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The Logic of Life - IB Economics Power Point Presentation

Tim Harford is an English economist and journalist who has written two economic books, including "The Logic of Life." The book argues that life events that seem illogical actually comply with economic logic, as people rationally respond to incentives and consider costs and benefits. For example, the rise in oral sex among teenagers from the 1990s to 2000s corresponds to the increased costs of regular sex due to HIV/AIDS. While emotions also motivate people, their responses are still shaped by incentives like changing prices, incomes, and consideration of future consequences, like needing to repay loans.

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193 views12 pages

The Logic of Life - IB Economics Power Point Presentation

Tim Harford is an English economist and journalist who has written two economic books, including "The Logic of Life." The book argues that life events that seem illogical actually comply with economic logic, as people rationally respond to incentives and consider costs and benefits. For example, the rise in oral sex among teenagers from the 1990s to 2000s corresponds to the increased costs of regular sex due to HIV/AIDS. While emotions also motivate people, their responses are still shaped by incentives like changing prices, incomes, and consideration of future consequences, like needing to repay loans.

Uploaded by

mykiri79
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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“The Logic Of

Life”
~ Tim Harford
~
“A book that forever changes the way
you look at things”
(BBC Economics
Tim Harford
(1973)
An English economist and journalist.
• 2 economic books:
– “The Undercover Economist” (2005)
– “The Logic Of Life” (2008)
• The presenter of the BBC TV series
– “Trust me, I’m Economist”
• Writer of “Dear Economist” for “The
Financial Times”
Rational
Choices
• The Rational Economics of an
Irrational World

• Life often seems to defy logic, but in


fact, according to Tim Harford,
everything that we concern as unlogical
does comply with economic logic.
When the costs or
benefits of something
change, people change
their behavior.
Oral sex
• Between 1994 and 2004: young people between
ages 12-24:
– Boys: 16% -> 32%
– Girls: 14% -> 38%

• Professor Jonathan Zenilman, expert at John


Hopkins University on sexual transmitted
diseases: “Oral sex is definitely in vogue”

• Regular sex is more costly than it used to be,


because of the spread of HIV / AIDS.
Rational people
respond to
incentives.
They consider
their budget.
And they are
mindful of future
You
buy a
Honda
instead
=> People respond to
incentives
Price of
Toyota
rises
Your
income rises

People consider
their budget.
You plump
for a Ferrari
You know that the loan
to buy that Ferrari must
eventually be repaid

=> People are mindful


of future consequences
People are
motivated by all
kinds of human
emotions.
… which are not
financial, but our
responses to them are
As Tim Harford has mentioned in the book:

“For almost teenagers, planning


and calculating and strategising
about matters of the heart go on
as many as about the matters of
the wallet.”
THANK YOU

MAGDA NGUYEN

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