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為什麼最便宜的機票不要買？：經濟學家教你降低生活中每件事的風險，做出最好的選擇
艾莉森．薛格（Allison Schrager）的職業生涯都在研究人們如何管理生活中的風險。她走出股票市場及其他金融機構，與讀者分享她所遇見的真實（但往往很奇特的）生活場景，以及從中學習到關於風險的二三事。
不管有沒有意識到，我們每天都在冒著大大小小的風險，即使是最小心的人，也無法自外於此——問題根本不在於要不要冒險，而在於要承擔哪一種風險。我們大多不知道如何衡量這些風險、如何讓我們生活美夢成真的機會達到最大。
在這本書中，薛格提供讀者五個原則，作為因應風險的利器，這些原則取自於世界上最有趣的冒險家的經歷，例如：
▎一個曼哈頓的狗仔隊，在努力拍攝能賺到龐大收益的鏡頭時，應用「不入虎穴，焉得虎子」的原則。
▎一個職業撲克賽冠軍在賭注變高時，會提醒自己：「我知道我並不理性。」
▎肯塔基州的一個養馬人，靠著讓配種馬匹的類型多樣化，使損失降到最低，從冒險投資中賺到最大的利潤。
▎一個夏威夷的衝浪客精熟自己的領域，不但降低面臨的風險，也仍能站上浪頭，馳騁於五十呎高的浪上。
▎一位在伊拉克帶兵的將軍，知道天有不測風雲，為他所無法預見之事未雨綢繆。
一旦你能透過薛格的新架構來檢視風險決定，便能提高任何情境下的潛在好處，並且更有效地緩解不利影響。
不管有沒有意識到，我們每天都在冒著大大小小的風險，即使是最小心的人，也無法自外於此——問題根本不在於要不要冒險，而在於要承擔哪一種風險。我們大多不知道如何衡量這些風險、如何讓我們生活美夢成真的機會達到最大。
在這本書中，薛格提供讀者五個原則，作為因應風險的利器，這些原則取自於世界上最有趣的冒險家的經歷，例如：
▎一個曼哈頓的狗仔隊，在努力拍攝能賺到龐大收益的鏡頭時，應用「不入虎穴，焉得虎子」的原則。
▎一個職業撲克賽冠軍在賭注變高時，會提醒自己：「我知道我並不理性。」
▎肯塔基州的一個養馬人，靠著讓配種馬匹的類型多樣化，使損失降到最低，從冒險投資中賺到最大的利潤。
▎一個夏威夷的衝浪客精熟自己的領域，不但降低面臨的風險，也仍能站上浪頭，馳騁於五十呎高的浪上。
▎一位在伊拉克帶兵的將軍，知道天有不測風雲，為他所無法預見之事未雨綢繆。
一旦你能透過薛格的新架構來檢視風險決定，便能提高任何情境下的潛在好處，並且更有效地緩解不利影響。
150 pages, Kindle Edition
First published January 1, 2019
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Displaying 1 - 30 of 258 reviews
April 17, 2019
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...
June 1, 2019
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 first section of the book is on the risk premium sex workers pay to work in managed brothels. The author then explains how that compares to illegal markets for sex and drugs and how the difference in price provides information on supply, demand, and safety. This section could have used a few more examples rather than just leaning on sex work.
The book then talks about options but brings in Black-Scholes-Merton which needlessly complications the discussion of options. The types of options are simply mentioned with one sentence and two sentence explanations with few examples. BSM shouldn't be introduced for a number of reasons but given that it's going to be brought up, flesh it out. The book also talks about general risk strategies but doesn't provide enough examples to apply to life then introduces risk homeostatis to imply that it's all useless anyway.
I strongly preferred Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts which was focused, loaded with examples, and very readable.
The book then talks about options but brings in Black-Scholes-Merton which needlessly complications the discussion of options. The types of options are simply mentioned with one sentence and two sentence explanations with few examples. BSM shouldn't be introduced for a number of reasons but given that it's going to be brought up, flesh it out. The book also talks about general risk strategies but doesn't provide enough examples to apply to life then introduces risk homeostatis to imply that it's all useless anyway.
I strongly preferred Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts which was focused, loaded with examples, and very readable.
April 5, 2019
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 buy this informational book, I would like to see it in the public domain so that it will reach more readers.
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 buy this informational book, I would like to see it in the public domain so that it will reach more readers.
April 14, 2019
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 value.
It was interesting to read about how risk is dealt with among brothels, movie studios, the paparazzi, poker champions, criminals, race horse breeders, magicians, big wave surfers, and the military. No risk, no reward (risk is the input, reward is the output). The most important thing to figure out is what you want. As Goethe wrote, "The dangers of life are infinite, and among them is safety." The author lists the following questions to help you determine what you want:
1. What is your ultimate goal? If you achieve it, what does that look like?
2. How can you achieve your goal with no risk at all, or as little risk as possible?
3. Is that no-risk option possible or desirable? If not, how much risk do you need to take to get what you want?
Some interesting facts: 53% of movies don’t earn back production costs at the box office.
