The Armchair Economist: Economics and Everyday Life [Paperback]

The extensively revised and updated edition of Steven Landsburg’s hugely popular book,The Armchair Economist—“a delightful compendium of quotidian examples illustrating important economic and financial theories” (The Journal of Finance).

In this revised and updated edition of Steven Landsburg’s hugely popular book, he applies economic theory to today’s most pressing concerns, answering a diverse range of daring questions, such as:

Why are seat belts deadly?
Why do celebrity endorsements sell products?
Why are failed executives paid so much?
Who should bear the cost of oil spills?
Do government deficits matter?
How is workplace safety bad for workers?
What’s wrong with the local foods movement?
Which rich people can’t be taxed?
Why is rising unemployment sometimes good?
Why do women pay more at the dry cleaner?
Why is life full of disappointments?

Whether these are nagging questions you’ve always had, or ones you never even thought to ask, this new edition ofThe Armchair Economistturns the eternal ideas of economic theory into concrete answers that you can use to navigate the challenges of contemporary life.CHAPTER 1

THE POWER OF INCENTIVES

How Seat Belts Kill

Most of economics can be summarized in four words: People respond to incentives. The rest is commentary.

People respond to incentives sounds innocuous enough, and almost everyone will admit its validity as a general principle. What distinguishes the economist is his insistence on taking the principle seriously at all times.

I remember the late 1970s and waiting half an hour to buy a tank of gasoline at a federally controlled price. Virtually all economists agreed that if the price were allowed to rise freely, people would buy less gasoline. Many noneconomists believed otherwise. The economists were fight: When price controls werl3;