A fantastic exploration of the purpose and dangers of economics and its effects on society.

(Full disclosure: like Philip Roscoe, I work at the University of St Andrews, and we know each other slightly.)

Roscoe’s main observation is of a fallacy, that economics is a descriptive endeavour. Instead, he argues that it becomes normative: it causes people to enact the behaviour that it thinks it simply describes. Introducing an economic model into a situation causes those concerned to act in accordance with the model, rather than (as we often think) the model simply exposing behaviours and motivations that were there already. Roascoe supports this hypothesis with a fabulous range of examples, from Norwegian fishermen to prostitution and internet dating.

In many ways this argument is reminiscent of that made by Adam Curtis in The Trap. Mathematical and scientific models are necessarily abstractions of the agents and phenomena they describe, but when these models are used to design systems, we can find that – rather than the systems failing because the models are incomplete – the people involved respond to the systems’ incentives by becoming more like the simplified abstractions. What game theory is for Curtis, economics is for Roscoe: simplifying assumptions lead to a reduction in human richness and behaviour through the power of incentives.

One can read this book as a call to arms to reclaim economics (and society) by embracing these characteristics about systems and people, and to design systems with this power in mind: systems that enrich and encourage people rather than simply following the dictates of money and its tendency to further enrich the already wealthy at the expense of the poor. That would be a noble outcome for what is a fascinating piece of work

5/5. Finished Saturday 29 March, 2014.

(Originally published on Goodreads.)