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Sex, Drugs & Economics: An Unconventional Introduction to Economics    by Diane Coyle order for
Sex, Drugs & Economics
by Diane Coyle
Order:  USA  Can
Texere, 2004 (2002)
Hardcover, Paperback

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* * *   Reviewed by Hilary Williamson

The title intrigues; what, one wonders can sex and drugs have to do with economics, or vice versa? But this volume indeed provides an 'Unconventional Introduction' to a subject that I, like many others, previously considered extremely dull.

The first section claims that 'Economics Really Does Apply to Everything' and then goes on to discuss: demand and supply with respect to the sex industry and porn on the Internet; the externalities (something by which an individual or group's behavior affects others) of the illegal drug trade; the evolution of interdisciplinary behavioral economics to explain issues like teens' tendency to engage in risky behaviors; sports as a 'low markup, high volume business'; choices facing the 'robber barons' of the music industry; and societal implications of huge farm subsidies.

In the following section the author considers 'What Governments Are Good For', the kinds of economic activities, in which the public sector has a good or poor track record. In particular she compares rail service in Europe and N. America. I found the explanation of the differing points of views of environmentalists and economists enlightening, and a discussion of tax incidence (who actually ends up paying certain taxes) disturbing, especially with respect to the 1998 US settlement with cigarette manufacturers. The commercial implications of the arms trade, and consideration of the 'cost of going to war' is also worrisome.

I looked forward to the third section, which covers the new technologies: the development of 'network goods' like the telephone, which require a critical mass of users to have value; the impact of standards; the experience of 'Dot-Bombs' and the unusual characteristics of businesses on the net, such as a common lack of physical product. The author quotes economist Herbert Simon on the information overload problem: 'A wealth of information creates a poverty of attention.' She also covers the 'creative destruction' of the current shift from manufacturing to service industries and government policies that might equip people to cope with job changes.

The fourth section is on Globalization: global diseases and the possibility of funding vaccine development via international government guaranteed payment for success; sweatshops and the need to stop child labor but not simply by stopping jobs; immigration and the cultural value of diversity; a discussion of whether the 'demographic time bomb' will ever explode; and a recognition of the failure of a spate of fashions in policies to aid the development of poorer countries.

The book concludes with a section on Macroeconomics, 'how economies work at the aggregate level', forecasting of which the author compares to forecasting the weather. Topics include the 90s slump in Japan, management of inflation, seasonal effects and the implications of defense spending. The author tells us that economics is 'about why and how people make choices'; debunks common sense economics and explains why many economic truths are counterintuitive; emphasizes intelligent skepticism; and gives examples of the payoff of applied microeconomics.

Sex, Drugs & Economics is accessible to non-experts, though you do need to keep your brain in gear to read and understand it. The author has convinced me both of the complexity of the topic and of its relevance to our lives and those of our children. If you want to understand the subject better, I recommend this as an excellent introduction.

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