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An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk
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An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk

3.58  ·  Rating details ·  1,262 ratings  ·  169 reviews
A Financial Times Book of the Month pick for April!

Is it worth swimming in shark-infested waters to surf a 50-foot, career-record wave?

Is it riskier to make an action movie or a horror movie?

Should sex workers forfeit 50 percent of their income for added security or take a chance and keep the extra money?

Most people wouldn't expect an economist to have an answer to t
Hardcover, 240 pages
Published April 2nd 2019 by Portfolio
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I took a risk on purchasing this book. I hedged against this purchase by using a discount coupon to offset the price. Based on my reading of the book and what I got out of it, I may have broken even on my investment of time and money. Some good anecdotes and basic advice but I was expecting a bit more...
Tim Jin
Apr 04, 2019 rated it really liked it
I was listening to the Indicator on NPR and they were interviewing Allison Schrager who is an economist and who wrote this book, "An Economist Walks into a Brothel". I have many interests and economics is one of them. Unfortunately, this book won't make it to the best seller and I won't be surprised if I'm the only reviewer.

The information presented in the book is basic and logical to understand. Anyone who grabs this book should understand clearly the basic on economics. Instead of having to b
Ronald J.
We need to take risks to make our lives better. In the 16th century, people started to think about risk as something controllable, not left to fate. Once risk is measured it can bought or sold. No institution spends more time and energy on risk planning than the military. Risk, a Greek seafaring term, rhizikón, a dangerous hazard. The Middle High German word rysigo means, “to dare, to undertake, enterprise, hope for economic success.” Financial economics assumes risk is a critical component of v ...more
Jun 01, 2019 rated it it was ok
Quite simply this book is bad. The writing is unclear, the examples poorly explained, definitions sparse, and call backs poorly integrated. It feels like the author found three or four examples they wished to use and kind of relied on them for everything. When an example was used to explain a phenomenon, the tie wasn't obvious. Some of this could have been improved by clearer writing and some of this could have been improved by spending more time to talk through the logic. For instance, the firs ...more
Dec 19, 2019 rated it really liked it
This is a book by a non-academic economist that explains the core ideas of financial economics in terms of non-financial activities, jobs, and recreations that are done by real people but which all involve extraordinary amounts of risk and uncertainty. The initial story line about brothels is a nice touch that gets the author’s points across well. Other vignettes in later chapters cover such different topics as turning around Cinnabon, planning for your trip to the airport, breeding champion rac ...more
Frank Stein
Nov 09, 2019 rated it liked it
This book is best read as a primer on basic risk and reward analysis in economics. Most concepts, like the diversification of risk, the difference between systematic and idiosyncratic risk, the difference between hedging and insurance, will not be surprising to even those reading regular business news, but the treat here is the little stories Schrager tells to illustrate these ideas.

Schrager shows how brothels pay their women less money, almost 50% less, than those women would earn on the stree
Henry Manampiring
Aug 11, 2019 rated it liked it
This is a good INTRODUCTORY book on risk through finance world lens. Still recommend this for most layman, but not to advanced finance practitioners, unless they want to refresh their fundamentals.
Apr 19, 2020 rated it really liked it
In "An Economist Walks into a Brothel," Allison Schrager demonstrates through real life examples how an understanding of different types of risk and risk management strategies can help people make better decisions. Each chapter opens with a profile of someone whose work involves some form of risk (professional poker player, prostitute, celebrity photographer, etc.) and that interview is a launching point for discussion. This format works well, as it makes the concepts easy to understand for some ...more
Jun 30, 2020 rated it really liked it
This book struck a nice balance between giving an accessible survey of risk management science and sharing insightful, entertaining, real-world examples to demonstrate the principles of risk management at work. It’s ultimately an unabashed endorsement of risk management models (with a reminder to never forget that they don’t capture unknown unknowns), so don’t come looking for any philosophical reflections on the possible downsides to widespread financial thinking. But if you want a breezy, reas ...more
Hal Carim
Apr 23, 2020 rated it really liked it
Shelves: 2020
Allison Schrager with her PhD in Economics, rather than taking it down the academic track, trained under Nobel laureate Robert Merton and with her great journalistic skills wrote this entertaining and fascinating book on the application of the cardinal principles of Risk and Reward (as it is normally used with all its math methodology in the Financial sector) to see how the concept works out for a sex worker at the Bunny Ranch, thoroughbred stud breeders in Kentucky, Big Wave surfers, Poker Play ...more
Jim Kucharczyk
Jul 08, 2020 rated it really liked it  ·  review of another edition
Entertaining read, the author explains and evaluates risk from unusual (she had me at the title) perspectives and explores different risk mitigation strategies. A light, high-level read, certainly not a textbook but provides some insight. Upside with little-to-no downside.
Sep 07, 2020 rated it liked it
For a book about "understanding the science behind risk", Schrager spends surprisingly little time talking about "how to define risk, how to measure it, how to identify the type of risk we face, and how to manage it." Instead we're left with interesting anecdotes and a rushed discussions of the theory that ultimately offers nothing new to those with even a passing familiarity of probability and behavioural economics.
Raz Pirata
“We need to take risks to make our lives better, we must gamble to get what we want”

