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Phishing for Phools: The Economics of Manipulation and Deception
Why the free-market system encourages so much trickery even as it creates so much good
Ever since Adam Smith, the central teaching of economics has been that free markets provide us with material well-being, as if by an invisible hand. In Phishing for Phools , Nobel Prize–winning economists George Akerlof and Robert Shiller deliver a fundamental challenge to this insight, arguing that markets harm as well as help us. As long as there is profit to be made, sellers will systematically exploit our psychological weaknesses and our ignorance through manipulation and deception. Rather than being essentially benign and always creating the greater good, markets are inherently filled with tricks and traps and will "phish" us as "phools."
Phishing for Phools therefore strikes a radically new direction in economics, based on the intuitive idea that markets both give and take away. Akerlof and Shiller bring this idea to life through dozens of stories that show how phishing affects everyone, in almost every walk of life. We spend our money up to the limit, and then worry about how to pay the next month's bills. The financial system soars, then crashes. We are attracted, more than we know, by advertising. Our political system is distorted by money. We pay too much for gym memberships, cars, houses, and credit cards. Drug companies ingeniously market pharmaceuticals that do us little good, and sometimes are downright dangerous.
Phishing for Phools explores the central role of manipulation and deception in fascinating detail in each of these areas and many more. It thereby explains a paradox: why, at a time when we are better off than ever before in history, all too many of us are leading lives of quiet desperation. At the same time, the book tells stories of individuals who have stood against economic trickery―and how it can be reduced through greater knowledge, reform, and regulation.
Ever since Adam Smith, the central teaching of economics has been that free markets provide us with material well-being, as if by an invisible hand. In Phishing for Phools , Nobel Prize–winning economists George Akerlof and Robert Shiller deliver a fundamental challenge to this insight, arguing that markets harm as well as help us. As long as there is profit to be made, sellers will systematically exploit our psychological weaknesses and our ignorance through manipulation and deception. Rather than being essentially benign and always creating the greater good, markets are inherently filled with tricks and traps and will "phish" us as "phools."
Phishing for Phools therefore strikes a radically new direction in economics, based on the intuitive idea that markets both give and take away. Akerlof and Shiller bring this idea to life through dozens of stories that show how phishing affects everyone, in almost every walk of life. We spend our money up to the limit, and then worry about how to pay the next month's bills. The financial system soars, then crashes. We are attracted, more than we know, by advertising. Our political system is distorted by money. We pay too much for gym memberships, cars, houses, and credit cards. Drug companies ingeniously market pharmaceuticals that do us little good, and sometimes are downright dangerous.
Phishing for Phools explores the central role of manipulation and deception in fascinating detail in each of these areas and many more. It thereby explains a paradox: why, at a time when we are better off than ever before in history, all too many of us are leading lives of quiet desperation. At the same time, the book tells stories of individuals who have stood against economic trickery―and how it can be reduced through greater knowledge, reform, and regulation.
288 pages, Hardcover
First published September 15, 2015
435 people are currently reading
5273 people want to read
About the author
George A. Akerlof
23 books139 followersGeorge A. Akerlof is a Professor of Economics at the University of California, Berkeley, and 2001 Nobel Laureate in Economics.
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Displaying 1 - 30 of 249 reviews
December 6, 2015
This book was not well-written, nor did it explain anything new about economics. If the field of economics wasn't so enamored with the greatness of free markets, despite its obvious shortcomings, maybe this book wouldn't have been written. But, it appears economists still largely think people act rationally, and there is some invisible hand guiding markets in the right direction, which is hard to believe given all the fraud that regularly occurs, not to mention the Great Recession. I would like to see more research in behavioral economics, which would likely show the pitfalls of deregulation and why a strong governmental influence on the economy can be a good thing.
December 14, 2015
I got to the end of this book and realized I'm not really sure what it's authors were actually arguing. They claim to be advocating a new mode of "equilibrium" (to use economics-speak), where the balance between supply and demand is replaced by a balance between "phishers" and "phools". It all makes sense intellectually but it felt unfinished. Let's grant this new model, for discussion's sake. How can we test its validity? What outcomes does it predict, where conventional models fail?
I also struggle a bit with the book's central hypothesis itself. I don't think they spent enough time exploring some potential objections. I'm not sure it's falsifiable at all, since one person's scam is another person's legitimate enjoyment. I suspect this defect, in particular, may be phatal.
I also struggle a bit with the book's central hypothesis itself. I don't think they spent enough time exploring some potential objections. I'm not sure it's falsifiable at all, since one person's scam is another person's legitimate enjoyment. I suspect this defect, in particular, may be phatal.
November 23, 2015
Did not finish, which is very rare for me for a nonfiction book. Would file what I did read under "not even wrong" - full of fairly obvious observations, and if you're interested in cognitive bias or advertising or fraud or finance etc. that the book covers, read something else about those things instead.
One star is maybe harsh, can imagine some people might get something out of it, but I was really unimpressed - and, most importantly, bored.
One star is maybe harsh, can imagine some people might get something out of it, but I was really unimpressed - and, most importantly, bored.
November 11, 2016
Two of the world’s most famous behavioral economists are on a mission from God. Their task is critical. They must travel 239 years back in time, all the way to 1776, to introduce Adam Smith’s butcher, brewer and baker to their nemesis, the dreaded phisherman. If it all goes to plan, the economics profession, and the world at large, will be rescued from the touch of the invisible hand.
Somewhere in the time capsule, and while they are waiting for the synthesis between the Phishing Equilibrium and General Equilibrium to occur (chiefly through incantation of the Greek ph in lieu of the vulgar letter f), the two giants collide. They probably realize they don’t agree about much. Hank Paulson’s TARP was a phish in one guy’s view, but saved the world from a second Great Depression in the other’s.
The biggest phish in the history of Finance, Quantitative Easing, is taboo, because George’s wife remains heavily involved.
Defeated, they jump back out of the capsule, only to discover that their writing powers have been reduced to those of a diligent high school student. In horror, and facing a deadline on a book promised years ago and pre-sold on Amazon six months ago, they take a leaf out of said student’s book and copy down from Wikipedia the biographies of some evil advertisers and snake oil salesmen.
It works! Joseph Stiglitz, Alan (couldn’t be) Blinder, Dani Rodrik and Laura Tyson pronounce the book a triumph. It works out less well for you, the reader, unless you are a precocious 17 year old and have never heard of the Keating Five.
In fairness, for that audience it’s probably a rather good intro to Alternative Economics. But this is not the seminal work I was expecting. It’s a laundry list of standard stuff the two authors could agree on. Probably decent assigned reading for the one or two lectures on “alternative views” that the Stephen Marglins of this world are invited to give to Freshmen in Economics.
AHA! That’s precisely what it is. No wonder they praise N. Greg Mankiw. They want a piece of the $350 each Economics Freshman in the land must fork out for his magnum opus.
March 16, 2021
I had known about the existence of this book, as I have been reading lots and lots of books and papers on behavioral economics for the last two years, but was not planning on reading it. Not reading this book, written by two Nobel Prize laureates, in the field I’ve been studying for so long, was a tough call to make.
“The time for changing subject has finally come”, said I after reading my 33rd paper — all of them between January and February 2021. In fact, the intention was to read just 4 papers relating Behavioral Science to Antitrust, and then “call it a day”. I hardly knew how deluded I was! Once you start reading these papers you may never stop if you don’t have some self control, as the number of references that pique your curiosity seem only to grow. That was how 4 became 33 (I also read Oren Bar-Gill’s excellent book “Seduction by Contract”, half of Herbert Simon’s groundbreaking book “Administrative Behavior”, and the first chapter of Paul Glimcher et al’s “Neuroeconomics” in this period).
At least I could see the light at the end of the tunnel when I was reading Cass Sunstein’s papers on “sludge” near the end of my list. Sunstein explicitly mentioned this book when he brought his concept of “sludge” together with the authors’ concept of “phishing for phools”. Done. This was the last straw — I definitely could not change subject before reading this last (I promise!) work on the matter.
Sludge, according to Sunstein, is basically the nudge for the bad; a factor in the environment, created with bad intent or not, that exploits a decision-maker’s cognitive failures by persuading him/her to do what is not necessarily good for him/her. Sunstein mainly exemplifies sludge as the excessive time wasted by the American public filling out forms with plenty of useless information, though he does not restrict the concept only to this type of situation.
In “Phishing for Phools”, Akerlof and Shiller not only give good and actual examples of cognitive failures exploited by companies, with some of them leading to bad economic results (notably the 2008 crisis), but scale their importance since they are part of the functioning of the economy - the authors include “phishing for phools” as a necessary and recognizable phenomenon in traditional economists’ so dear notion of “market equilibrium”. Market equilibrium is a reality, but it is achieved including or due to such exploitation, to which economists should start paying more attention.
The book was clearly written with the intention of being readable by the greater public and the authors achieved this goal with variable success throughout the book. It’s both a pleasant and instructional read.
“The time for changing subject has finally come”, said I after reading my 33rd paper — all of them between January and February 2021. In fact, the intention was to read just 4 papers relating Behavioral Science to Antitrust, and then “call it a day”. I hardly knew how deluded I was! Once you start reading these papers you may never stop if you don’t have some self control, as the number of references that pique your curiosity seem only to grow. That was how 4 became 33 (I also read Oren Bar-Gill’s excellent book “Seduction by Contract”, half of Herbert Simon’s groundbreaking book “Administrative Behavior”, and the first chapter of Paul Glimcher et al’s “Neuroeconomics” in this period).
At least I could see the light at the end of the tunnel when I was reading Cass Sunstein’s papers on “sludge” near the end of my list. Sunstein explicitly mentioned this book when he brought his concept of “sludge” together with the authors’ concept of “phishing for phools”. Done. This was the last straw — I definitely could not change subject before reading this last (I promise!) work on the matter.
Sludge, according to Sunstein, is basically the nudge for the bad; a factor in the environment, created with bad intent or not, that exploits a decision-maker’s cognitive failures by persuading him/her to do what is not necessarily good for him/her. Sunstein mainly exemplifies sludge as the excessive time wasted by the American public filling out forms with plenty of useless information, though he does not restrict the concept only to this type of situation.
In “Phishing for Phools”, Akerlof and Shiller not only give good and actual examples of cognitive failures exploited by companies, with some of them leading to bad economic results (notably the 2008 crisis), but scale their importance since they are part of the functioning of the economy - the authors include “phishing for phools” as a necessary and recognizable phenomenon in traditional economists’ so dear notion of “market equilibrium”. Market equilibrium is a reality, but it is achieved including or due to such exploitation, to which economists should start paying more attention.
The book was clearly written with the intention of being readable by the greater public and the authors achieved this goal with variable success throughout the book. It’s both a pleasant and instructional read.
May 2, 2016
Bom livro para quem quer uma introdução ao espaço para enganadores na economia. Um pouco de economia moderna, um pouco de publicidade, regulação e cognição. Tudo para ilustrar como mercados desregulados e anarcocaptalismo invariavelmente dão espaço para muita gente ser enganada e grandes problemas. Algo que aparentemente os americanos ainda precisam aprender.
