CAN YOU OUTSMART AN ECONOMIST

Technically, I am an economist. Despite this, I could only get a handful of the puzzles in Steven Landsburg's Can You Outsmart an Economist? right.

This means I am either an idiot or a bad economist. Or both. (The two are not mutually exclusive.)

Of course there's another alternative: puzzle books can be unfair.

Actually, this is my criticism of puzzle books in general, my "the house always wins" argument. The deck is always stacked against the reader when it comes to a puzzle book, as the author can frame a puzzle however s/he damn well pleases. To some degree, that’s what Landsburg does in Can You Outsmart an Economist?––and there’s nothing wrong with that. After all, as the author, he’s entitled to have his fun, too.

Certainly, there are a number of puzzles that perhaps could have been framed better and for which I found the language imprecise, based on the ensuing “solution”. And yes, I feel Landsburg got a smattering of the puzzles wrong (and, well, wrong!). For instance, I strenuously object to his explanation to the “escalator question” of why people walk up stairs and not escalators, which strikes me as so much pedantic nitpicking. But there are many more that are truly inspired, which readers who have some background in economics will readily appreciate.

As might be expected, although framed in the context of riddles and thought experiments, much of Can You Outsmart an Economist? draws from established economic theory to make these more intelligible for a general readership. Having studied my fair share of economics, I found it truly delightful to find complex subjects such Bayesian auctions, the Prisoner’s Dilemma and Nash Equilibria, and backwards induction presented in very down-to-earth terms. To cite one specific example, Landsburg’s explanation of the the intuition behind the Black-Scholes option pricing model makes up for its lack of precision by the clarity of its presentation––and I must say I wish I’d come across that explanation when I was in grad school.

It’s in the nature of riddles to make those unable to solve them feel a little foolish. But it also follows those left stumped often appreciate the cleverness belied by their solutions, and thereby learn a thing or two in the process. This is how I felt about Can You Outsmart an Economist?. I have no qualms admitting that despite my degree in economics I hadn’t reason through all of Landsburg’s puzzles in the manner by which he did. While that may mean that I hadn’t outsmarted an economist, it does mean I am still learning, and will be a better economist because for it.

CAN YOU OUTSMART AN ECONOMIST? by Steven E. Landsburg contains "100+ Puzzles to Train Your Brain." Landsburg is a Professor of Economics at the University of Rochester and he is definitely attempting to promote critical thinking, especially through the use of logic puzzles. Initially I thought that his chapter titled: "Are you smarter than Google?" would be a useful approach to teaching about "fake news" and evaluating credibility. That chapter is based on a blog post which generated 1000's of responses at his blog, TheBigQuestions.com, but there was little if any information about the algorithms (with their own inherent biases) that Google uses. Overall, I think this book had the potential to be both fun and informative ("think beyond the obvious. What seems obvious is often wrong"), but part way through, Landsburg may have assumed too much knowledge (and willingness to really work hard to understand the logic of a given example) on the part of his readers.

As someone who has had a lot of experience teaching finance and economics at the college level, I am very familiar with the challenge of motivating these subjects to a group of sometimes-unwilling students. While undoubtedly of fundamental importance, the topics comprising these fields of study can be arcane and, occasionally, a little dull. So, I very much appreciate what Steven Landsburg attempts to do with Can You Outsmart an Economist? The volume is nominally pitched as a series of quizzes and brain teasers that require economic reasoning to solve. However, what it really represents is a cleverly disguised text that tries to introduce readers to many of the seminal concepts in the economic sciences in an engaging and entertaining way. Happily, the author largely succeeds in doing just that.

Many of the examples Landsburg has created are simple—deceptively so, in fact—but they do a nice job of conveying the book’s main message: When making decisions or judgments, do not take things at face value and jump to easy or obvious conclusions. Economic principles, while mostly logical, are not always transparent and they often require looking at situations in indirect ways. An example of this is trying to apply cost-benefit analysis—a cornerstone of economic thinking—when neither the costs nor the benefits are well defined. The author illustrates several other interesting discussions in a quiz-and-solution format. He uses the celebrated Prisoner’s Dilemma model from game theory to establish the moral that rational decisions do not always lead to good outcomes for the participants involved. Also effective were the examples of the role that the price system plays in properly allocating economic resources and how the assumption of irrationality affects an individual’s decision-making prowess.

Unfortunately, not all of the topics explored were as compelling; some of the discussions were either misapplied, misleading, or overly didactic. For instance, the chapter ‘Are You Smarter Than Google?’ was a very low-payoff exercise in the intricacies of probability theory that ultimately read like a self-serving promotion of the author’s own work. The same can be said about the decision theory analysis of which street one should take to avoid being consumed by a dinosaur (this frame actually makes sense in its context). Finally, the description of option valuation, while not exactly wrong, was quite misdirected; the simple example Landsburg chose violated a basic assumption of the model being illustrated and resulted in the nonsensical outcome that the option would be worth more today than it could possibly receive as a payoff at expiration! Still, these are not major quibbles and they do not detract from what was a very solid overall project. For readers seeking intriguing explanations of economic concepts—and not just a random collection of brain teasers—Can You Outsmart an Economist? is a great place to look.

I have to say, I would not be able to outsmart an economist after attempting to complete some of these puzzles. I love puzzle books and brain teasers and this one put me to the test. I was able to complete some of the puzzles, but I definitely know I am NOT an economist.