Free Market Madness: Why Human Nature Is at Odds with Economics and Why It Matters
by Peter A. Ubel, Harvard Business School Press, 272 pages, $26.95, Hardcover, January 2009, ISBN 9781422126097
Peter A. Ubel is a physician, so how is it that he ended up writing a book about the intersection of psychology and the free market for one of the most prestigious business publishers in the country? The quick answer is that he knows what he's talking about. The long answer is that he has "spent the better part of fifteen years researching the forces that influence the way people make decisions" and directs the Center for Behavioral and Decision Sciences in Medicine at the University of Michigan.
There has been a rash of behavioral economics books published recently that challenge the traditional view that human economic behavior is essentially rational. While most of the other books in the genre are subtler in their critique of that view, with titles like Nudge
and Predictably Irrational
, Ubel openly challenges the ways he believes traditional economics have failed us. Despite the book's title, though, Ubel is in no way anti-free market. He recognizes the tremendous wealth "of both opportunity and of consumer goods," that free markets have created, but also recognizes their fallibility.
With the meltdown of the economic system, there has been a lot a clamoring for more regulation of markets recently, but Ubel's critique is not a response to that crisis. His book is in response to "free market evangelists" who believe the market is the solution to every human ailment, even if it's an ailment the market itself seems to have created--such as the alarming increase in obesity in this country. As a physician on the front lines of the obesity battle, Ubel concentrates much of his focus on that problem, which he sees as a clear market failure. The problem, as Ubel sees it, is that those marketing products have spent so much time and money studying our behavior that they know more about how we make decisions than we do.
As you would expect from any book published by HBSP, Free Market Madness
is well researched and intellectually engaging. Ubel weans us into the heavier issues with a brief history of both traditional and behavioral economics, while introducing us to the major players in each fields' development. Ubel definitely has a point of view and an agenda in this book, and as a self-described "flaming moderate" uses his platform to clamor for a middle way between free market evangelism and what critics of market regulation call a "nanny state." Regardless of whether or not you agree with the author, you will find the history and examples he provides a good addition to this ongoing conversation.