October 4, 2015
Was expecting more. Their thesis about phools who are phished by alcohol was weak and ancedotal. Their political bias was definitely on display. I have more to say and revise this review in the next day or so.
March 29, 2016
I found this to be an excellent book on the subject of how institutions and industries use the 'levers' of human biases and frailties to motivate or otherwise convince people to act against their own best interests. This subject gives it a lot of ground to cover, as this sort of thing plays out in everything from food manufacturing to pharmaceuticals, and beyond. A well-written and engaging book on a serious (and at times upsetting) topic.
October 12, 2015
Billed as highlighting the economics of manipulation and deception, this book provides, albeit with a slightly over-used ‘device’ a very interesting look at how we are being cheated by the invisible, free-market hand that many economists assure us works for our common good.
Can there be only winners or, for every winner must there be at least one losing counterpart? The authors must know their stuff, as you don’t get Nobel prizes (for economics) out of cereal packages. They provide a compelling view to often perceived wisdom, reinforcing perhaps many thoughts that mere mortals hold, or perceive; yet maybe we don’t have the power to change and those that hold the power have no desire to change…
The authors’ central point is that as long as there is profit to be made, sellers will systematically exploit our psychological weaknesses and our ignorance through manipulation and deception. This is not a dry economics textbook, as many real world examples are offered up to highlight the contention made with a fair amount of humour. It manages to avoid being a tin foil hat-wearer’s vision of apocalypse and everything being controlled by a small cabal of the elite.
“We spend our money up to the limit, and then worry about how to pay the next month’s bills. The financial system soars, then crashes. We are attracted, more than we know, by advertising. Our political system is distorted by money. We pay too much for gym memberships, cars, houses, and credit cards. Drug companies ingeniously market pharmaceuticals that do us little good, and sometimes are downright dangerous,” notes the book’s publicity material. Make no mistake, even though this is a comparatively jovial, lightweight book aimed clearly at the generalist, it is backed by serious minds, passing on a serious message with a serious level of research so there’s a lot for the non-generalist to get their teeth into, if they just will.
At times this book felt a little overwhelming, perhaps due to the over-use of the ph-device and some of its style, yet taken a chapter-at-a-time, in smaller chunks, it seemed a totally different book. Perceptions, perceptions! For those who care, there is a mass of reference notes and an extensive bibliography, so you can dig deeper through the source materials at will.
The authors note that they admire the free-market system but just don’t like how it is serving people, writing: “The economic system is filled with trickery, and everyone needs to know that. We all have to navigate this system in order to maintain our dignity and integrity, and we all have to find inspiration to go on despite craziness all around us. We wrote this book for consumers, who need to be vigilant against a multitude of tricks played on them. We wrote it for businesspeople, who feel depressed at the cynicism of some of their colleagues and trapped into following suit out of economic necessity. We wrote it for government officials, who undertake the usually thankless task of regulating business. We wrote it for the volunteers, the philanthropists, the opinion leaders, who work on the side of integrity. And we wrote it for young people, looking ahead to a lifetime of work and wondering how they can find personal meaning in it.”
Some of the stories featured will make you despair, such as how focussed people can be on gambling that slot machine players would continue feeding the machines in a casino, oblivious to a person lying on the floor suffering from a heart attack. Some of the stories will have your eyes wide open and on stalks. Some may just sap your will to live and make you want to find a cave and hide in it. Yet maybe, just maybe, there is hope…?
If those who have it better in life are still worrying about making ends meet, how do those with nothing cope? You read stories about the poorest of the poor in some of the less-developed parts of the world and they appear to be relatively happy with what little they have; it seems unbelievable when viewed with our western, first-world eyes. The authors write: “Most adults, even in rich countries, go to bed at night worried about how to pay the bills. Economists think that it is easy for people to spend according to a budget. But they forget that even if we are careful 99 per cent of the time, the remaining one per cent, when we act as if ‘money does not matter,’ can undo all that prior rectitude. And businesses are keenly aware of those one per cent moments. They target the events in our lives when love (or other motivations) trumps our budgetary caution. For some, this is an annual Christmas potlatch. For others, it occurs at rites of passage: such as weddings (where the wedding mags assure brides that the ‘average wedding’ costs almost one half of annual per capita GDP); funerals (where the parlour director carefully lays out the caskets to induce the choice, for example, of the Monaco ‘with Sea Mist polished finish, interior richly lined in 600 Aqua Supreme velvet, magnificently quilted and shirred’); or births (where Babies “R” Us will give a ‘personal registry advisor’).”
So many examples are given that can have the effect of hitting you in the face with a hammer. How health clubs ‘manipulate’ us to savings that cost us more, how we stuff nearly a third of our daily calorific intake in a single snack, how we felt adding an egg to a mix made is creative and how statistics can be presented to appear to show one thing whilst carefully ignoring what they should be telling. Remember all those wonderful statistics and ratings showing how securities are a slam-dunk investment? Remember how Enron was wallowing in profits? Statistics, accountancy sleight of hand, and much more besides. Who is the fool?
Overall the authors have put together a very good book. In an ideal world there’d be no need for such warnings, but our world is not ideal. It is a book that is capable of giving a lot and leaving many lasting impressions; albeit sadly for the wrong reasons (but that’s the purpose of this book, so don’t shoot the messenger).
Autamme.com
Can there be only winners or, for every winner must there be at least one losing counterpart? The authors must know their stuff, as you don’t get Nobel prizes (for economics) out of cereal packages. They provide a compelling view to often perceived wisdom, reinforcing perhaps many thoughts that mere mortals hold, or perceive; yet maybe we don’t have the power to change and those that hold the power have no desire to change…
The authors’ central point is that as long as there is profit to be made, sellers will systematically exploit our psychological weaknesses and our ignorance through manipulation and deception. This is not a dry economics textbook, as many real world examples are offered up to highlight the contention made with a fair amount of humour. It manages to avoid being a tin foil hat-wearer’s vision of apocalypse and everything being controlled by a small cabal of the elite.
“We spend our money up to the limit, and then worry about how to pay the next month’s bills. The financial system soars, then crashes. We are attracted, more than we know, by advertising. Our political system is distorted by money. We pay too much for gym memberships, cars, houses, and credit cards. Drug companies ingeniously market pharmaceuticals that do us little good, and sometimes are downright dangerous,” notes the book’s publicity material. Make no mistake, even though this is a comparatively jovial, lightweight book aimed clearly at the generalist, it is backed by serious minds, passing on a serious message with a serious level of research so there’s a lot for the non-generalist to get their teeth into, if they just will.
At times this book felt a little overwhelming, perhaps due to the over-use of the ph-device and some of its style, yet taken a chapter-at-a-time, in smaller chunks, it seemed a totally different book. Perceptions, perceptions! For those who care, there is a mass of reference notes and an extensive bibliography, so you can dig deeper through the source materials at will.
The authors note that they admire the free-market system but just don’t like how it is serving people, writing: “The economic system is filled with trickery, and everyone needs to know that. We all have to navigate this system in order to maintain our dignity and integrity, and we all have to find inspiration to go on despite craziness all around us. We wrote this book for consumers, who need to be vigilant against a multitude of tricks played on them. We wrote it for businesspeople, who feel depressed at the cynicism of some of their colleagues and trapped into following suit out of economic necessity. We wrote it for government officials, who undertake the usually thankless task of regulating business. We wrote it for the volunteers, the philanthropists, the opinion leaders, who work on the side of integrity. And we wrote it for young people, looking ahead to a lifetime of work and wondering how they can find personal meaning in it.”
Some of the stories featured will make you despair, such as how focussed people can be on gambling that slot machine players would continue feeding the machines in a casino, oblivious to a person lying on the floor suffering from a heart attack. Some of the stories will have your eyes wide open and on stalks. Some may just sap your will to live and make you want to find a cave and hide in it. Yet maybe, just maybe, there is hope…?
If those who have it better in life are still worrying about making ends meet, how do those with nothing cope? You read stories about the poorest of the poor in some of the less-developed parts of the world and they appear to be relatively happy with what little they have; it seems unbelievable when viewed with our western, first-world eyes. The authors write: “Most adults, even in rich countries, go to bed at night worried about how to pay the bills. Economists think that it is easy for people to spend according to a budget. But they forget that even if we are careful 99 per cent of the time, the remaining one per cent, when we act as if ‘money does not matter,’ can undo all that prior rectitude. And businesses are keenly aware of those one per cent moments. They target the events in our lives when love (or other motivations) trumps our budgetary caution. For some, this is an annual Christmas potlatch. For others, it occurs at rites of passage: such as weddings (where the wedding mags assure brides that the ‘average wedding’ costs almost one half of annual per capita GDP); funerals (where the parlour director carefully lays out the caskets to induce the choice, for example, of the Monaco ‘with Sea Mist polished finish, interior richly lined in 600 Aqua Supreme velvet, magnificently quilted and shirred’); or births (where Babies “R” Us will give a ‘personal registry advisor’).”
So many examples are given that can have the effect of hitting you in the face with a hammer. How health clubs ‘manipulate’ us to savings that cost us more, how we stuff nearly a third of our daily calorific intake in a single snack, how we felt adding an egg to a mix made is creative and how statistics can be presented to appear to show one thing whilst carefully ignoring what they should be telling. Remember all those wonderful statistics and ratings showing how securities are a slam-dunk investment? Remember how Enron was wallowing in profits? Statistics, accountancy sleight of hand, and much more besides. Who is the fool?
Overall the authors have put together a very good book. In an ideal world there’d be no need for such warnings, but our world is not ideal. It is a book that is capable of giving a lot and leaving many lasting impressions; albeit sadly for the wrong reasons (but that’s the purpose of this book, so don’t shoot the messenger).
Autamme.com
September 7, 2021
I have to say I am very disappointed with this book even though I already got some (mostly negative) ideas when reading the prologue. Authors, both are Nobel laureates, try to develop a new theory based on "phishers" and "phools" by replacing the "suppliers" and "consumers" which are the focal points of the mainstream economic theory. However, they repeat the usual, impertinent, falsified and misleading arguments against free markets. Probably, at some point towards the end of the book, they realized that they are not suggesting anything new and tried to convince readers that their ideas are different and more systematic than the market failures that have already been documented/discussed for decades. Pathetic...
The problem of these highly intelligent and influential economists is that no matter how smart and wise they are, they do not understand the essence/nature of the markets. This is not a surprise for most American economists (apologies to the exceptions) who think of the supply and demand phenomenon as just analytical tools that mathematically express consumer and producer behaviours without understanding the underlying philosophy and what they actually imply. (This is less of a problem for Europeans who mostly turn their attention to the intellectual/philosophical implications of economic ideas/systems. They have their own problems but that's another topic of discussion.) You may object to this by stating that they both are behavioural economists but that's the tragicomic part. Although they built a career by finding obvious weak/ignored points of mainstream economics (which also distorts the market notion), they filled those points with the same analytical tools. For instance, mainstreamers assume rationality in their mathematical models and these guys develop the same model by just modifying that assumption. However, the analytical tools and the equilibrium concept are the same in both theories. This fundamental flaw is the result of ignoring the uncertainty, dynamism and role of actual economic agents in a perpetually evolving environment.
