Along with the tagline, there is a great media byte on the book provided by the authors of Freakonomics, “You will love this book.” Now, I did not buy the book based on the tagline because I’m already happily married and in love. I know how to survive meetings because I’ve been in and called more than my fair share. However, the dentist one sounded like it could provide me a little bit of useful insight (I’m sure most of us would like a motivated dentist). To be brutally honest with you, the only reason why I bought this book was the simple statement from the authors of Freakonomics. The marketing gurus and publisher behind the Inner Economist book made a great decision in pursuing Levitt and Dubner for a great byte to add to the book’s cover.

Ok, so I bought the book because of a recommendation on the jacket. My “Inner Economist” told me that my theoretical enjoyment gain would be much higher than the purchase price of the book because I absolutely loved reading Freakonomics. The author had zero value in my decision and the tagline offered minimal impact. The title drew me to the book of course, but the quote slam dunked my decision. My “cost analysis” regarding the purchase of this book was definitely weighted in my favor. Price for the soft cover book, $15… my potential enjoyment of the book, quite possibly 4-5 times that amount. I had determined that I was going to make out very well in this transaction. I was going to be the winner while also helping the author reap a benefit for his time and effort writing the book. Was I the real winner?

You may think I am alluding to a potentially negative review given some of the hints between the lines. Well, you would be somewhat correct. While I did enjoy reading the book (if I didn’t, I wouldn’t have finished it), it did not offer me the perceived reward I placed upon it at purchase. My 4-5 times purchase price enjoyment valuation did not occur. Looking back with perfect 20/20 hindsight vision, I paid $15 and got exactly $15 worth of enjoyment out of it. What that means is I got what I paid for, nothing more and nothing less. Now, to let you in on a little secret, I place high value on my time. Reading a book utilizes my limited resource of time and therefore, if I purchase a book that will consume one of my scarcest resources, I expect it to pay me back in enjoyment many times above the original cost of the product. Discovering My Inner Economist failed my transaction.

The book itself provided about 200 pages worth of interesting reading, albeit not groundbreaking by any means. Separated into 10 chapters, the author takes us through ideas of controlling our world, the “me factor”, how to motivate your dentist, how to become a cultural billionaire, and many other interesting tidbits strung throughout the book. Quite a bit of time is spent on art appreciation and ethnic food decision making. Personally, I could have done without the 60 or so pages dedicated to these two subjects. A few pages directed at each subject would have sufficed but they were drilled to infinity… and beyond. One of the more interesting chapters was dedicated to beggars and poor people. Another singular chapter that stood out as I was reading was the look at self delusion. If the author could have continued on the paths of similarly interesting subjects and points of view as he was able to provide in those two chapters, the book would have been a much better transaction for me.

But I just said I got what I paid for didn’t I? Yes, it turns out that I made an even trade. I traded $15 in cash for $15 in enjoyment. Weren’t we both winners then if it’s an even trade and no one really lost anything? No, the author won because he retained a percentage of my purchase amount, but I lost because my perceived winnings were far less than expected. The author is not at fault for my loss, I am. I incorrectly placed a value on the book before purchase. However, the primary factor for this incorrect valuation was in large part due to the quote procured from authors whose opinion I “trust.” The author and publisher knew going into their business venture that when writing an economics book of this nature, a quote from arguably the two most famous behavioral economists in print would increase sales. They have essentially created an incentive for purchasing and reading this book.

The incentive is a simple one. Utilize the knowledge that the consumer who picks up the book knows who Levitt and Dubner are and create a want/need. The incentive is to stay in the know or in the loop. Another incentive is what I rationally expected. I expected that I was going to win in dramatic fashion by purchasing this book. My incentive was that I anticipated a reward above and beyond my costs associated with the time involved in reading this book. I failed. The author correctly used his Inner Economist and created an incentive for purchase.

Will other people have a different reward than what I experienced? Yes. Everyone places a different value on their time and they also have different parameters involved when making a purchase decision. I did not come out any better than if I had decided not to purchase the book since it was an even trade. I ended up trading time for money, and a book. Would I recommend this book to other economic enthusiasts? Sure, my transaction was good enough to warrant a recommendation to people who enjoy reading economics books but I would not recommend it to anyone else, much unlike Freakonomics which I would recommend that everyone read.

Has my Inner Economist learned anything resulting from this transaction? Yes. Primarily, don’t “trust” the media byte on the book’s cover. Also, it’s a pretty good idea to read an unbiased book review of the product before handing your money over. Will I enact these findings in my future decisions? Hopefully, but we all know how easy it is to rely on trusted opinion, not to mention the fact that it takes precious time researching a book’s value by reading multiple reviews. So, I will probably continue my normal methodology for determining a book’s value and deal with the “losses” because more often than not, I will continue to “win.”

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