A powerful way of looking at the market, of much use to investors and strategists.



What do we know about the way economies work? According to two British economists, less than we think.

As Donald Rumsfeld once observed, there are known knowns, known unknowns, and unknown unknowns, a vexation for the smartest strategist. Kay and King (The British Tax System, 1978) employ a like notion here: Although in economics there is a neat little concept called “perfect information,” and although pricing is assumed to incorporate shared knowledge, the governing principle of the real world is uncertainty—and most of the time, we don’t know what we don’t know. This “radical uncertainty” means that our understanding of the present is incomplete and of the future, even more fragmentary, meaning that economists are forced to rely on something akin to hunches. They must explain by way of “narrative reasoning…the most powerful mechanism for organizing our imperfect knowledge,” creating stories about the world that incorporate our experiences, the experiences of others, and such reliable data as we are able to assemble in a “world of uncertain futures and unpredictable consequences.” A repeated example throughout the book is the probabilistic assessment Barack Obama received when determining whether to launch the raid that killed Osama bin Laden: It wasn’t 100% sure that bin Laden was in that Pakistani compound, and a botched operation might have meant war. That things worked out as they did was by no means guaranteed, and neither is following the rules of economics: Supply and demand is a powerful explanatory tool, but it explains only so much about how people and markets behave. While a sophisticated knowledge of economic concepts is a desideratum for following the authors’ argument closely, many of their takeaways don’t require much expertise. “Never rely on data without asking ‘What is the source of this information?’ ” they counsel, helpfully, one of many dicta to help overcome the shadowy unknowns that elude us even with the benefit of hindsight, such as why recessions hit when they do.

A powerful way of looking at the market, of much use to investors and strategists.

Pub Date: March 17, 2020

ISBN: 978-1-324-00477-6

Page Count: 384

Publisher: Norton

Review Posted Online: Dec. 8, 2019

Kirkus Reviews Issue: Jan. 1, 2020

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Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our...


A psychologist and Nobel Prize winner summarizes and synthesizes the recent decades of research on intuition and systematic thinking.

The author of several scholarly texts, Kahneman (Emeritus Psychology and Public Affairs/Princeton Univ.) now offers general readers not just the findings of psychological research but also a better understanding of how research questions arise and how scholars systematically frame and answer them. He begins with the distinction between System 1 and System 2 mental operations, the former referring to quick, automatic thought, the latter to more effortful, overt thinking. We rely heavily, writes, on System 1, resorting to the higher-energy System 2 only when we need or want to. Kahneman continually refers to System 2 as “lazy”: We don’t want to think rigorously about something. The author then explores the nuances of our two-system minds, showing how they perform in various situations. Psychological experiments have repeatedly revealed that our intuitions are generally wrong, that our assessments are based on biases and that our System 1 hates doubt and despises ambiguity. Kahneman largely avoids jargon; when he does use some (“heuristics,” for example), he argues that such terms really ought to join our everyday vocabulary. He reviews many fundamental concepts in psychology and statistics (regression to the mean, the narrative fallacy, the optimistic bias), showing how they relate to his overall concerns about how we think and why we make the decisions that we do. Some of the later chapters (dealing with risk-taking and statistics and probabilities) are denser than others (some readers may resent such demands on System 2!), but the passages that deal with the economic and political implications of the research are gripping.

Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our minds.

Pub Date: Nov. 1, 2011

ISBN: 978-0-374-27563-1

Page Count: 512

Publisher: Farrar, Straus and Giroux

Review Posted Online: Sept. 4, 2011

Kirkus Reviews Issue: Sept. 15, 2011

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A declaration worth hearing out in a time of growing inequality—and indignity.


Noted number cruncher Sperling delivers an economist’s rejoinder to life, liberty, and the pursuit of happiness.

Former director of the National Economic Council in the administrations of Presidents Bill Clinton and Barack Obama, the author has long taken a view of the dismal science that takes economic justice fully into account. Alongside all the metrics and estimates and reckonings of GDP, inflation, and the supply curve, he holds the great goal of economic policy to be the advancement of human dignity, a concept intangible enough to chase the econometricians away. Growth, the sacred mantra of most economic policy, “should never be considered an appropriate ultimate end goal” for it, he counsels. Though 4% is the magic number for annual growth to be considered healthy, it is healthy only if everyone is getting the benefits and not just the ultrawealthy who are making away with the spoils today. Defining dignity, admits Sperling, can be a kind of “I know it when I see it” problem, but it does not exist where people are a paycheck away from homelessness; the fact, however, that people widely share a view of indignity suggests the “intuitive universality” of its opposite. That said, the author identifies three qualifications, one of them the “ability to meaningfully participate in the economy with respect, not domination and humiliation.” Though these latter terms are also essentially unquantifiable, Sperling holds that this respect—lack of abuse, in another phrasing—can be obtained through a tight labor market and monetary and fiscal policy that pushes for full employment. In other words, where management needs to come looking for workers, workers are likely to be better treated than when the opposite holds. In still other words, writes the author, dignity is in part a function of “ ‘take this job and shove it’ power,” which is a power worth fighting for.

A declaration worth hearing out in a time of growing inequality—and indignity.

Pub Date: May 5, 2020

ISBN: 978-1-9848-7987-5

Page Count: 384

Publisher: Penguin Press

Review Posted Online: Feb. 26, 2020

Kirkus Reviews Issue: March 15, 2020

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