An appealing, very different approach to a pressing problem.

SCARCITY

WHY HAVING TOO LITTLE MEANS SO MUCH

An intriguing discussion of poverty and scarcity that uses the tools of behavioral economics and offers some different approaches to mitigation.

Mullainathan (Economics/Harvard Univ.; co-author: Policy and Choice: Public Finance Through the Lens of Behavioral Economics, 2011, etc.) and Shafir (Psychology and Public Affairs/Princeton Univ.; editor: The Behavioral Foundations of Public Policy, 2012, etc.) compare scarcity in different forms—financial, but also in relation to time, diet and loneliness—reporting on psychological tests and human and organizational activity to develop their idea that scarcity can be approached from a cognitive standpoint. The authors discuss the concept of “tunneling,” in which focus is so tightly confined that alternate or broader considerations are excluded, and “bandwidth tax,” where “poverty itself taxes the mind…reduces fluid intelligence and executive control." The authors stress that their approach to scarcity is different than that of economists. They distinguish between “physical scarcity,” which they say “is ubiquitous,” and “the feeling of scarcity,” which is not. They examine the mechanics of payday loans and the way market vendors in the Indian city of Chennai finance inventory, and they discuss how choices are constrained by habits of thought. They insist that scarcity “is not merely the gap between resources and desires on average.” Managing slack, as well as relative plenty, matters as much as managing scarcity, and incentives prove more powerful than education in changing habits. “As we contemplate the better management of scarcity,” they write, “we should remember that scarcity often begins with abundance. The crunch just before a deadline often originates with ample time used ineffectively in the weeks preceding it. The months just before harvest are particularly cash tight because money was not spent well in the easy months following last harvest.”

An appealing, very different approach to a pressing problem.

Pub Date: Sept. 3, 2013

ISBN: 978-0-8050-9264-6

Page Count: 304

Publisher: Times/Henry Holt

Review Posted Online: June 17, 2013

Kirkus Reviews Issue: July 1, 2013

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Hiccups aside, a mostly valuable compendium of irrational thinking, with a handful of blanket corrective maneuvers.

THE ART OF THINKING CLEARLY

A waggish, cautionary compilation of pitfalls associated with systematic cognitive errors, from novelist Dobelli.

To be human is to err, routinely and with bias. We exercise deviation from logic, writes the author, as much as, and possibly more than, we display optimal reasoning. In an effort to bring awareness to this sorry state of affairs, he has gathered here—in three-page, anecdotally saturated squibs—nearly 100 examples of muddied thinking. Many will ring familiar to readers (Dobelli’s illustrations are not startlingly original, but observant)—e.g., herd instinct and groupthink, hindsight, overconfidence, the lack of an intuitive grasp of probability or statistical reality. Others, if not new, are smartly encapsulated: social loafing, the hourly rate trap, decision fatigue, carrying on with a lost cause (the sunk-cost fallacy). Most of his points stick home: the deformation of professional thinking, of which Mark Twain said, “If your only tool is a hammer, all your problems will be nails”; multitasking is the illusion of attention with potentially dire results if you are eating a sloppy sandwich while driving on a busy street. In his quest for clarity, Dobelli mostly brings shrewdness, skepticism and wariness to bear, but he can also be opaque—e.g., shaping the details of history “into a consistent story...we speak about ‘understanding,’ but these things cannot be understood in the traditional sense. We simply build the meaning into them afterward.” Well, yes. And if we are to be wary of stories, what are we to make of his many telling anecdotes when he counsels, “Anecdotes are a particularly tricky sort of cherry picking....To rebuff an anecdote is difficult because it is a mini-story, and we know how vulnerable our brains are to those”?

Hiccups aside, a mostly valuable compendium of irrational thinking, with a handful of blanket corrective maneuvers.

Pub Date: May 14, 2013

ISBN: 978-0-06-221968-8

Page Count: 304

Publisher: Harper/HarperCollins

Review Posted Online: March 6, 2013

Kirkus Reviews Issue: April 1, 2013

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BEATING THE STREET

More uncommonly sensible investment guidance from a master of the game. Drawing on his experience at Fidelity's Magellan Fund, a high- profile vehicle he quit at age 46 in 1990 after a spectacularly successful 13-year tenure as managing director, Lynch (One Up on Wall Street, 1988) makes a strong case for common stocks over bonds, CDs, or other forms of debt. In breezy, anecdotal fashion, the author also encourages individuals to go it alone in the market rather than to bank on money managers whose performance seldom justifies their generous compensation. With the caveat that there's as much art as science to picking issues with upside potential, Lynch commends legwork and observation. ``Spending more time at the mall,'' he argues, invariably is a better way to unearth appreciation candidates than relying on technical, timing, or other costly divining services prized by professionals. The author provides detailed briefings on how he researches industries, special situations, and mutual funds. Particularly instructive are his candid discussions of where he went wrong as well as right in his search for undervalued securities. Throughout the genial text, Lynch offers wry, on-target advisories under the rubric of ``Peter's Principles.'' Commenting on the profits that have accrued to those acquiring shares in enterprises privatized by the British government, he notes: ``Whatever the Queen is selling, buy it.'' In praise of corporate parsimony, the author suggests that, ``all else being equal, invest in the company with the fewest photos in the annual report.'' Another bull's-eye for a consummate pro, with appeal for market veterans and rookies alike. (Charts and tabular material— not seen.)

Pub Date: March 1, 1993

ISBN: 0-671-75915-9

Page Count: 320

Publisher: Simon & Schuster

Review Posted Online: May 20, 2010

Kirkus Reviews Issue: Jan. 1, 1993

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