Predictably Rational: A Brilliant Book by Richard B. McKenzie

by Mario Rizzo 

This is the time of the year that various publications recommend Christmas books or the best books of 2010. (I have never known what a Christmas — or summer – book is. Are they supposed to be light reading? I don’t believe in reading “light.” When I am in the mood for that, I watch TV.)  In any event, I have a serious book to recommend.

Every so often a brilliant book comes out on a topic of great academic importance that is in danger of not getting the attention it deserves. I am thinking about Predictably Rational: In Search of Defenses for Rational Behavior in Economics by Richard B. McKenzie.

Why Kant Was Smarter Than Behavioral Economists

by Mario Rizzo  

Behavioral economists who like to indulge in normative pronouncements have decided that quasi-hyperbolic discounting violates rationality. In other words, suppose a person decides today that he will give up the hamburgers he loves beginning in 2010 (because of the high fat content). But then when 2010 arrives he reverses his decision and continues to eat them.  To stress the point, let’s suppose that he repeats this preference-reversal one or two more times during 2010.  

The poor fellow is, in addition to all his other troubles, violating standard economic rationality.

Elinor Ostrom and the Relevance of Economics

by Mario Rizzo  

The work of Elinor Ostrom, the first woman to receive the Nobel Prize in economics, is not very well-known among economists. In fact, I would venture the guess than most economists had not heard of her before the prize was announced yesterday morning.  

Two reasons for this are that her degree is in political science and she has written for publications outside of the mainstream economics journals. Additionally, her work, by and large, lacks the high degree of mathematical formalism now so characteristic of economics.  

Yet the Nobel Prize Committee has done a great service to economics and the greater social-scientific community.