Idiosyncratic risk—the risk unique to a particular asset (Your Apple stock might go down). Diversify.
Systemic risk: affects the larger system, entire market crashes.
Secretariat’s heart was 21 pounds but that doesn’t translate into speed unless it meshes with the horse’s other features. Simply translating a bigger heart into another horse is like putting a Ferrari engine in a Subaru.
"Fun is like life insurance; the older you get, the more it costs." Frank Mckinney Hubbard, American Cartoonist
An interesting read on a great topic. I'd also recommend Against the Gods by Peter Bernstein, reviewed herein.
It was interesting to read about how risk is dealt with among brothels, movie studios, the paparazzi, poker champions, criminals, race horse breeders, magicians, big wave surfers, and the military. No risk, no reward (risk is the input, reward is the output). The most important thing to figure out is what you want. As Goethe wrote, "The dangers of life are infinite, and among them is safety." The author lists the following questions to help you determine what you want:
1. What is your ultimate goal? If you achieve it, what does that look like?
2. How can you achieve your goal with no risk at all, or as little risk as possible?
3. Is that no-risk option possible or desirable? If not, how much risk do you need to take to get what you want?
Some interesting facts: 53% of movies don’t earn back production costs at the box office.
Idiosyncratic risk—the risk unique to a particular asset (Your Apple stock might go down). Diversify.
Systemic risk: affects the larger system, entire market crashes.
Secretariat’s heart was 21 pounds but that doesn’t translate into speed unless it meshes with the horse’s other features. Simply translating a bigger heart into another horse is like putting a Ferrari engine in a Subaru.
"Fun is like life insurance; the older you get, the more it costs." Frank Mckinney Hubbard, American Cartoonist
An interesting read on a great topic. I'd also recommend Against the Gods by Peter Bernstein, reviewed herein.
November 10, 2019
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 streets, but these women trade off the income for risk reduction. The johns pay more for the safe experience though (up to 300% more, partially because both them and the women are affected by tax rates, which cuts wages and raises prices). She shows how horse-raising encourages high-risk, high-reward studs like War Front, who got $250,000 a mating session, or almost $25 million a year, even though the market leads to many failures and mass in-breeding (almost all thoroughbreds are descended from a single male in the early 1700s, the Darley Arabian. Another stud in the 1980s, Northern Dancer, sired most all of the next generation). She explains why paparazzi like Santiago Baez tried to organize "photogs" in the gold-rush era of the early 2000s, with each taking some percentage of the high-income photographs, but she also explains why incentives led most of these photogs to cheat and why the alliances fell apart.
So there are some interesting journalistic exposes here, but don't expect anything that surprising.
Schrager shows how brothels pay their women less money, almost 50% less, than those women would earn on the streets, but these women trade off the income for risk reduction. The johns pay more for the safe experience though (up to 300% more, partially because both them and the women are affected by tax rates, which cuts wages and raises prices). She shows how horse-raising encourages high-risk, high-reward studs like War Front, who got $250,000 a mating session, or almost $25 million a year, even though the market leads to many failures and mass in-breeding (almost all thoroughbreds are descended from a single male in the early 1700s, the Darley Arabian. Another stud in the 1980s, Northern Dancer, sired most all of the next generation). She explains why paparazzi like Santiago Baez tried to organize "photogs" in the gold-rush era of the early 2000s, with each taking some percentage of the high-income photographs, but she also explains why incentives led most of these photogs to cheat and why the alliances fell apart.
So there are some interesting journalistic exposes here, but don't expect anything that surprising.
