Sunday, December 7, 2014

What I've Been Reading

What can be added to the happiness of the man who is in health, who is out of debt, and has a clear conscience?

“Very little.”

How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness by Russ Roberts.

Adam Smith's first book The Theory of Moral Sentiments is really a hard book to read and I never got around reading it. Russ Roberts has done us a huge favor for by writing this new book. Go, get this book and read it - this is the best book I have read this year.

Smith’s awareness of our inability to see ourselves clearly finds an echo in the modern literature at the intersection of psychology and economics called behavioral economics , a field that challenges the strict rationality of most modern economic models. Daniel Kahneman won the Nobel Prize in Economics for experimental work he did with Amos Tversky that examined how easily and often we misperceive reality. The co-winner that year was Vernon Smith, another experimentalist who studies how the mistakes people make individually can be tempered by their interactions with others in the marketplace. So while we may think our house is actually more beautiful than it is or our skills are more valuable than they really are, when we try to sell our house or look for a job, we gain a richer appreciation of how things truly are. I like to think Adam Smith would respect the work of both Kahneman and Vernon Smith and see them both as his intellectual heirs.

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