I fully understand that this is the problem of dominant economic theories and not specific to the authors. In the end, if you assume that you have all the information about the product that is being traded, that you know everything that happened and will happen that affect the price of the product, that there are limitless alternatives and all the agents in this transaction are fully rational and act for their own benefits, of course, you can build a static model that has an optimum combination of supply and demand what is called equilibrium. However, the better/developed/realistic version of this framework is not imposing certain mathematical limitations on one of these assumptions. By doing so, you only move the equilibrium point to somewhere else in a hypothetical supply-demand graph. Both of these methods are delusional as they both draw a static picture of the state of the market at some point, which is subject to change with any small act of suppliers or consumers. So there's no equilibrium, neither market nor phishing... There are, however, constantly moving supply/demand curves that are impossible to be estimated beforehand as the consequences of market participants' conscious actions to make their life better.
The other and more arrogant problem of the authors is that they think the regulators are (and themselves) more intelligent/rational/wiser than the ordinary "phishable" people. And because of that, regulators (they) have the right to decide for you. In fact, the whole conflict between mainstream free marketers and interventionists is a matter of "who is more rational" discussion. This is also the outcome of the above-mentioned delusional view on markets. There are actually more fundamental/urgent problems than the discussion of who is more rational in the above-outlined setting. In real life, no one knows better than others about all this stuff, no one has the full knowledge, no one knows the future, no one is rational (especially the regulators!), etc. Actually, that's why we need markets in the first place. The markets act as mediators in which consumers and suppliers who have imperfect information come together for exchange in ever-changing external conditions. There will be mistakes, phishings, adverse selections from which market participants learn. While consumers learn from their mistakes, some producers/entrepreneurs will exploit the gaps of ignorance and new markets will emerge that serves to reduce this ignorance gap. There are endless possibilities of evolvement unless blocked by interventionist policies.
I can write hundreds of pages to refute the arguments in this book and the underlying ideas of authors, however, the only thing I need to say is that instead of wasting your time with this book, go read Friedrich von Hayek's "The use of knowledge in society" and Israel Kirzner's "Competition and Entrepreneurship" to learn more about the free market notion.
The problem of these highly intelligent and influential economists is that no matter how smart and wise they are, they do not understand the essence/nature of the markets. This is not a surprise for most American economists (apologies to the exceptions) who think of the supply and demand phenomenon as just analytical tools that mathematically express consumer and producer behaviours without understanding the underlying philosophy and what they actually imply. (This is less of a problem for Europeans who mostly turn their attention to the intellectual/philosophical implications of economic ideas/systems. They have their own problems but that's another topic of discussion.) You may object to this by stating that they both are behavioural economists but that's the tragicomic part. Although they built a career by finding obvious weak/ignored points of mainstream economics (which also distorts the market notion), they filled those points with the same analytical tools. For instance, mainstreamers assume rationality in their mathematical models and these guys develop the same model by just modifying that assumption. However, the analytical tools and the equilibrium concept are the same in both theories. This fundamental flaw is the result of ignoring the uncertainty, dynamism and role of actual economic agents in a perpetually evolving environment.
I fully understand that this is the problem of dominant economic theories and not specific to the authors. In the end, if you assume that you have all the information about the product that is being traded, that you know everything that happened and will happen that affect the price of the product, that there are limitless alternatives and all the agents in this transaction are fully rational and act for their own benefits, of course, you can build a static model that has an optimum combination of supply and demand what is called equilibrium. However, the better/developed/realistic version of this framework is not imposing certain mathematical limitations on one of these assumptions. By doing so, you only move the equilibrium point to somewhere else in a hypothetical supply-demand graph. Both of these methods are delusional as they both draw a static picture of the state of the market at some point, which is subject to change with any small act of suppliers or consumers. So there's no equilibrium, neither market nor phishing... There are, however, constantly moving supply/demand curves that are impossible to be estimated beforehand as the consequences of market participants' conscious actions to make their life better.
The other and more arrogant problem of the authors is that they think the regulators are (and themselves) more intelligent/rational/wiser than the ordinary "phishable" people. And because of that, regulators (they) have the right to decide for you. In fact, the whole conflict between mainstream free marketers and interventionists is a matter of "who is more rational" discussion. This is also the outcome of the above-mentioned delusional view on markets. There are actually more fundamental/urgent problems than the discussion of who is more rational in the above-outlined setting. In real life, no one knows better than others about all this stuff, no one has the full knowledge, no one knows the future, no one is rational (especially the regulators!), etc. Actually, that's why we need markets in the first place. The markets act as mediators in which consumers and suppliers who have imperfect information come together for exchange in ever-changing external conditions. There will be mistakes, phishings, adverse selections from which market participants learn. While consumers learn from their mistakes, some producers/entrepreneurs will exploit the gaps of ignorance and new markets will emerge that serves to reduce this ignorance gap. There are endless possibilities of evolvement unless blocked by interventionist policies.
I can write hundreds of pages to refute the arguments in this book and the underlying ideas of authors, however, the only thing I need to say is that instead of wasting your time with this book, go read Friedrich von Hayek's "The use of knowledge in society" and Israel Kirzner's "Competition and Entrepreneurship" to learn more about the free market notion.
November 19, 2018
APŽVALGA
Ar esate kadanors buvę apgauti? Mūsų pinigai dažnai nepastebimai viliojami iš kišenės, piniginės, banko sąskaitų. Kodėl, kada ir kaip mes tampame tokiais "kvailiais", kuriuos "žvejoja", norintys pasipelnyti, šioje knygoje pasakoja ekonomistai George A. Akerlof ir Robert J. Shiller.
Knyga parašyta moksliniu stiliumi, su išsamiais pavyzdžiais, statistikomis, skaičiais, nuorodomis bei išnašomis pabaigoje. Neverta stebėtis, kad ją su ilgomis pertraukomis skaičiau gerą pusmetį. Nors ir bandyta rašyti, kad ir ne ekonomistai suprastų, knyga tikrai nemenkas iššūkis. Džiaugiuosi pagaliau ją įveikusi.
Manau, kad įgavau daugiau suvokimo apie pasaulį ir gyvenimą iš ekonominės pusės, kaip kartais mulkinami ir apvaginėjami žmonės, nors toli gražu ne viską supratau. Turbūt "Kvailių žvejonė" apskritai vienintelė knyga ekonomikos tema, kurią iki šiol esu perskaičius taip.
Ar rekomenduočiau? Galbūt, kurie ir taip mėgsta domėtis ekonomika, rinka ir pan. temomis, skaityti mokslinius straipsnius ji bus įdomi. Kitu atveju, vargu ar verta jos imtis.
3/5
Ar esate kadanors buvę apgauti? Mūsų pinigai dažnai nepastebimai viliojami iš kišenės, piniginės, banko sąskaitų. Kodėl, kada ir kaip mes tampame tokiais "kvailiais", kuriuos "žvejoja", norintys pasipelnyti, šioje knygoje pasakoja ekonomistai George A. Akerlof ir Robert J. Shiller.
Knyga parašyta moksliniu stiliumi, su išsamiais pavyzdžiais, statistikomis, skaičiais, nuorodomis bei išnašomis pabaigoje. Neverta stebėtis, kad ją su ilgomis pertraukomis skaičiau gerą pusmetį. Nors ir bandyta rašyti, kad ir ne ekonomistai suprastų, knyga tikrai nemenkas iššūkis. Džiaugiuosi pagaliau ją įveikusi.
Manau, kad įgavau daugiau suvokimo apie pasaulį ir gyvenimą iš ekonominės pusės, kaip kartais mulkinami ir apvaginėjami žmonės, nors toli gražu ne viską supratau. Turbūt "Kvailių žvejonė" apskritai vienintelė knyga ekonomikos tema, kurią iki šiol esu perskaičius taip.
Ar rekomenduočiau? Galbūt, kurie ir taip mėgsta domėtis ekonomika, rinka ir pan. temomis, skaityti mokslinius straipsnius ji bus įdomi. Kitu atveju, vargu ar verta jos imtis.
3/5
May 25, 2017
Other books by the duo are better. There is nothing radical in here, if you have a well rounded knowledge of the world, you will just amass some anecdotes maybe find a new perspective or two on things you kind of knew.
February 26, 2020
(The English review is placed beneath Russian one)
По словам авторов, они хотели написать в меру научную и в меру доступную книгу для широкой аудитории. Получилось? Не думаю. Тут как в знаменитой пословице про двух зайцев. Авторы не стали углубляться в одну конкретную тему, но и также не стали опускаться до простого или любительского уровня. В итоге получилось, что одни прочитали и мало что поняли, т.к. темы связанные с финансовым миром авторы совершенно не упростили, а для тех людей, кто понимает и разбирается в вопросе, авторы тоже ничего не предложили, т.к. написали крайне поверхностную книгу. И если сказать, что книга больше всего напоминает, то я бы предложил, что это газетная или журнальная статья из какого-нибудь финансового издания (темы в книге никак не связанны друг с другом, по моему мнению).
Во-первых, начало и конец книги. У авторов чуть ли не половина книги отдано на «введение» и «заключение». Это явный перебор. Люди не всегда читают эти главы, т.к. в первом, т.е. в ведении, чаще всего общие слова, которые никак не влияют на основное содержание, на её понимание, поэтому зачастую можно не тратить на это время. А заключение, часто содержит итог, краткий пересказ, который также можно пропустить, если понятна идея книги и все её детали.
Во-вторых, в начале, авторы долго пишут о проблемах свободного рынка, чуть ли не подводя читателя к мысли, что он не такой уж и свободный (в определённом смысле, разумеется). Что люди стали покупать (или им стали успешно навязывать) множества ненужного барахла. Ну, это верно, но также и очевидно.
Идём дальше. Финансовый кризис 2008 года с описанием того, как лопался мыльный пузырь новых финансовых инструментов, которые были созданы в этот период и которые связаны с кредитами на покупку недвижимости. По моему мнению, авторы не сильно-то и упростили материал и не предложили чего-то нового и/или интересного, что не было сказано в самой знаменитой книги на эту тему «Большая игра на понижение» (The Big Short) или во второй знаменитой книги на эту тему «Слишком большие, чтобы рухнуть» (Too Big to Fail). В итоге непонятно - зачем? И, что важно, авторы посвящают подобным финансовым историям ещё две главы (учитывая, что их и так немного, это явный крен в сторону финансовой сферы, в которой не каждый читатель разбирается с лёгкостью).
Третья глава меня просто ошарашила. К обманным трюкам авторы отнесли не что иное, как рекламу как таковую. Не неэтичную рекламу, не рекламу, которая служит целью обмануть покупателя, предъявив ему неточную или даже ложную информацию, а рекламу вообще. Для этого они рассказывают о трёх титанах мира рекламы, двое из которых, это Клод Хопкинс и Дэвид Огилви. И их эти «эксперты» обозначили как шулеры? Уже после этого, книгу можно выкидывать на помойку, т.к. эти двое всегда имели во всём мире безупречную репутацию, и я ни разу не встречал (а я прочитал практически все книги по рекламе и маркетингу, что были изданы в России на русском языке иностранных авторов), чтобы кто-то обвинял их в обмане покупателей. Что касается рекламы, то она берёт своё начало ещё с древних базаров, когда продавцы (мяса ли, шёлка ли, вина ли) кричали потенциальным покупателям, чтобы те посмотрели их товар и возможно, решили их купить. Как предприниматель может существовать, никому не рассказывая о своём бизнесе (а это – ядро, суть рекламы как таковой)?
