Published in December 2015 issue of Prospect Magazine
by George A Akerlof and Robert J Shiller (Princeton, £16.95)
“Modern economics inherently fails to grapple with deception and trickery.” That’s the central claim of the new book by Nobel Laureates George Akerlof and Robert Shiller. Economics, they argue, assumes that we make choices according to our best interests. In practice, though, we depart from our best interests: we eat too much sugar and spend money we don’t have. Hence the other people we deal with—Akerlof and Shiller are particularly interested in the behaviour of profit-maximising private firms—can often do better for themselves by exploiting our foibles rather than help us work in our best interests.