SLIDE 1: Quote “A book that forever changes the way you look at things” – At first, reading this quote,

I thought
the book would really changes the way I look at things, so that it will be usefull not only for this presentation, but
also generally, for me. However, I must say that the book is interesting, a lot of practical examples, but it had
nothing to do with changing the way I look at things. 

SLIDE 2: Couple of words about Tim Harford: was born in 1973. He’s an English economist and journalist,
residing in London. He’s the author of 2 economic books: “The undercover Economist”, written in 2005 and
“The logic of life” , written in 2008. He’s also the presenter of BBC television series “Trust me, I’m economist”,
and the writer of humorous weekly column called “Dear Economist” for “the Financial Times”, in which he uses
economic theory to attempt to solve readers’ personal problems.

SLIDE 3: So moving on to the book, the main idea of the book is “rational choice”. Through this book, Tim
Harford showed the readers, that what seems to be a million miles from rational behavior for us, absolutely
makes sense to him. For us, life often seems to defy(not following) logic. It is not logical when a prostitue agrees
to unprotected sex, or a teenage criminal embarks (is involved in) on a burglary, or a smoker lights another
cigarette, or the boss is overpaid, etc… but in the book, he aims to persuade people that we are all, in fact,
suprisingly logical. Reading this book, we can discover that everything complies with economic logic, always
taking account of future costs and benefits, even if they don’t quite realise it.

SLIDE 4: When the costs or benefits of sth change, people change their behavior.

SLIDE 5: There was one example about the economics of sex. In the “Atlantic”, Caitlin Flanagan wrote: “The
moms are certain that they know for a fact, that all over the city, in the very best schools, in the necest families, in
the leafiest neighborhoods, 12 and 13 – year old girls are performing oral sex on as many boys as they can”. It is
also found that between 1994 and 2004, young people between ages 12 and 24 became more than twice as likely
to report that they’d recently had oral sex. For boys, the rate climbed from 16% to 32%, for girls from 14% to
38%. Professor Jonathan Zenilman, expert at John Hopkins University on sexual transmittes diseases, believes
that oral sex is now much more common, and “epidemic” might be putting it too strongly, but oral sex is
definitely in vogue. It should be obvious that the cost of a close substitute for oral sex has risen: regular sex is
more costly than it used to be, because of the spread of HIV/AIDS. Since regular sex is riskier than it used to be,
while teenagers are unlikely to have given up on the idea of having sex, so they choose another way. When the
price of Coca Cola rises, rational people drink more Pepsi. When the price of a flat in the city goes up, rational
people move out to the suburbs, and when the price of normal sex rises, rational teenagers have more oral sex
instead.

SLIDE 6: Rational people respond to incentives. When it becomes more costly to do something, they will tend to
do less. When it becomes easier, cheaper, or more beneficial, they will tend to do more. In weighing up their
choises, they will bear in mind, not only the costs and benefits of a specific choice, but their total budget. And
they will also consider the future consequences of present choices.

SLIDE 7 + 8: For example:

If the price of a Toyota rises, you buy a Honda instead. => People respond to incentives.
When your income rises, you plump for a Ferrari. => People consider their budget.
You know that the loan to buy that Ferrari must eventually be repaid. => People are mindful of future
consequences.

SLIDE 9: People are motivated with all kinds of human emotions: fear of Aids, or parent disaproval, or romantic
love, etc..These motivations are not financial, but our responses to them are rational. As Tim Harford has
mentioned in the book, for almost every teenager, planning, calculating and strategising about matters of the heart
go on as many as about the matters of the wallet. So, you’re mad about the boy, but if you weren’t, you wouldn’t
be dreaming up all those clever strategies to get him.

SLIDE 10: To end up the presentation, I’d say that the book, for me personally was very interesting and I liked
the way Tim Harford gave the practical examples. And you should really read the book. Thank you.