Дальше - не лучше. Авторы пишут о «табаке», об алкоголе, в плане, что один приводит к раку, а другой – к алкоголизму. Стоит ли об этом писать в подобной книге? Да – и это единственный плюс – авторы описывают, как табачные компании стремились сокрыть информацию о вреде табака. Или как фармацевтические гиганты внедряют свои новинки, путём подкупа врачей. Но опять же, ав��оры уделяют этим вопросом крайне мало страниц и делают это крайне поверхностно. Плюс, совсем смехотворное количество примеров.
И последнее. Авторы включили в книгу главу «инновации», где рассказывается о той зависимости, что имеет на некоторых людей, Facebook и прочие социальные сети. М-да.…Стоило ли писать книгу ради всего этого?
According to the authors, they wanted to write a reasonably scientific and reasonably accessible book for a wide audience. Did it work? I don't think so. It's like a famous proverb about two hares. The authors decided not to go deep into one specific topic, but they also decided not to go down to the simple or amateur level. As a result, it turned out that some people have not understood much, because the authors have not simplified the topics related to the financial field, and for those people who understand and understand the issue, the authors have not offered anything either, because they have written an extremely superficial book. And if you ask what the book reminds me most of all, I would suggest that this is a newspaper or magazine article from some financial publication (the topics in the book are not related to each other, in my opinion).
First, the beginning and the end of the book. The authors have devoted almost half of the book to "introduction" and "conclusion". This is an obvious mistake. That's too much. People do not always read these chapters, because the introduction most often contains common phrases that do not affect the main content, its understanding, so one can often not waste time. And the chapter "conclusion" often contains a summary, a brief paraphrase, which can also be skipped if you understand the idea of the book and all its details.
Second, in the beginning, the authors write a lot about the problems of the free market, almost leading the reader to the idea that it is not so free (in a certain sense, of course). People began to buy a lot of unnecessary junk. That's true, but it's obvious.
Let's move on. The financial crisis of 2008, with a description of how the bubble of new financial instruments that were created during this period burst and that are related to real estate loans. In my opinion, the authors did not simplify the material and did not offer anything new and/or interesting, which was not mentioned in the most famous book on the subject "The Big Short" by Michael Lewis or in the second famous book on the subject "Too Big to Fail" by Andrew Ross Sorkin. As a result, I don't understand, why did the authors include this chapter in their book? And, importantly, the authors devote two more chapters to such financial stories (given that there are few chapters, it's a clear tilt towards the financial sphere, in which not every reader can easily understand).
The third chapter simply stunned me. The authors considered the deceptive tricks to be nothing but advertising as such. Such tricks the authors have included not unethical advertising, not advertising that is intended to deceive the buyer by providing inaccurate or even false information, and advertising in general. To do this, they talk about three titans of the advertising world, two of whom are Claude C. Hopkins and David Ogilvy. Already after such a statement, the book can safely be thrown to the trash, because these two have always had an impeccable reputation throughout the world, and I have never seen anyone accuse them of deceiving customers (and I have read almost all the books on advertising and marketing that were published in Russia in the Russian language of foreign authors). As for advertising, it dates back to the ancient bazaars, when sellers called on potential buyers to see their goods and maybe decide to buy them. How can an entrepreneur exist without telling anyone about his business and his goods/services (which is the core, the essence of advertising as such)?
Next - not better. The authors write about tobacco, about alcohol, in terms of the fact that one leads to cancer and the other to alcoholism. Is it worth writing about in a book like this? Yes - and this is the only plus - the authors describe how tobacco companies have sought to hide information about the harm caused by tobacco. Or how pharmaceutical giants implement their novelties by bribing doctors. But then again, the authors do not pay much attention to this issue and do it very superficially. Plus, it's a ridiculous number of examples.
And lastly. The authors have included in the book a chapter on "innovation", which tells about the addiction that some people have in relation to Facebook and other social networks. Well... Was it worth writing a book for all this?
По словам авторов, они хотели написать в меру научную и в меру доступную книгу для широкой аудитории. Получилось? Не думаю. Тут как в знаменитой пословице про двух зайцев. Авторы не стали углубляться в одну конкретную тему, но и также не стали опускаться до простого или любительского уровня. В итоге получилось, что одни прочитали и мало что поняли, т.к. темы связанные с финансовым миром авторы совершенно не упростили, а для тех людей, кто понимает и разбирается в вопросе, авторы тоже ничего не предложили, т.к. написали крайне поверхностную книгу. И если сказать, что книга больше всего напоминает, то я бы предложил, что это газетная или журнальная статья из какого-нибудь финансового издания (темы в книге никак не связанны друг с другом, по моему мнению).
Во-первых, начало и конец книги. У авторов чуть ли не половина книги отдано на «введение» и «заключение». Это явный перебор. Люди не всегда читают эти главы, т.к. в первом, т.е. в ведении, чаще всего общие слова, которые никак не влияют на основное содержание, на её понимание, поэтому зачастую можно не тратить на это время. А заключение, часто содержит итог, краткий пересказ, который также можно пропустить, если понятна идея книги и все её детали.
Во-вторых, в начале, авторы долго пишут о проблемах свободного рынка, чуть ли не подводя читателя к мысли, что он не такой уж и свободный (в определённом смысле, разумеется). Что люди стали покупать (или им стали успешно навязывать) множества ненужного барахла. Ну, это верно, но также и очевидно.
Идём дальше. Финансовый кризис 2008 года с описанием того, как лопался мыльный пузырь новых финансовых инструментов, которые были созданы в этот период и которые связаны с кредитами на покупку недвижимости. По моему мнению, авторы не сильно-то и упростили материал и не предложили чего-то нового и/или интересного, что не было сказано в самой знаменитой книги на эту тему «Большая игра на понижение» (The Big Short) или во второй знаменитой книги на эту тему «Слишком большие, чтобы рухнуть» (Too Big to Fail). В итоге непонятно - зачем? И, что важно, авторы посвящают подобным финансовым историям ещё две главы (учитывая, что их и так немного, это явный крен в сторону финансовой сферы, в которой не каждый читатель разбирается с лёгкостью).
Третья глава меня просто ошарашила. К обманным трюкам авторы отнесли не что иное, как рекламу как таковую. Не неэтичную рекламу, не рекламу, которая служит целью обмануть покупателя, предъявив ему неточную или даже ложную информацию, а рекламу вообще. Для этого они рассказывают о трёх титанах мира рекламы, двое из которых, это Клод Хопкинс и Дэвид Огилви. И их эти «эксперты» обозначили как шулеры? Уже после этого, книгу можно выкидывать на помойку, т.к. эти двое всегда имели во всём мире безупречную репутацию, и я ни разу не встречал (а я прочитал практически все книги по рекламе и маркетингу, что были изданы в России на русском языке иностранных авторов), чтобы кто-то обвинял их в обмане покупателей. Что касается рекламы, то она берёт своё начало ещё с древних базаров, когда продавцы (мяса ли, шёлка ли, вина ли) кричали потенциальным покупателям, чтобы те посмотрели их товар и возможно, решили их купить. Как предприниматель может существовать, никому не рассказывая о своём бизнесе (а это – ядро, суть рекламы как таковой)?
Дальше - не лучше. Авторы пишут о «табаке», об алкоголе, в плане, что один приводит к раку, а другой – к алкоголизму. Стоит ли об этом писать в подобной книге? Да – и это единственный плюс – авторы описывают, как табачные компании стремились сокрыть информацию о вреде табака. Или как фармацевтические гиганты внедряют свои новинки, путём подкупа врачей. Но опять же, ав��оры уделяют этим вопросом крайне мало страниц и делают это крайне поверхностно. Плюс, совсем смехотворное количество примеров.
И последнее. Авторы включили в книгу главу «инновации», где рассказывается о той зависимости, что имеет на некоторых людей, Facebook и прочие социальные сети. М-да.…Стоило ли писать книгу ради всего этого?
According to the authors, they wanted to write a reasonably scientific and reasonably accessible book for a wide audience. Did it work? I don't think so. It's like a famous proverb about two hares. The authors decided not to go deep into one specific topic, but they also decided not to go down to the simple or amateur level. As a result, it turned out that some people have not understood much, because the authors have not simplified the topics related to the financial field, and for those people who understand and understand the issue, the authors have not offered anything either, because they have written an extremely superficial book. And if you ask what the book reminds me most of all, I would suggest that this is a newspaper or magazine article from some financial publication (the topics in the book are not related to each other, in my opinion).
First, the beginning and the end of the book. The authors have devoted almost half of the book to "introduction" and "conclusion". This is an obvious mistake. That's too much. People do not always read these chapters, because the introduction most often contains common phrases that do not affect the main content, its understanding, so one can often not waste time. And the chapter "conclusion" often contains a summary, a brief paraphrase, which can also be skipped if you understand the idea of the book and all its details.
Second, in the beginning, the authors write a lot about the problems of the free market, almost leading the reader to the idea that it is not so free (in a certain sense, of course). People began to buy a lot of unnecessary junk. That's true, but it's obvious.
Let's move on. The financial crisis of 2008, with a description of how the bubble of new financial instruments that were created during this period burst and that are related to real estate loans. In my opinion, the authors did not simplify the material and did not offer anything new and/or interesting, which was not mentioned in the most famous book on the subject "The Big Short" by Michael Lewis or in the second famous book on the subject "Too Big to Fail" by Andrew Ross Sorkin. As a result, I don't understand, why did the authors include this chapter in their book? And, importantly, the authors devote two more chapters to such financial stories (given that there are few chapters, it's a clear tilt towards the financial sphere, in which not every reader can easily understand).
The third chapter simply stunned me. The authors considered the deceptive tricks to be nothing but advertising as such. Such tricks the authors have included not unethical advertising, not advertising that is intended to deceive the buyer by providing inaccurate or even false information, and advertising in general. To do this, they talk about three titans of the advertising world, two of whom are Claude C. Hopkins and David Ogilvy. Already after such a statement, the book can safely be thrown to the trash, because these two have always had an impeccable reputation throughout the world, and I have never seen anyone accuse them of deceiving customers (and I have read almost all the books on advertising and marketing that were published in Russia in the Russian language of foreign authors). As for advertising, it dates back to the ancient bazaars, when sellers called on potential buyers to see their goods and maybe decide to buy them. How can an entrepreneur exist without telling anyone about his business and his goods/services (which is the core, the essence of advertising as such)?
Next - not better. The authors write about tobacco, about alcohol, in terms of the fact that one leads to cancer and the other to alcoholism. Is it worth writing about in a book like this? Yes - and this is the only plus - the authors describe how tobacco companies have sought to hide information about the harm caused by tobacco. Or how pharmaceutical giants implement their novelties by bribing doctors. But then again, the authors do not pay much attention to this issue and do it very superficially. Plus, it's a ridiculous number of examples.
And lastly. The authors have included in the book a chapter on "innovation", which tells about the addiction that some people have in relation to Facebook and other social networks. Well... Was it worth writing a book for all this?
