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This book is as good a primer as any to the Dumb Agent Theory, so it is with great pleasure that I write a review of it on this site:

The Wisdom of Crowds
By James Surowiecki
Anchor Books, 2005. 306 pp., $10.17

The message of this book, in a nutshell, is that groups are more intelligent than any one individual of that group, even so-called experts. This is a very interesting premise, negating such common assumptions as “dumbing down of the masses” or “a person is intelligent, people are dumb” and others. Once again, this concept, used in finance and economics, is the foundation for the Dumb Agent Theory and is more easily explained with examples than with theory. I will state a couple of the more interesting examples from this book, after which I will give some brief commentary.

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Although not new, and arguably not a serious economics work, Freakonomics nonetheless has had an enormous impact on everyday economics and will be recognized for some time to come. Therefore it seems fitting as our first book review:

Freakonomics
A Rogue Economist Explores the Hidden Side of Everything
By Steven Levitt and Stephen J. Dubner
HarperCollins Publishers, 2005. 256 pp., $16.77 cloth.

Freakonomics is a compilation of Steven Levitt’s main papers and subsequent findings, weaved together, sometimes in a confusing manner, by Stephen Dubner. While giving the impression that he is trying to make economics accessible to the masses, Levitt shows how non-traditional thinking can bring about surprising results. The author also brings to fore how many conclusions that are often taken for granted can actually be deceiving. Readers, therefore, should not be put off by the pop-culture evoking title of this book. In fact, a wide audience that includes people interested in economics, social sciences and those who just want to observe a different outlook on statistics, should find this book worth reading.

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