Alison Schrager is my kind of risk taker. With a PhD in economics from Columbia, the NYU professor is not your stereotypical academic. Oh no my friends, Dr Schrager is as likely to be found in the lecture hall as she is to be hanging out with big wave surfers, magicians, poker players and prostitutes. This is my kind of fun.

In An Economist Walks Into a Brothel we are treated to the most entertaining and useful le
Marilyn Shea
Jun 15, 2019 rated it liked it
This book introduces the reader to risk in many diverse professions including sex work, surfing, making films in Hollywood and planning military campaigns in war. In short, risk is unavoidable in all aspects of life, so considering the psychology of risk can help us take smart risks that feel comfortable to us. We learn that the legalization of sex work, for example, reduces risk both for the sex worker and the client and may be worth the increase in price for services as a kind of insurance for ...more
Jul 08, 2019 rated it really liked it
This little book is actually about risk and not the economics of brothels, and I wish it’s title could have been clearer.

1. Legal brothel workers pay a lot (half their earnings) to the owner for protection against potentially dangerous customers (beating, murder), and they are escorted home.
2. Diversification (buying many different stocks) reduces idiosyncratic risk but not systemic risk. It also reduces the potential upside.
3. Hedging (buying things that move in different directions) reduces
Marc Gerstein
May 11, 2019 rated it it was amazing  ·  review of another edition
Shelves: non-fiction
A very engaging presentation of an important, complex, and under-taught concept.

The book seems targeted at those who are not financial professionals and I think it hits the mark nicely, by avoiding dry formulations and presenting things in very human relatable ways. We get a bit of financial risk management, but a lot on risk management in other walks of life, such as sex work, race horse breeding, being a paparazzi, etc.

As a financial professional though I think it’s also valuable on this leve
Joao Carlos
May 10, 2019 rated it really liked it
More advanced readers may find find a bit too simplistic. However, I found it quite a good book for the general non-financialy educated public. Alison has the capacity to simplify the financial aspects of risk, hedge and security into a more everyday life sort of situations.
Above all, the lessons of the book should be well known by the broader public, however they aren't. This book works well as a first step towards it.
More experienced readers might also enjoy some of the topics covered due to A
Feb 23, 2020 rated it really liked it
Good book for readers who are new to risk management in finance and financial tools like hedging, insurance, securities, et cetera. But I am sure, for people of the field, this book might sound as that for beginners. What I liked about Allison, is her simple definitions of the crude terms with real life examples that an amateur can relate to , how easy she makes the complex definitions to understand with ease. I would like to rate this book as 3.5, however in absence of this option, I will be ge ...more
Jan 13, 2020 rated it liked it  ·  review of another edition
Yet another popular economics book, this time from a retirement/risk person. Unfortunately this tries to push an analogy (financial economics and risk) into areas where it makes no sense, and the author picks pathologically bad examples almost always (i.e. when trying to describe increased range, always picks things which just expand in the downside risk, also shifting the median and mean, rather than just showing increased variance).
May 06, 2019 rated it liked it
It's an okay economic book. Some of the stories/analogies are interesting, but not as good as similar books.

