Book reviews

Would people be interested in a review of Portfolios of the Poor; How the World's Poor Live on $2 a Day? link It basically gives a qualitative account of how really poor people manage their incomes; useful for anyone considering philanthropy. I’ve just read it, and have to write a summary of it anyway.

I plan to do produce a review of the recent book Selfish Reasons To Have More Kids for less wrong which summarizes the statistical literature on heredity vs. parenting on life outcomes. It argues that that contrary to intuition, typical differences in parenting have only very small effects on child life outcomes (income, education, life satisfaction, personality, etc) and that this implies that parents should spend less effort on trying to affect child life outcomes and more effort on making parents and children's current lives more pleasant.

Ooh. I recently read The Black Swan, by Nassim Nicholas Taleb (originally published in 2007); I read the 2nd ed. (2010).

Thesis: the world tends to be defined by high-impact events which are very hard to predict. They happen a lot more than people give them credit for.

A few examples are trends in finance, bestsellers in publishing, and the impact of the internet. Taleb observes that people tend to have ridiculous hindsight (and other) biases with respect to these sorts of events.

The only real recommendation in the book is to categorize situations you're trying to predict into four "quadrants": binary outcomes vs. outcomes with magnitude, and normally-distributed probabilities vs. non-normally-distributed probabilities. Taleb terms the normally-distributed region "Mediocristan" and the non-normally-distributed region "Extremistan". When you have non-normal distribution, and outcomes are based on magnitude, that is the "fourth quadrant" -- where you have to beware of black swans, and know that you're going to have trouble making good predictions.

He talks about the probabilistic model in Mediocristan, where the Gaussian / normal distribution applies - it tails off exponentially, rapidly reducing the probability of outliers to miniscule, so it's much easier to rely on the absence of outliers. And he gives dire warnings against applying the normal distribution to the Fourth Quadrant, though many do anyway -- for example, the Black-Scholes option valuation equation models the price of stocks as varying using a Gaussian distribution, and (in the 2nd ed.) makes the case that this was the reason for many derivatives-based financial firms collapsing in 2008.

It's a fun read for students of rationality because he talks a lot about empiricism and biases. One idea he emphasized is the "ludic fallacy" -- "ludic" meaning "game-like", and referring to people relying on excessively simplified models to make predictions, or thinking too much inside the box. Wikipedia has a better summary of this idea. It's something I don't see talked about much here, though I think it applies to rationality.

My review of The Moral Landscape.

This list should be maintained and updated, or put in the Wiki. There are whole literatures I would like to see reviewed, like the top 100 cognitive science works of the 20th century. We could do a distributed review project, where each person chooses a book on the list, reads it, and posts a review.

I reviewed Jason Rosenhouse's book on The Monty Hall Problem on my blog. While the book is primarily about math, a fair bit of the book is about how the response of people to the Monty Hall problem reflects what heuristics we use to reason about probability. If there's interest I can post an expanded version of that review here.

I'm currently reading Ariely so I can do a review of that also if people in addition to Phil are interested.

Ward Farnsworth (2007) The Legal Analyst

My main goal in teaching my introductory Economics class is to give students a good set of mental tools for understanding the world. This semester, I had a student who already had a surprisingly good understanding of game theory and questions of knowledge and proof. As we talked after class, he mentioned that he had learned these things from a book assigned for an introductory law class. After I asked about the book, he lent it to me.

From the minute I started reading 'The Legal Analyst', I saw that it was consistently excellent. About two-thirds of it was a readable, intuitive, high-quality summary of things I already knew, and the other third was new information that I am very glad to have. After finishing the book, my professional opinion is that it is extraordinarily good. Anyone who studies it will be a much better thinker and citizen.

'The Legal Analyst' is not just a law textbook. The subtitle is A toolkit for thinking about the law. These should be reversed. The title of the book should be 'A Toolkit for Thinking' and the subtitle should be 'using examples from the legal system'. The book is an excellent overview of a lot of very important things, such as incentives, thinking at the margin, game theory, the social value of rules and standards, heuristics and biases in human thinking, and the tools of rational thinking. It has the best intuitive explanation of Bayes' Theorem I have ever seen, making this incredibly important mental tool available for everyone's use.

I am very glad that law students are reading 'The Legal Analyst'. They will be much better thinkers as a result. The existence of this book makes me more optimistic about the future of our government and legal system. If the principles outlined here become widely understood, the world will be a better place. This book should be required reading in any course that can get away with assigning it. Anyone who is responsible for writing any kind of regulation or policy, or does economic analysis, needs the information in this book.

'The Legal Analyst' is a very easy book to read, making it even better from a cost-benefit analysis standpoint. I read it a few chapters a time, in my spare time, without any mental effort required. A great deal of high-quality research has been carefully and expertly summarized in clear, vibrant language.

Anyone who has an interest in understanding how the world works, or becoming a more rational thinker, should read 'The Legal Analyst'.

I read Ferris a while back; I can have a review up in a few days.

I've read Predictably Irrational - not sure if it's worth a full review, in all honesty. It's pretty much just a recounting of various studies that he's done, and what general irrationalities they show. Having said that, I'd be willing to get it out of the library again and do a quick write-up of the studies/biases