March 23, 2016
The book written by George A. Akerlof (who won Nobel prize in Economic Sciences) and Robert J. Shiller contains a simple idea, that Chuck Palahniuk described in 1996:
"Advertising has us chasing cars and clothes, working jobs we hate so we can buy sh*t we don't need."
Unfortunately, Palahniuk somehow hadn't received his Nobel prize for this wonderful discovery. Sigh.
In Akerlof's book it's not just advertising that makes us buy 'sh*t'. He describes how free markets create goods and services that satisfy needs we didn't even know we have. For me it was boring. I expected more in-depth analysis from a Noble prize winner. Instead, authors give example after example of how companies exploit our fragile psychology and behaviour. Yeah, we get it. Cinnabon kiosks smell good and are specifically placed where there's no time for the consumers to order some healthy food (shopping molls, airports). Buyers tend to spend more paying with credit cards (i.e. they feel less guilt than when they pay with cash).
It may be worth mentioning that I studied marketing and micro/macroeconomics. So Akerlof's examples seemed very obvious to me, but I suppose the book could be interesting for someone without this prior knowledge.
I'd say reading preface and introduction would be sufficient to get an idea of the book. If you are interested in the topic, try legendary Ogilvy's book 'On Advertising'
***
Книга Джорджа Акерлофа, лауреата Нобелевской премии, о том, как свободные рынки создают товары и услуги, которые нам не нужны, но которые мы всё это время хотели. На мой взгляд просто подборка различных примеров без углубленного анализа, который я и ожидала увидеть. Чтобы понять суть, достаточно прочитать вступление.
"Advertising has us chasing cars and clothes, working jobs we hate so we can buy sh*t we don't need."
Unfortunately, Palahniuk somehow hadn't received his Nobel prize for this wonderful discovery. Sigh.
In Akerlof's book it's not just advertising that makes us buy 'sh*t'. He describes how free markets create goods and services that satisfy needs we didn't even know we have. For me it was boring. I expected more in-depth analysis from a Noble prize winner. Instead, authors give example after example of how companies exploit our fragile psychology and behaviour. Yeah, we get it. Cinnabon kiosks smell good and are specifically placed where there's no time for the consumers to order some healthy food (shopping molls, airports). Buyers tend to spend more paying with credit cards (i.e. they feel less guilt than when they pay with cash).
It may be worth mentioning that I studied marketing and micro/macroeconomics. So Akerlof's examples seemed very obvious to me, but I suppose the book could be interesting for someone without this prior knowledge.
I'd say reading preface and introduction would be sufficient to get an idea of the book. If you are interested in the topic, try legendary Ogilvy's book 'On Advertising'
***
Книга Джорджа Акерлофа, лауреата Нобелевской премии, о том, как свободные рынки создают товары и услуги, которые нам не нужны, но которые мы всё это время хотели. На мой взгляд просто подборка различных примеров без углубленного анализа, который я и ожидала увидеть. Чтобы понять суть, достаточно прочитать вступление.
August 10, 2016
Many of us are aware of the concept of “phishing.” Wikipedia defines this notion thus: “Phishing is the attempt to obtain sensitive information such as usernames, passwords, and credit card details (and sometimes, indirectly, money), often for malicious reasons, by masquerading as a trustworthy entity in an electronic communication. The word is a neologism created as a homophone of fishing due to the similarity of using a bait in an attempt to catch a victim.” This book notes that phishing is also done, using different tools, by businesses—including big business. That is, they try to lure consumers into purchasing products that are, perhaps, not very useful to individuals.
Examples? Smoking. The book notes the efforts of tobacco companies to poo poo arguments that smoking was harmful to individuals. In short, such corporations masqueraded as trustworthy in order to “catch a victim.” Big pharma has done the same thing (note the example of VIOXX, which ended up costing the lives of thousands of people). In short, con people to purchase items that are not in the best interests of consumers. Is this an elitist argument (always a first attack by those who defend the indefensible—casting aspersions against those who speak truth to power).
Manipulation and deception are a part of this process. Corporations want to create demand for products that may or may not be of value (John Kenneth Galbraith, many years ago, used the term “induced consumption: to speak of a process by which ads and other messages convinced people to purchase items of dubious value to them).
Of course, free markets can be robust institutions facilitating efficient production and distribution of goods ands services. But there are plenty of opportunities to use the market to “phish” people. The authors have faith in the market—but understand that it can be manipulated.
Examples? Smoking. The book notes the efforts of tobacco companies to poo poo arguments that smoking was harmful to individuals. In short, such corporations masqueraded as trustworthy in order to “catch a victim.” Big pharma has done the same thing (note the example of VIOXX, which ended up costing the lives of thousands of people). In short, con people to purchase items that are not in the best interests of consumers. Is this an elitist argument (always a first attack by those who defend the indefensible—casting aspersions against those who speak truth to power).
Manipulation and deception are a part of this process. Corporations want to create demand for products that may or may not be of value (John Kenneth Galbraith, many years ago, used the term “induced consumption: to speak of a process by which ads and other messages convinced people to purchase items of dubious value to them).
Of course, free markets can be robust institutions facilitating efficient production and distribution of goods ands services. But there are plenty of opportunities to use the market to “phish” people. The authors have faith in the market—but understand that it can be manipulated.
December 14, 2020
Fỉnh Fờ lũ ngốc- "kinh tế học thao túng và bịp bợm" cuốn sách có ý tưởng rất hay nhưng mình thực sự không thể yêu thương nổi =((
Nhóm tác giả gồm hai nhà kinh tế đạt giải Nobel đã cùng viết cuốn sách để chỉ ra một thực tế rằng nền kinh tế không phải bao giờ cũng vận hành theo lý thuyết, khi chúng ta (người mua/người tiêu dùng) không phải bao giờ cũng lựa chọn những thứ có lợi cho bản thân. Thế giới này đầy những mánh lừa đảo và chúng ta thì quá nhiều điểm yếu để bị lợi dụng móc túi 🥺
Đấy là điều mình rút ra từ cuốn sách này, mình hiểu những điều mà hai tác giả truyền đạt, nhưng thực sự mình không thể yêu thương được.
Thứ nhất, cách dẫn dắt của nhóm tác giả theo hướng rất logic khi tiếp cận người đọc từ những điều đơn giản nhất, mở rộng ra những trò phỉnh phờ trong nhiều bối cảnh và tổng kết những chủ đề. Tuy nhiên chủ đề mà nhóm tác giả lựa chọn để bóc "phốt" lại quá kì quặc, lúc thì lựa chọn những thứ quá chung chung (chính trị), lúc thì dẫn dắt đến những thứ quá chi tiết (thuốc lá, rượu bia, thuốc lá)....
Thứ hai, bối cảnh của cuốn sách lại quá đặc thù (tập trung vào nước Mỹ) nên mình thấy thiếu tính ứng dụng thực tế.
Thứ ba, mình có cảm giác cuốn sách dịch không phải của dịch giả chuyên về kinh tế, nhiều thứ cảm giác mơ hồ hoặc thiếu những từ thường dùng trong kinh tế. Kiểu như "công ty công chúng" (tr264 sđd) làm mình thấy không quen lắm, hình như nó hay dùng là "công ty đại chúng" thì phải...
Vậy đấy, mình thích kiểu bóc phốt về kinh tế như của Ha-Joon Chang hơn, nhưng đọc cuốn này đọc kèm với những cuốn khác cũng ổn, nhưng nếu cho chọn lại mình sẽ không mua (giá bìa 160k) mà mua Hiệu ứng chim mồi =((
Nhóm tác giả gồm hai nhà kinh tế đạt giải Nobel đã cùng viết cuốn sách để chỉ ra một thực tế rằng nền kinh tế không phải bao giờ cũng vận hành theo lý thuyết, khi chúng ta (người mua/người tiêu dùng) không phải bao giờ cũng lựa chọn những thứ có lợi cho bản thân. Thế giới này đầy những mánh lừa đảo và chúng ta thì quá nhiều điểm yếu để bị lợi dụng móc túi 🥺
Đấy là điều mình rút ra từ cuốn sách này, mình hiểu những điều mà hai tác giả truyền đạt, nhưng thực sự mình không thể yêu thương được.
Thứ nhất, cách dẫn dắt của nhóm tác giả theo hướng rất logic khi tiếp cận người đọc từ những điều đơn giản nhất, mở rộng ra những trò phỉnh phờ trong nhiều bối cảnh và tổng kết những chủ đề. Tuy nhiên chủ đề mà nhóm tác giả lựa chọn để bóc "phốt" lại quá kì quặc, lúc thì lựa chọn những thứ quá chung chung (chính trị), lúc thì dẫn dắt đến những thứ quá chi tiết (thuốc lá, rượu bia, thuốc lá)....
Thứ hai, bối cảnh của cuốn sách lại quá đặc thù (tập trung vào nước Mỹ) nên mình thấy thiếu tính ứng dụng thực tế.
Thứ ba, mình có cảm giác cuốn sách dịch không phải của dịch giả chuyên về kinh tế, nhiều thứ cảm giác mơ hồ hoặc thiếu những từ thường dùng trong kinh tế. Kiểu như "công ty công chúng" (tr264 sđd) làm mình thấy không quen lắm, hình như nó hay dùng là "công ty đại chúng" thì phải...
Vậy đấy, mình thích kiểu bóc phốt về kinh tế như của Ha-Joon Chang hơn, nhưng đọc cuốn này đọc kèm với những cuốn khác cũng ổn, nhưng nếu cho chọn lại mình sẽ không mua (giá bìa 160k) mà mua Hiệu ứng chim mồi =((
April 19, 2025
many of our problems come from the nature of the economic system itself.
Despite the above admission right off the bat in para1 of the intro, followed by 150 pages documenting how the ‘free-market system,’ formerly known as Capitalism, is rotten to the core and inherently incentivizes the worst behaviors, Shiller and Akerlof can’t imagine any alternatives.
Instead they wrote this brief apology for the deceivers, heartless manipulators, soulless exploiters and would-be demagogues who rise to the top of society under this corrupt system. Along the way, they suggest a few survival tactics for the rest of us phools, such as 'stick to your budget.' Thanks.
It’s a shame, as Shiller himself, as I gleaned from a couple of 2016-17 chats around his data-based sneer at runaway financial capitalism in Irrational Exuberance, is a closeted Socialist who apparently lacks the courage of his own convictions.
The furthest he and Akerlof go here is a sidelong look at neoliberalism, dubbed the 'New Story' and weakly reprimanded for its cult's calls to privatize US Social Security from 2004 onwards, the renewed push to abolish the thin film of securities market (self) regulations, and the disastrous Citizens United ruling by a short-sighted and hard-right SCOTUS majority that grants more rights and liberties to intangible legal entities than are available to 98% of the living population.
Despite the above admission right off the bat in para1 of the intro, followed by 150 pages documenting how the ‘free-market system,’ formerly known as Capitalism, is rotten to the core and inherently incentivizes the worst behaviors, Shiller and Akerlof can’t imagine any alternatives.
Instead they wrote this brief apology for the deceivers, heartless manipulators, soulless exploiters and would-be demagogues who rise to the top of society under this corrupt system. Along the way, they suggest a few survival tactics for the rest of us phools, such as 'stick to your budget.' Thanks.