If your a hardcore economics/business junky check it out, otherwise I would recommend one of the Freakonomics books if you haven't read them.
May 21, 2019 rated it really liked it
An entertaining read on risk assessment as it pertains to all areas of life. It required my full concentration, but it was interesting to see the applications and lessons drawn from big-wave surfers, war generals, paparazzi, and magicians.
Magdalene Choong
Jun 02, 2019 rated it it was ok
Author tries too hard to reconcile supposed risks found in brothel, military, movie, surfing etc with financial risk concepts. Interesting snippets but otherwise does nothing to increase understanding/management of risks.
Sep 05, 2019 rated it liked it
Shelves: non-fiction
Main idea of the book is worth thinking about: how to use risk measurement in daily life. But it's a long explanation of this sentence. Most of it is trivial. Idea of "risk-free" way of getting to the goal was interesting.
Jul 10, 2019 rated it it was ok
Shelves: economics
I had high hopes for this book, that it would define and discuss risk in everyday situations. But it was rather poorly written and superficial.
Sep 12, 2020 rated it really liked it  ·  review of another edition
I honestly found this book more interesting and useful than I expected - having expected this to be a series of Planet Money style anecdotes which were mildly entertaining, Schrager has actually achieved much more. Yes there is the anecdote involving a brothel proprietor and prostitute that the title alludes to, but Schrager also succeeds in making economic and finance jargon relateable and (I dare say) useful to the reader. Along the way, there are also some great interviews with really interes ...more
Apr 18, 2020 rated it it was amazing
TL;DR: Exceptionally written and easily digestible book especially for those who aren't too familiar with economics. Writing a book this easy to read and successful at illustrating economic concepts is challenging and difficult to pull off. Schrager successfully does this. I'd recommend this to anyone who wants to learn a little bit about risk and reward.

I bought this book around a year ago when Schrager was a guest on a either an episode of Planet Money or The Indicator, and I have almost star
Apr 28, 2020 added it
At the end of the day, the rationale behind every risk we take is always the same: the price of achieving our goal without risk is just too high

Past results are a poor way of calculating future risk.

The ways we perceive risk are not always entirely rational.
And when we make a decision, utility often matters more than actual value.

Diversification helps reduce unnecessary risk.
Diversification is just a fancy way of saying, “Don’t put all your eggs in one basket.”
But diversification has its downsi
May 03, 2020 rated it liked it
Love the idea of understanding risk in new ways. Was engrossed by the little details of each profession she goes into (who knew that horses got paid that much to **** one another?). However, it felt like that each new chapter contradicted the last one. In one she espouses the virtues of hedging, in another the virtues of risk taking. That said, I think a closer examination would reveal that these aren't contradictions, but rather nuances. My biggest take away is this system for taking risks.
Jennifer Jarboe
May 02, 2020 rated it really liked it
As a risk-averse person, I really enjoyed the thesis of the book - which is that you can be smart about how you take risk and that there are ways to maximize your likelihood of success. Intuitively, this is simple, but this book really brought that idea to life through colorful examples that spanned surfing, cruise ships, poker, and more.

Schraeger did an excellent job describing simply the basic tenets of risk measurement and mitigation - made memorable through her interesting examples. This bo
Apr 21, 2020 rated it it was amazing
This is a subject matter and style of book I wouldn't normally pick up but with the unexpected free time many have due to everything happening in the world with quarantine, I figured it was a chance to step outside of my typical reads. I have to say that I wasn't at all disappointed with my pick of this book and found myself loving each chapter a little more.

The insight into risk management through the lens of different people and industries was so interesting and enlightening. It explained hum
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You know the saying: There's no time like the present...unless you're looking for a distraction from the current moment. In that case, we can't...
42 likes · 19 comments
“Only those who will risk going too far can possibly find out how far one can go. —T. S. ELIOT” 1 likes
“Unusual markets often provide the clearest insight into how risk is assessed, bought, and sold. Because nothing is hidden in markets like sex work, the subtleties that exist in all markets are made obvious. This is why we can learn the most by studying how business is conducted at the edges of the economy and apply that knowledge to more typical economic transactions.” 1 likes
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