When Lewis was busy researching what would become The Big Short, he ran across a Dallas investor who seemed so outlandish that Lewis brushed him off. Governments, the guy told him, would be the next domino to fall due to the economic crisis. But this idea seemed so absurd as to likely be false that Lewis gave it little other thought, until it looked like governments were going to fail. And since he already had that good good background in his pocket from The Big Short, he was able to continue to watch the fallout through governments.
Boomerang is a short little book that details big fiscal failure. Starting in Iceland where a lot of fishermen decided to try their hand as investment brokers, through Greece where austerity measures were crippling the bribery economy, to Ireland, Germany and finally California, Lewis finds a culture of easy money and the governments that spent it.
The details are sad and overwhelming. How can governments behave so badly? How can the outspend so richly? How can they possibly not see this as a problem? Turns out governments were having a grand time bailing out banks who had made monumentally stupid gambles and passing that cost on to their citizens. But, to try to write of an entire national character based on a couple weeks of travel with carefully selected citizens may be a bit of a stretch and obviously unfair to the entire populace of these countries.
Frustrating and full of gallows type humor, Boomerang made me feel that absolutely no one is minding the store. And we're all doomed.
3.5/5.
Finishing this book was a race against time to get it back to the library, but I made it. And I'm so glad I got to soak up even the last pages. This book took a long time for me to read because the concepts were mostly new and I took notes throughout. A few months ago I read The Undoing Project by Michael Lewis (you can read that review here) and his discussion of Prospect Theory as first explained by genius psychologist Amos Tversky and his partner, Nobel laureate Danny Kahneman. This book exploded in my brain. It awakened a curiosity for behavioral economics and decision making I didn't even know was there. It spoke to concepts I grapple with daily in my work adjusting and reserving claims and I simply had to know more. I suppose I've always been a curious person. I really enjoy the act of learning. I've spent fully 22 years of my life in formal classroom settings. But having a full time job and trying to love and nurture two tiny humans can sometimes leave little room for exploration and discovery into new interests. So between The Undoing Project and Misbehaving, my curiosity is born anew and I'll be starting a new certification program in January, largely in response to the way my mind has reacted to these books. And to me, that's probably the very best thing about books and their power.Richard Thaler took a risky approach to economics. In Misbehaving: The Making of Behavioral Economics, Thaler details his humble behavioral beginnings in economics when a list on a blackboard kept taking him back to things that were unexplained in current economic theory, things that broke the rules, things that didn't make sense. Thaler stumbled upon Kahneman and Tversky's work and sought them out, finding kindred spirits. Their collaborations are briefly touched upon in The Undoing Project. And from there Thaler forged ahead, gathering like minds to explore the incongruities of human behavior and economic theory - the misbehaving. (You may have caught Richard Thaler's brief appearance in the movie The Big Short based on the Michael Lewis book where he appears next to Selena Gomez in a casino - review here).He made enemies. He made friends. He made an entirely new field of study within economics. And our world is better for it. We are not all economists. We are not all rational beings. Instead we often act irrationally. Become incomprehensibly attached to objects through ownership. Coming to value what we have far above the true value of the item. Econs don't do this. But humans do. And to understand the economic and market system in which we live, we must take these things into account. Doing so gives us a much better descriptive model from which to work and predict. Thaler does a great job making these theories accessible. I'm not making the mistake of believing I now could practice or completely understand the field of Behavioral Economics, but I do understand the broad brushes and my life is just plain better for having read this book.
5/5 Stars.
Yeah Yeah behavioral economics has been around for a couple decades. But it's NEW to me! I listened to The Undoing Project about the friendship between psychologists Danny Kahneman and Amos Tversky and there were times when I wished I was reading it because the concepts are something I needed to see and mull over. All the while alarm bells are ringing in my head about how I can apply these concepts to my own job and work. Why does cross-discipline happen so slowly or so happenstance? In any event, these two amazing brilliant people somehow had the good fortune (for us) to meet at Hebrew University in the early 70s/late 60s and change how we understand how people make decisions. Until Kahneman and Tversky, everyone assumed that people are rational creatures who make decisions loosely aligned to statistical probabilities and sound logic. But guess what?! We're not. We're crazy emotional beings who make decisions against logic and failing to account for this was causing economists to miss wildly in predictions. So behavioral economics comes along and takes Kahneman and Tversky's theories and findings and blows apart all the traditional thinking about decision making and now it's a whole field and gah when can I get in on this and where can I find out more? I love the story of two brilliant people creating very lovely mind expanding theories based on the combined strengths of the group. This was well written (of course it was it's Michael Lewis FGS). And while the science could get a little heavy it was still accessible. Loved this book and the way it made my brain want more.
4/5 Stars.