It’s a shame, as Shiller himself, as I gleaned from a couple of 2016-17 chats around his data-based sneer at runaway financial capitalism in Irrational Exuberance, is a closeted Socialist who apparently lacks the courage of his own convictions.
The furthest he and Akerlof go here is a sidelong look at neoliberalism, dubbed the 'New Story' and weakly reprimanded for its cult's calls to privatize US Social Security from 2004 onwards, the renewed push to abolish the thin film of securities market (self) regulations, and the disastrous Citizens United ruling by a short-sighted and hard-right SCOTUS majority that grants more rights and liberties to intangible legal entities than are available to 98% of the living population.
July 23, 2017
Bylo to takový nijaký. Autoři chtěli obsáhnout vše, nemluvili ale o ničem konkrétním. Jejich závěry byly často dosti pochybné. Bylo to hodně povrchní a s behaviorální ekonomii to nemělo vůbec nic společného. Nelíbilo. Nedoporučuji.
November 17, 2024
Serves as a perspective that bridge reality and textbook. Particularly like the conclusive analogy of cancerous cell to capitalistic economy in which the "problem" is inherent in the system rather than sweep it under the rug in guise of so called externalities.
December 24, 2015
Super disappointing book given the authors. It seemed super half-baked, and like it was just a first draft of a book they had put together.
December 3, 2015
This book has a reasonable concept behind it but is poorly executed in my opinion. The authors don't really give a clear idea of why they are writing the book until the very end. To give my own summary with the best possible spin, the authors (two very prominent economists) are interested in linking findings of behavioral economics with partial equilibrium (and perhaps general equilibrium) microeconomics. In general, the discipline of behavioral economics has focused heavily on special cases and experimental evidence. Certainly authors like Kahneman and Tversky have developed taxonomies of known "heuristics and biases," but these are generally not mined for broader implications for market clearing and welfare economics. This is what Akerlof and Shiller would like to see. The book is very non-technical and only gestures in this direction, but generally, the authors create a microeconomic picture where individuals' weaknesses and biases play more or less as prominent of a role in technological development and investment in a given market as do individuals' "true" preferences (more on those scare quotes below). Presumably, this could even lead to implications regarding aggregate investment and productivity growth. In this picture, weaknesses and biases are not curious exceptions, but something closer to the rule. It is hard to look at the evolution of the food industry and doubt that there is some truth to this view.
That said, the book has many weaknesses. First, because of the authors' attempts to write for a general-interest audience, there are only the vaguest gestures in the direction of this unifying perspective. As a result, the book primarily comes across as a piling-up of examples of specific cases where companies take advantage of individual weaknesses and biases--which is exactly what I think the authors see as a shortcoming of the existing behavioral economics literature!
Second, because the constant use of the terms "phishing" and "phools" is insufferable. It's bad enough that the authors try to commandeer "phishing," which is already a well-defined term that does not mean what they use it to mean. It's really a distraction from any kind of actual substance that might be delivered, and I think it also to some degree denies the agency of the consumer. The authors certainly don't ever discuss what one can do to be less of a "phool." To the extent that "phishing behavior" is as endemic as the authors portray it, I think it implies a fairly radical level of skepticism, reliance on the precautionary principle, and active avoidance of advertising and other capitalist situations--which I am not sure the authors would be ready to endorse explicitly. Something that might be endorsed by, say, E.F. Schumacher.
Third, it's not clear who the right audience for this book is. In the conclusion, the authors say that they hope to influence the direction of research in economics, but I feel like a popular consumption book like this is about the worst way to do that. To the extent that the target audience is everyday people (as the style implies), it is hardly news to us (and to economists when they are not acting in their professional capacity) that corporations look for opportunities to take advantage of people for profit.
Fourth, the authors mix together under the broad heading of "phishing" what they call "information phishing" (situations of asymmetric information) and "psychological phishing" (situations of weaknesses and biases). It's not clear to me why these should be analyzed together, other than that they both suck. Asymmetric information has been extensively studied in economics, most prominently by Akerlof himself, with the general conclusion being that asymmetric information results in market failure (no market can be sustained even if welfare-enhancing trades are in principle available). The authors don't give much explanation for why they think markets are sustained in the examples they give. Asymmetric information problems are also often amenable to top-down solutions, such as disclosure laws, requiring warranties, requiring insurance, etc. Weakness/bias situations, on the other hand, aren't likely to result in market failure, and the proposed solution typically involves some type of "nudge," which may or may not be very effective.
Fifth and finally, as this review has gone on long enough, the authors too readily distinguish between our "real" preferences and what they call our "monkey on the shoulder," or irrational preferences. They laud capitalism for helping us fulfill our "real" preferences but castigate it for helping us fulfill the monkey ones. Surely there is a great deal of truth to this, but the thing that makes this such a dicey issue is that it is very difficult to distinguish between these two classes of preference, and I'm not sure how much of a distinction there really is. For example, the authors spend a great deal of ink talking about how advertisers "phish" people by selling them a story about something, and getting people to identify with that story. They basically portray this as bad, and in some limiting cases I can certainly see that. But take the example of sports fandom, and economically speaking, the purchase of game tickets, team paraphernalia, etc. What is being a fan of a sports team other than buying into a story and identifying with it, along with a bunch of other people? If the authors are skeptical about whether this is "truly" valuable to people, they need to watch Doris Kearns Goodwin talk about the Dodgers and Red Sox in the Ken Burns baseball documentaries. At best, and the authors do not at all draw this conclusion, I think this line of analysis can lead us to understand how important it is to be reflective about our own preferences and assess whether our budgets instantiate our values.
My favorite part of this book was learning that Bob Shiller ate cat food, in order to prove some point that didn't really make sense to me.
That said, the book has many weaknesses. First, because of the authors' attempts to write for a general-interest audience, there are only the vaguest gestures in the direction of this unifying perspective. As a result, the book primarily comes across as a piling-up of examples of specific cases where companies take advantage of individual weaknesses and biases--which is exactly what I think the authors see as a shortcoming of the existing behavioral economics literature!
Second, because the constant use of the terms "phishing" and "phools" is insufferable. It's bad enough that the authors try to commandeer "phishing," which is already a well-defined term that does not mean what they use it to mean. It's really a distraction from any kind of actual substance that might be delivered, and I think it also to some degree denies the agency of the consumer. The authors certainly don't ever discuss what one can do to be less of a "phool." To the extent that "phishing behavior" is as endemic as the authors portray it, I think it implies a fairly radical level of skepticism, reliance on the precautionary principle, and active avoidance of advertising and other capitalist situations--which I am not sure the authors would be ready to endorse explicitly. Something that might be endorsed by, say, E.F. Schumacher.
Third, it's not clear who the right audience for this book is. In the conclusion, the authors say that they hope to influence the direction of research in economics, but I feel like a popular consumption book like this is about the worst way to do that. To the extent that the target audience is everyday people (as the style implies), it is hardly news to us (and to economists when they are not acting in their professional capacity) that corporations look for opportunities to take advantage of people for profit.
Fourth, the authors mix together under the broad heading of "phishing" what they call "information phishing" (situations of asymmetric information) and "psychological phishing" (situations of weaknesses and biases). It's not clear to me why these should be analyzed together, other than that they both suck. Asymmetric information has been extensively studied in economics, most prominently by Akerlof himself, with the general conclusion being that asymmetric information results in market failure (no market can be sustained even if welfare-enhancing trades are in principle available). The authors don't give much explanation for why they think markets are sustained in the examples they give. Asymmetric information problems are also often amenable to top-down solutions, such as disclosure laws, requiring warranties, requiring insurance, etc. Weakness/bias situations, on the other hand, aren't likely to result in market failure, and the proposed solution typically involves some type of "nudge," which may or may not be very effective.
Fifth and finally, as this review has gone on long enough, the authors too readily distinguish between our "real" preferences and what they call our "monkey on the shoulder," or irrational preferences. They laud capitalism for helping us fulfill our "real" preferences but castigate it for helping us fulfill the monkey ones. Surely there is a great deal of truth to this, but the thing that makes this such a dicey issue is that it is very difficult to distinguish between these two classes of preference, and I'm not sure how much of a distinction there really is. For example, the authors spend a great deal of ink talking about how advertisers "phish" people by selling them a story about something, and getting people to identify with that story. They basically portray this as bad, and in some limiting cases I can certainly see that. But take the example of sports fandom, and economically speaking, the purchase of game tickets, team paraphernalia, etc. What is being a fan of a sports team other than buying into a story and identifying with it, along with a bunch of other people? If the authors are skeptical about whether this is "truly" valuable to people, they need to watch Doris Kearns Goodwin talk about the Dodgers and Red Sox in the Ken Burns baseball documentaries. At best, and the authors do not at all draw this conclusion, I think this line of analysis can lead us to understand how important it is to be reflective about our own preferences and assess whether our budgets instantiate our values.
My favorite part of this book was learning that Bob Shiller ate cat food, in order to prove some point that didn't really make sense to me.
December 10, 2023
It's an interesting topic, but a rather terrible style of analysing it. The title of the book "Phishing for Phools" is repeated in the book more than one hundred times, and this is a bit overdoing it. As well, replacing "fish" or "food" with "phood" and "phish" is not something that makes reading it easier. Difficult to read as a result, because the style used and the logical organisation of the issues are a bit challenging. The really clear parts are the beginning and the conclusion. I was expecting a bit more after reading "Animal Spirits" from the same authors, but I was wrong. There are too many cases with names that are not helping in understanding the points made because there are so many names used from the past of characters that were unknown to me, at least. Again, may be it is just me... but it was a gruelling read.
January 24, 2021
Phishing for Phools starts from assertions that people “do not do what is really good for them; they do not choose what they really want” and that we follow “monkey-on-our-shoulder tastes” which are “not good for us” . However, it never makes clear what those statements mean. Is “what is good for us” the same as “what we really want?” Does every choice the authors believe is not good justify added government regulations? Would “beneficiaries” really be grateful? And with regard to the volume’s opening illustration, is every Cinnabon customer phished into a self-deluded choice? Such lack of clarity provides one reason its sweeping conclusions are insufficiently supported.
February 5, 2021
A leitura em si não é tão prazerosa, mas traz ótimos exemplos para convencer os mais liberais de que o livre mercado não é perfeito e, se deixado sem regulamentação alguma, SEMPRE terá alguém se aproveitando de outrem. Os autores mostram que a regulamentação não é só necessária para impedir falcatruas, mas também para impedir gastos excessivos do Estado com eventos facilmente evitáveis, como a crise do subprime.
July 25, 2021
A superficial book that does what they are criticizing in the book: phishing.
The book is a superficial overview of the manipulations of choice and the leveraging of reputation in the modern world, clearly outlining how people have been doing it for a long time, but the authors fail to address the impact of said actions or an in-depth economic analysis (or even the implications).
The writing is rather poor, and it's obvious two people wrote it. The book is a compendium of well-known observations of cognitive biases and frauds. Thus is merely anecdotal and lacks in the potential the theme could have had if properly designed and developed, it undersells in its search for: "The Economics of Manipulation and Deception".
