Why the free-market system encourages so much trickery even as it
creates so much good
Ever since Adam Smith, the central teaching of economics has been that
free markets provide us with material well-being, as if by an invisible
hand. In Phishing for Phools, Nobel Prize-winning economists George
Akerlof and Robert Shiller deliver a fundamental challenge to this
insight, arguing that markets harm as well as help us. As long as there
is profit to be made, sellers will systematically exploit our
psychological weaknesses and our ignorance through manipulation and
deception. Rather than being essentially benign and always creating the
greater good, markets are inherently filled with tricks and traps and
will "phish" us as "phools."
Phishing for Phools therefore strikes a radically new direction in
economics, based on the intuitive idea that markets both give and take
away. Akerlof and Shiller bring this idea to life through dozens of
stories that show how phishing affects everyone, in almost every walk of
life. We spend our money up to the limit, and then worry about how to
pay the next month's bills. The financial system soars, then crashes. We
are attracted, more than we know, by advertising. Our political system
is distorted by money. We pay too much for gym memberships, cars,
houses, and credit cards. Drug companies ingeniously market
pharmaceuticals that do us little good, and sometimes are downright
dangerous.
Phishing for Phools explores the central role of manipulation and
deception in fascinating detail in each of these areas and many more. It
thereby explains a paradox: why, at a time when we are better off than
ever before in history, all too many of us are leading lives of quiet
desperation. At the same time, the book tells stories of individuals who
have stood against economic trickery--and how it can be reduced through
greater knowledge, reform, and regulation.
