Licence to be Bad audiobook cover - How Economics Corrupted Us

Licence to be Bad

How Economics Corrupted Us

Jonathan Aldred

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Economics

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Licence to be Bad
The Myth of Objective Economics+
Rise of Free-Market Ideology+
The Danger of Homo Economicus+
Flawed Economic Concepts+
The Failure of Incentives+
Bad Math and Inequality+

Quiz — Test Your Understanding

Question 1 of 10
How has the discipline of economics often been misleadingly characterized in recent decades?
  • A. As a purely philosophical field focused on morality
  • B. As a hard, objective science similar to physics or engineering
  • C. As a branch of psychology focused on emotional decision-making
  • D. As a strictly historical discipline analyzing past financial failures
Question 2 of 10
What is the central philosophy of the Chicago School of economics?
  • A. Governments should heavily regulate markets to prevent financial crashes
  • B. Public spending is the only way to stimulate post-war economic growth
  • C. The free market, not public officials, should dictate where money is made and spent
  • D. Financial regulators are solely responsible for preventing economic recessions
Question 3 of 10
According to the book, what is a major negative consequence of relying heavily on game theory to predict human behavior?
  • A. It fails to account for mathematical probabilities in complex scenarios
  • B. It assumes and encourages a coldly selfish and uncooperative view of the world
  • C. It places too much trust in the altruism of politicians and corporate leaders
  • D. It heavily relies on unpredictable emotional responses rather than rational thought
Question 4 of 10
How did the Chicago School of economists misinterpret Ronald Coase’s theorem regarding transaction costs?
  • A. They believed transaction costs proved the need for strict government regulation
  • B. They used it to argue that legal justice is more important than economic efficiency
  • C. They concluded that transaction costs should be minimized by removing government and court interference
  • D. They assumed transaction costs only applied to agricultural disputes rather than modern markets
Question 5 of 10
What does James M. Buchanan's public choice theory argue about the political system?
  • A. Politicians, civil servants, and voters are entirely motivated by self-interest and short-term gain
  • B. Civil servants are the only neutral actors in a fundamentally corrupt system
  • C. Voters are highly informed and consistently vote for the long-term good of the country
  • D. Democracy is mathematically impossible because voting systems cannot rank all outcomes
Question 6 of 10
How does 'free-rider thinking' negatively impact global issues like climate change?
  • A. It causes governments to overspend on ineffective environmental regulations
  • B. It convinces individuals that their small contributions are pointless, leading to inaction
  • C. It encourages corporations to invest heavily in green technology to avoid taxation
  • D. It forces international coalitions to penalize developing nations for high emissions
Question 7 of 10
Economist Gary Becker is noted for attempting to apply economic reasoning to everyday life. Which of the following was one of his real-world proposals?
  • A. Replacing the traditional family unit with state-run childcare facilities
  • B. Eliminating all taxes to see if citizens would voluntarily fund public services
  • C. Increasing prison sentences to disincentivize crime and save money on law enforcement
  • D. Paying citizens a universal basic income to stimulate local economies
Question 8 of 10
Why did a fine for late parents at Israeli day care centers fail to reduce tardiness, while a tax on plastic bags in the UK successfully reduced usage?
  • A. The UK tax was significantly more expensive relative to income than the day care fine
  • B. The day care centers lacked a public awareness campaign, causing parents to view the fine as a guilt-free fee for a service
  • C. The Israeli government subsidized the day care fines, neutralizing the financial penalty
  • D. Plastic bags are a physical commodity, making them easier to economically regulate than a service like day care
Question 9 of 10
According to the book, why were statistical models so wildly inaccurate regarding the likelihood of the 2007 financial crash?
  • A. They relied on a fractal distribution instead of a normal distribution
  • B. They assumed financial markets follow a normal distribution (bell curve) rather than a fractal distribution
  • C. They factored in too much historical data, skewing the results toward extreme pessimism
  • D. They ignored the transaction costs associated with subprime mortgages
Question 10 of 10
The book challenges the modern economic consensus that high taxes on the wealthy discourage economic activity. What alternative psychological response to a tax cut does the author suggest?
  • A. A tax cut might cause individuals to work less because they can earn the same amount of money with less effort
  • B. A tax cut generally forces the wealthy to invest solely in high-risk foreign markets
  • C. A tax cut leads to an immediate increase in charitable giving, offsetting the loss of tax revenue
  • D. A tax cut creates a sense of guilt that inadvertently slows down entrepreneurial innovation

Licence to be Bad — Full Chapter Overview

Licence to be Bad Summary & Overview

Licence to be Bad (2019) explains how in the past 50 years a small handful of economists has drastically changed the way we think about the subject. Ideas including game theory, public choice theory, and free-riding have worked their way into our minds and our discourse, apparently permitting us to behave badly.

Who Should Listen to Licence to be Bad?

  • Economists interested in rethinking the subject
  • Ethics enthusiasts with an interest in recent thought
  • Anyone wondering why we think the things we do

About the Author: Jonathan Aldred

Jonathan Aldred is a fellow at Emmanuel College, University of Cambridge, where he teaches economics and land economy. His first book, The Skeptical Economist, was published in 2009 and examines the ethics that lie behind economics.

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