The book is a superficial overview of the manipulations of choice and the leveraging of reputation in the modern world, clearly outlining how people have been doing it for a long time, but the authors fail to address the impact of said actions or an in-depth economic analysis (or even the implications).
The writing is rather poor, and it's obvious two people wrote it. The book is a compendium of well-known observations of cognitive biases and frauds. Thus is merely anecdotal and lacks in the potential the theme could have had if properly designed and developed, it undersells in its search for: "The Economics of Manipulation and Deception".
January 14, 2022
کتاب پر از مثال ها و رویدادهایی است که فقط برای امریکاییها قابل درک است، نه خواننده خارجی. خوب بود مترجم در پاورقی، آنها را شرح میداد تا خواننده ایرانی کتاب بهتر درک کند.
October 15, 2023
I am thinking all along whether the general public would benefit from reading this book. Yes, they would. There are good chances they would relearn the fact that economists are a great bore. What about economics students? No, they would not learn anything besides some facts and figures. For that reason, I cannot rate a book of questionable audience too highly.
The book was clearly sprung from a benign purpose and a meaningful list of literature. Surprisingly, the ghostwriters George A. Akerlof and Robert J. Shiller hired (three research assistants whom they acknowledged postscriptum in paragraphs) did not key their wonderful ideas into a cogent piece.
Evident cliffhangers are not needed—I am referring to the electioneering story in chapter five and twelve—because each raggedy chapter telling various stories of more than one focus adds nothing but confusion to the next one. They had happily set out the goal of revisiting the concept of equilibrium, only to bring it up every fifty pages. The book read like an undergraduate’s work, as was indeed the case.
Make no mistake; both authors in the book were already Nobel laureates at the time of publishing. An important idea in the book that predated and inspired Shiller’s Narrative Economics is ‘story’. ‘Co-authored by Nobel laureates!’ You don’t say how much the weight and prestige of the prize has gone into expectations. Too much. I played the Phool here, and they were the Phishermen unfortunately.
The book was clearly sprung from a benign purpose and a meaningful list of literature. Surprisingly, the ghostwriters George A. Akerlof and Robert J. Shiller hired (three research assistants whom they acknowledged postscriptum in paragraphs) did not key their wonderful ideas into a cogent piece.
Evident cliffhangers are not needed—I am referring to the electioneering story in chapter five and twelve—because each raggedy chapter telling various stories of more than one focus adds nothing but confusion to the next one. They had happily set out the goal of revisiting the concept of equilibrium, only to bring it up every fifty pages. The book read like an undergraduate’s work, as was indeed the case.
Make no mistake; both authors in the book were already Nobel laureates at the time of publishing. An important idea in the book that predated and inspired Shiller’s Narrative Economics is ‘story’. ‘Co-authored by Nobel laureates!’ You don’t say how much the weight and prestige of the prize has gone into expectations. Too much. I played the Phool here, and they were the Phishermen unfortunately.
February 17, 2026
This is a good story, a well told story, a story worth reading, but far from the whole story.
One of the phishes described in this book is reputation mining. Both authors are Nobel prize winners in economics. We know Shiller especially from his Case Shiller index of housing prices, a highly useful tool for predicting events such as the 2008 housing bubble. The book will sell on the strength of these reputations.
George Ackerlof is married to --- Janet Yellen. I had not known. I found that fact via Google only after reading the book. It has a lot of explanatory power for the contents of the book.
The book's fundamental premise is that we are all taken for phools some of the time, and we should be wary all of the time. The Milton Friedman school of economics was premised on the idea that everybody knows and acts upon their own best interest, and that the aggregate of everybody acting in their own self-interest leads to an optimal arrangement, a concept that dates back to Adam Smith's "Wealth of Nations".
The modern instantiation of that concept, according to the authors, is modified only by the recognition of externalities and income distribution. But, the authors tell us, the torrent of recent books on financial illogic tells us otherwise. They quote Freakonomics author Steven Levitt, "Thinking Fast and Slow" author Daniel Kahneman, and several others. They do not mention Dan Ariely, Michael Shermer, Robert Trivers and others who write in the same vein. The bottom line, however, is exactly as the authors say. We act according to our wants rather than our needs. We do not recognize our needs, and our wants are often perverse. They name, as especially egregious examples, gambling, tobacco, alcohol and drugs.
Jumping to the conclusion, part three of the book seems more an exhortation, a defense of the status quo than an evenhanded presentation of the facts. They discount the severity of regulatory capture, and trumpet the benefits of government oversight bodies such as the FDA, the securities exchange commission, and the interstate commerce commission. They laud the positive outcomes of Social Security, Medicare, and other transfer programs. There is no discussion whatsoever about the sustainability of these programs, or the phishing aspect of their enactment. In my words, the promise of benefits today to be paid for by taxpayers tomorrow is a very popular political phish. Free lunch; something for nothing. Although how long this phish can go on has to be a topic of pillow talk for Ackerlof and Janet Yellen, no such discussion finds its way into the book.
The authors do not touch on many topics that would complicate their case. Technology is exacerbating income inequality. Smart people are becoming more productive, not so smart people are becoming increasingly superfluous in the American economy. During what they call the Age of Reform, 1890 to 1940, America was still largely governed by the scions of the founding fathers. The common good and the Protestant ethic were seen to coincide. Since that time America has experienced vast immigration by North Asians and Jews, who though very competent and successful maintain identities apart from the founding stock, and by Hispanics, Muslims and others. America's involuntary minorities, American Indians and especially Blacks, have gained political power. The increasing level of mutual mistrust is evident in crime reports in the daily newspapers, throughout the blogosphere, and in every political situation. The authors should recognize that a large amount of phishing involves appealing to tribal instincts. Every author must set boundaries in order to craft a book small enough that people will read it. While the authors did a great job with the topics they chose, I would observe that they could have edited down the good material they present to find room for some more relevant topics.
The book is well written and has an excellent bibliography. It is very centrist, very much an establishment work, as one would expect from the Princeton University Press. For what it is, it deserves five stars. For what it is not, the reader owes it to himself/herself to look to other sources.
That's the end of a short review. Here follows a chapter by chapter analysis.
Part One – Unpaid Bills and Financial Crash
CHAPTER ONE Temptation Strews Our Path.
The economy functions not by satisfying our needs but by satisfying our wants. The mortician does not sell you a reasonable priced funeral, the car dealer does not sell you what you need for basic transportation, the grocery store does not sell you what you need for nourishment. If they did they would starve. No – on the contrary they sell you what you will buy, even if it is not what you need, or detrimental to your self-interest.
CHAPTER TWO Reputation Mining and Financial Crisis
A good reputation is built up over a long period of time. A company can cash in on a good reputation, turning it into money by taking advantage of people who continue to believe in what once was. They cite the rating agencies, Moody's and Standard & Poor's, as examples. I will name my former employer IBM. It had a reputation as an outstanding employer, phishing those of my coworkers who stayed on in the expectation of secure employment and a decent pension. Defaulting on that trust brought the company a lot of profit for many years. I will add a reputation that these authors pointedly omit. The United States' worldwide reputation for sound money ensures that Ukrainian mattresses are stuffed with dollars, not Euros. Our reputation has allowed the US to sell treasury bonds throughout the world. In monetizing the federal debt, selling it to foreigners, we have abused that trust. The phish have gotten wise. As this book comes out, China is dumping treasury bonds faster than the government can print them.
PART TWO Phishing in Many Contexts
CHAPTER THREE Advertisers Discover How to Zoom In on Our Weak Spots.
The best part of the chapter is a history of three early advertisers, Albert Lasker, Claude Hopkins, and David Ogilvy. These geniuses managed to add value to oranges by turning Sunkist into a brand, exalt the process that every brewer used to the benefit of one brewer in particular, and turn an ordinary soap, Palmolive, into something the promised beauty. Advertising is a classic phish. Create a story, such as the Marlboro Man, that the buyer can identify with and they will not research the actual merits of the product.
CHAPTER FOUR Rip-offs Regarding Cars, Houses, and Credit Cards.
This chapter focuses on the big transactions in life. They pit buyers, who confront these situations infrequently, against sellers who do so every day. The buyers get ripped off on origination fees, points, financing terms, unneeded insurance and a million other costly extras. Credit cards charge an unconscionably high interest rate to those who do not scrupulously pay their bills when due.
CHAPTER FIVE Phishing in Politics.
Voters are dumb. We vote emotionally. The authors cite Senator Charles Grassley making a commercial of himself riding on a lawn tractor, portraying himself as a common man. That's what wins votes. A topic they might have explored is how emotional issues such as gun ownership/gun control are so key to getting politicians elected and so irrelevant with regard to what they do once in office.
CHAPTER SIX Phood, Pharma, and Phishing
The story here is Cinnabon, which floods airport lounges with the scent of cinnamon just when the traveler is tired and hungry. The high calorie content and the price are irrelevant. People buy what is not good for either their pocketbook or their waistline, and the company coins money.
CHAPTER SEVEN Innovation: The Good, the Bad, and the Ugly.
Some very interesting research here. Innovation accounts for 7/8 of the improvement in our standard of living, increased capital investment only 1/8. However, not all innovations are good for us. They provide histories of slot machines and Facebook.
CHAPTER EIGHT Tobacco and Alcohol.
The authors have nothing good to say about any of these. They provide a good history of the demonization of tobacco, and a good litany of the unmeasurable damage that alcohol does. In this regard I would be somewhat of a contrarian. Alcohol fills an important social role. I am fond of joking that without it, Germans could not breed. It is certainly an integral part of the culture where I live now in Ukraine. The downside is not to be dismissed, but there is also an upside to be acknowledged. I'll concede that it is harder to find arguments for the upside of tobacco, gambling or drugs.
CHAPTER NINE Bankruptcy for Profit.
This is a chapter on the techniques of corporate looting. It includes a good account of the savings and loan crisis of the 1980s, and something of an insight into how the "Keating five," including Senator McCain, got compromised.
CHAPTER TEN Michael Milken Phishes with Junk Bonds as Bait
This is a balanced chapter about an enigmatic character. Most of what Milken did was legal, and the crime for which he went to jail was a frame job. Nonetheless, his operation immorally took advantage of the gullibility of investors. One of the metaphors used throughout the book is rotten avocados, products presented as one thing but actually representing another. Milken used an obscure book on the profitability of fallen angel junk bonds issued by reputable companies that had fallen on hard times, and twisted the story to support the purchase of newly minted bonds which were junk from the start. It was a very successful financial phish.
CHAPTER ELEVEN The Resistance and Its Heroes.
This chapter leads the reader toward the happy conclusion. It is an endorsement, in general, of the forces that have made the marketplace safer and the economy richer and more productive over the years. These include the muckrakers such as Upton Sinclair and Ida Mae Tarbell, the governmental agencies that were set up starting in the Age of Reform, and nongovernmental groups such as the American Chamber of Commerce, the Better Business Bureau, the industry standards groups that rigorously define methods of classifying wheat by type and grade, and others that band together to ensure the general integrity of business.
PART THREE Conclusion and Afterword. This is the rosy conclusion alluded to above. Fret not, all is well. The government will look out for your best interests. I advise readers to sample pessimistic blogs such as zerohedge, the Unz review and oftwominds for differing points of view, then decide who is phishing whom.
