Cracked does it again

I’m a pretty big fan of Cracked.com. I’d go as far as to say it’s the generation-that-should-get-off-my-lawn’s version of Mad Magazine–funny (usually), often wickedly subversive, and done in an irreverent style that disguises what’s often really good information (even obscure scholarship). And I’m all for providing serious information in an irreverent package.

Anyway, today’s article, “Six logical fallacies that cost you money every day” is an excellent review of the ways we don’t think rationally. Which is important because economics—and especially conservative economics, from its belief in laissez faire to its exaltation of the financial world—often starts from the assumption that we do.

Don’t get me wrong–the irrationalities in the Cracked article are well known to economists, and some were first defined by economists. It’s just that they often get dropped from economic analysis. Which may sound like it doesn’t matter (Oh no! Some economic analysis doesn’t take irrational behaviors into account!) but check this out: only a few years ago many economists were saying that asset bubbles are impossible because hey, it would be stupid to pay too much for an asset. Since a bubble was impossible, there was no need to take steps to prevent or deflate one.

One last point: the article also shows that economics isn’t rocket science. The best of economics–the parts that matter in the real world–are the very parts that can be explained in layperson’s terms.

Edited for some truly atrocious spelling errors. Me write good Englishese.