AGAINST THE GODS

THE REMARKABLE STORY OF RISK

A history of probability from an economist and author of a history of Wall Street (Capital Ideas, 1991). Modern risk theory dates from a little geometric model invented in 1654 called Pascal's Triangle, which Blaise Pascal used to address a perennial intellectual question: If two participants quit a game of chance before finishing, how is the pot divided? Pascal's Triangle answered the question by showing the proportions of probable outcomes at any given stage of a game. Games dominated theories of risk for a long while, until the English began analyzing death records, resulting in the first actuarial tables, and the Dutch did the same with the successes and failures of merchant shipping. The bell curve and the concept of standard deviations arrived, after much tedious experimentation, in the 19th century—and are very much with us still, in political polling, for instance, and in the analysis of stocks. These classical concepts retain their value, but the irrational, catastrophic events of the 20th century led economists such as John Maynard Keynes to discard the past as a reliable gauge for the future and embrace uncertainty as the only real operating principle. Chaos theorists are presently engaged in an attempt to computerize the minutiae of reality, arguing the need for ongoing, ever-changing models of the future, and rejecting the mean of the bell curve, because the mean changes even as it is identified. There is no norm, in other words, but Bernstein argues that this is cause for hope, rather than despair. He concurs with Keynes that probabilities exist; we simply do not know enough to find them. Therefore, an informed decision matters all the more: A calculated risk is superior to a fool's wager. A dense but compelling model of how the world works.

Pub Date: Oct. 18, 1996

ISBN: 0-471-12104-5

Page Count: 352

Publisher: Wiley

Review Posted Online: May 20, 2010

Kirkus Reviews Issue: Sept. 1, 1996

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

THINKING, FAST AND SLOW

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.

ECONOMIC DIGNITY

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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