One of the phishes described in this book is reputation mining. Both authors are Nobel prize winners in economics. We know Shiller especially from his Case Shiller index of housing prices, a highly useful tool for predicting events such as the 2008 housing bubble. The book will sell on the strength of these reputations.
George Ackerlof is married to --- Janet Yellen. I had not known. I found that fact via Google only after reading the book. It has a lot of explanatory power for the contents of the book.
The book's fundamental premise is that we are all taken for phools some of the time, and we should be wary all of the time. The Milton Friedman school of economics was premised on the idea that everybody knows and acts upon their own best interest, and that the aggregate of everybody acting in their own self-interest leads to an optimal arrangement, a concept that dates back to Adam Smith's "Wealth of Nations".
The modern instantiation of that concept, according to the authors, is modified only by the recognition of externalities and income distribution. But, the authors tell us, the torrent of recent books on financial illogic tells us otherwise. They quote Freakonomics author Steven Levitt, "Thinking Fast and Slow" author Daniel Kahneman, and several others. They do not mention Dan Ariely, Michael Shermer, Robert Trivers and others who write in the same vein. The bottom line, however, is exactly as the authors say. We act according to our wants rather than our needs. We do not recognize our needs, and our wants are often perverse. They name, as especially egregious examples, gambling, tobacco, alcohol and drugs.
Jumping to the conclusion, part three of the book seems more an exhortation, a defense of the status quo than an evenhanded presentation of the facts. They discount the severity of regulatory capture, and trumpet the benefits of government oversight bodies such as the FDA, the securities exchange commission, and the interstate commerce commission. They laud the positive outcomes of Social Security, Medicare, and other transfer programs. There is no discussion whatsoever about the sustainability of these programs, or the phishing aspect of their enactment. In my words, the promise of benefits today to be paid for by taxpayers tomorrow is a very popular political phish. Free lunch; something for nothing. Although how long this phish can go on has to be a topic of pillow talk for Ackerlof and Janet Yellen, no such discussion finds its way into the book.
The authors do not touch on many topics that would complicate their case. Technology is exacerbating income inequality. Smart people are becoming more productive, not so smart people are becoming increasingly superfluous in the American economy. During what they call the Age of Reform, 1890 to 1940, America was still largely governed by the scions of the founding fathers. The common good and the Protestant ethic were seen to coincide. Since that time America has experienced vast immigration by North Asians and Jews, who though very competent and successful maintain identities apart from the founding stock, and by Hispanics, Muslims and others. America's involuntary minorities, American Indians and especially Blacks, have gained political power. The increasing level of mutual mistrust is evident in crime reports in the daily newspapers, throughout the blogosphere, and in every political situation. The authors should recognize that a large amount of phishing involves appealing to tribal instincts. Every author must set boundaries in order to craft a book small enough that people will read it. While the authors did a great job with the topics they chose, I would observe that they could have edited down the good material they present to find room for some more relevant topics.
The book is well written and has an excellent bibliography. It is very centrist, very much an establishment work, as one would expect from the Princeton University Press. For what it is, it deserves five stars. For what it is not, the reader owes it to himself/herself to look to other sources.
That's the end of a short review. Here follows a chapter by chapter analysis.
Part One – Unpaid Bills and Financial Crash
CHAPTER ONE Temptation Strews Our Path.
The economy functions not by satisfying our needs but by satisfying our wants. The mortician does not sell you a reasonable priced funeral, the car dealer does not sell you what you need for basic transportation, the grocery store does not sell you what you need for nourishment. If they did they would starve. No – on the contrary they sell you what you will buy, even if it is not what you need, or detrimental to your self-interest.
CHAPTER TWO Reputation Mining and Financial Crisis
A good reputation is built up over a long period of time. A company can cash in on a good reputation, turning it into money by taking advantage of people who continue to believe in what once was. They cite the rating agencies, Moody's and Standard & Poor's, as examples. I will name my former employer IBM. It had a reputation as an outstanding employer, phishing those of my coworkers who stayed on in the expectation of secure employment and a decent pension. Defaulting on that trust brought the company a lot of profit for many years. I will add a reputation that these authors pointedly omit. The United States' worldwide reputation for sound money ensures that Ukrainian mattresses are stuffed with dollars, not Euros. Our reputation has allowed the US to sell treasury bonds throughout the world. In monetizing the federal debt, selling it to foreigners, we have abused that trust. The phish have gotten wise. As this book comes out, China is dumping treasury bonds faster than the government can print them.
PART TWO Phishing in Many Contexts
CHAPTER THREE Advertisers Discover How to Zoom In on Our Weak Spots.
The best part of the chapter is a history of three early advertisers, Albert Lasker, Claude Hopkins, and David Ogilvy. These geniuses managed to add value to oranges by turning Sunkist into a brand, exalt the process that every brewer used to the benefit of one brewer in particular, and turn an ordinary soap, Palmolive, into something the promised beauty. Advertising is a classic phish. Create a story, such as the Marlboro Man, that the buyer can identify with and they will not research the actual merits of the product.
CHAPTER FOUR Rip-offs Regarding Cars, Houses, and Credit Cards.
This chapter focuses on the big transactions in life. They pit buyers, who confront these situations infrequently, against sellers who do so every day. The buyers get ripped off on origination fees, points, financing terms, unneeded insurance and a million other costly extras. Credit cards charge an unconscionably high interest rate to those who do not scrupulously pay their bills when due.
CHAPTER FIVE Phishing in Politics.
Voters are dumb. We vote emotionally. The authors cite Senator Charles Grassley making a commercial of himself riding on a lawn tractor, portraying himself as a common man. That's what wins votes. A topic they might have explored is how emotional issues such as gun ownership/gun control are so key to getting politicians elected and so irrelevant with regard to what they do once in office.
CHAPTER SIX Phood, Pharma, and Phishing
The story here is Cinnabon, which floods airport lounges with the scent of cinnamon just when the traveler is tired and hungry. The high calorie content and the price are irrelevant. People buy what is not good for either their pocketbook or their waistline, and the company coins money.
CHAPTER SEVEN Innovation: The Good, the Bad, and the Ugly.
Some very interesting research here. Innovation accounts for 7/8 of the improvement in our standard of living, increased capital investment only 1/8. However, not all innovations are good for us. They provide histories of slot machines and Facebook.
CHAPTER EIGHT Tobacco and Alcohol.
The authors have nothing good to say about any of these. They provide a good history of the demonization of tobacco, and a good litany of the unmeasurable damage that alcohol does. In this regard I would be somewhat of a contrarian. Alcohol fills an important social role. I am fond of joking that without it, Germans could not breed. It is certainly an integral part of the culture where I live now in Ukraine. The downside is not to be dismissed, but there is also an upside to be acknowledged. I'll concede that it is harder to find arguments for the upside of tobacco, gambling or drugs.
CHAPTER NINE Bankruptcy for Profit.
This is a chapter on the techniques of corporate looting. It includes a good account of the savings and loan crisis of the 1980s, and something of an insight into how the "Keating five," including Senator McCain, got compromised.
CHAPTER TEN Michael Milken Phishes with Junk Bonds as Bait
This is a balanced chapter about an enigmatic character. Most of what Milken did was legal, and the crime for which he went to jail was a frame job. Nonetheless, his operation immorally took advantage of the gullibility of investors. One of the metaphors used throughout the book is rotten avocados, products presented as one thing but actually representing another. Milken used an obscure book on the profitability of fallen angel junk bonds issued by reputable companies that had fallen on hard times, and twisted the story to support the purchase of newly minted bonds which were junk from the start. It was a very successful financial phish.
CHAPTER ELEVEN The Resistance and Its Heroes.
This chapter leads the reader toward the happy conclusion. It is an endorsement, in general, of the forces that have made the marketplace safer and the economy richer and more productive over the years. These include the muckrakers such as Upton Sinclair and Ida Mae Tarbell, the governmental agencies that were set up starting in the Age of Reform, and nongovernmental groups such as the American Chamber of Commerce, the Better Business Bureau, the industry standards groups that rigorously define methods of classifying wheat by type and grade, and others that band together to ensure the general integrity of business.
PART THREE Conclusion and Afterword. This is the rosy conclusion alluded to above. Fret not, all is well. The government will look out for your best interests. I advise readers to sample pessimistic blogs such as zerohedge, the Unz review and oftwominds for differing points of view, then decide who is phishing whom.
October 1, 2021
Labiau orientuota į atorių gimtųjų JAV ekonominę bei politinę sistemą. Bet dauguma įžvalgų tinka ir kitoms valstybėms.
November 4, 2019
We live in a world where a plethora of materialistic lures compete for our attention and resources. We in turn are enslaved to and enraptured by wants which might on hindsight be totally inessential or unnecessary. Why is it that we fall prey to the tricks of unscrupulous dealers and businessmen even though we are rational and completely capable of making logical decisions. Why are we rendered incapable and vulnerable at those precise moments which call for clarity, alertness and judiciousness?
Nobel Laureates George Akerloff and Robert Schilling tackle this very vexing question in their new and interesting work "Phishing For Phools". The title is a take on the most pervasive internet fraud popularly referred to as 'phishing'. When greedy, smart and cut throat opportunists look for scapegoats to further their economic and monetary prospects, they end up "phishing". The ones that do manage to land up ultimately in their nets are the phools. Citing examples from diverse sectors of the economy, from Pharmaceuticals to Automotive dealers; from credit card purveyors to the powerful and effective tobacco lobby, Akerloff and Schiller provide authentic instances where the consumer is subject to a wide array of manipulative techniques, deceptive trade practices and false assurances which influence the direction of his/her spending. The sub prime mortgage debacle that resulted in an economic tailspin thereby leading to a global financial crisis (the reverberations of which still holds the world in its thrall) is also a classic example of a multitude of predatory phishermen targeting a ready market of gullible phools.
The authors in the latter half of the book also issue a timely warning to the reader by identifying potential red flags and underhand techniques, an understanding of which will reduce the probability of being sucked into the dangerous web of deceit, desperation and disaster.
"Phishing for Phools" - A Phantastic read!"
Nobel Laureates George Akerloff and Robert Schilling tackle this very vexing question in their new and interesting work "Phishing For Phools". The title is a take on the most pervasive internet fraud popularly referred to as 'phishing'. When greedy, smart and cut throat opportunists look for scapegoats to further their economic and monetary prospects, they end up "phishing". The ones that do manage to land up ultimately in their nets are the phools. Citing examples from diverse sectors of the economy, from Pharmaceuticals to Automotive dealers; from credit card purveyors to the powerful and effective tobacco lobby, Akerloff and Schiller provide authentic instances where the consumer is subject to a wide array of manipulative techniques, deceptive trade practices and false assurances which influence the direction of his/her spending. The sub prime mortgage debacle that resulted in an economic tailspin thereby leading to a global financial crisis (the reverberations of which still holds the world in its thrall) is also a classic example of a multitude of predatory phishermen targeting a ready market of gullible phools.
The authors in the latter half of the book also issue a timely warning to the reader by identifying potential red flags and underhand techniques, an understanding of which will reduce the probability of being sucked into the dangerous web of deceit, desperation and disaster.
"Phishing for Phools" - A Phantastic read!"
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