February 8, 2023
Schrager walks the reader through the risk management techniques used in a number of NON-WALL-ST industries: surfing, horse breeding, World Series of Poker, music royalty contracts, and (yes) licit and illicit sex work. The book has such a clever and attention-getting title, but spends only one chapter really focused on brothel stuff. As you read, take a shot when you get to Richard Thaler, Tversky and Kahneman. I read this all weekend at Priya’s parent’s house and her mom asked me what I was reading :)
August 15, 2021
這本書是在講風險管控。這本書的特點就是用了很多生動的例子來講風險管控，而且這些案例很多都是作者親自訪問的，像是拜訪妓院經營人還有妓女、講述現行好萊屋拍攝電影的籌資方式、純種馬配種策略、狗仔跟拍、魔術師(原來魔術師其實失手也不少見，但要懂得臨場利用一些技巧來蓋過)、極限運動巨浪衝浪手。
我最喜歡的是第10章(保險是有簽約的魔術—令人歎為觀止的股票選擇權)，選擇權介紹得蠻淺顯易懂的。最後在第12章(不確定性─管理你能想到的風險，對意外保持彈性)這裡有提到，風險評估判斷絕對不可能完美，但這也不是我們放棄風險管理的理由。「大家很喜歡記得是誰看到危機將近，誰又沒看到。不過這也是面對不確定性的錯誤態度。沒有人能一直做出正確預測，幾乎每一個「料準」金融危機的人，之後的預測也錯了好幾次。」對於過度妄想完美，身上瀰漫著失敗主義的人，一起加油XD。
最後這本書不知道是翻譯還是作者文筆緣故，感覺讀起來有點生硬。有時候出現一些經濟學、金融商品名詞，我覺得作者沒做太多解釋。作者的論述思路有些我也覺得有點跳躍，但故事案例還是很有趣，作為風險管控的入門書還不錯。
我最喜歡的是第10章(保險是有簽約的魔術—令人歎為觀止的股票選擇權)，選擇權介紹得蠻淺顯易懂的。最後在第12章(不確定性─管理你能想到的風險，對意外保持彈性)這裡有提到，風險評估判斷絕對不可能完美，但這也不是我們放棄風險管理的理由。「大家很喜歡記得是誰看到危機將近，誰又沒看到。不過這也是面對不確定性的錯誤態度。沒有人能一直做出正確預測，幾乎每一個「料準」金融危機的人，之後的預測也錯了好幾次。」對於過度妄想完美，身上瀰漫著失敗主義的人，一起加油XD。
最後這本書不知道是翻譯還是作者文筆緣故，感覺讀起來有點生硬。有時候出現一些經濟學、金融商品名詞，我覺得作者沒做太多解釋。作者的論述思路有些我也覺得有點跳躍，但故事案例還是很有趣，作為風險管控的入門書還不錯。
March 30, 2022
La idea del libro es buenísima: encontrar ejemplos de la vida real que nos ayuden a ilustrar conceptos de riesgo financiero y viceversa. Y empieza bien, con la distinción entre riesgo, que puedes conocer, medir e incluso desear, e incertidumbre (si estás apostando a lo que salga en un dado tienes riesgo, si te internas con tu tanque en líneas enemigas además tienes incertidumbre, los famosos unknown unknowns).
El problema es que la autora, que quiere que sepamos que ha viajado y hablado con gente como parte de las tareas del libro y nos cuenta cosas absurdas como el ambiente de la cafetería en la que se entrevista con un par de surferos en un congreso sobre "riesgo en el surf", la autora, como digo, no tiene medida a la hora de contarnos los casos de la vida real que va a usar como ejemplo. Verbigracia: Los paparazzi tienen una fuente de ingresos muy irregular, que depende de que la gente a la que siguen haga algo interesante/vendible o no. Puede que en una semana dada no pase nada. Si se juntan 10 paparazzi en un pool, es mucho más probable que al menos varios de los 10 consigan sacar alguna foto vendible cada semana, y ese dinero más regular se reparte entre todos. Pasa lo mismo, y esto es mío, cuando en vez de minar bitcoin por separado nos apuntamos a un pool de máquinas que reparte proporcionalmente a los ciclos de CPU que aportamos al pool. Pero al hablar de este pool nos tenemos que comer veintitantas páginas sobre la vida de los paparazzi. Otros temas sobre los que la autora diserta incesantemente antes de hacer su pequeña analogía con las finanzas son las carreras de caballos, la predecibilidad del éxito en taquilla de las pelis de Hollywood, el surf de olas gigantes, el mundo de los sementales equinos, la Guerra del Golfo y los torneos de póker. Que son temas a priori interesantes pero cuando llevas media hora oyendo hablar de sementales y su valor en el mercado dices ¿de qué era este libro, que se me ha olvidado? Solo al final de cada tema te dice "pues esto es como una opción call". Y ahí está su símil. Mucho menos trabajado que las veinte páginas de construcción de la metáfora. El estilo de la autora y sus diatribas te sacan completamente de los conceptos fundamentales que quiere transmitir.
En resumen, buena idea, peor ejecución. Dos estrellas y media que redondeo para abajo.
El problema es que la autora, que quiere que sepamos que ha viajado y hablado con gente como parte de las tareas del libro y nos cuenta cosas absurdas como el ambiente de la cafetería en la que se entrevista con un par de surferos en un congreso sobre "riesgo en el surf", la autora, como digo, no tiene medida a la hora de contarnos los casos de la vida real que va a usar como ejemplo. Verbigracia: Los paparazzi tienen una fuente de ingresos muy irregular, que depende de que la gente a la que siguen haga algo interesante/vendible o no. Puede que en una semana dada no pase nada. Si se juntan 10 paparazzi en un pool, es mucho más probable que al menos varios de los 10 consigan sacar alguna foto vendible cada semana, y ese dinero más regular se reparte entre todos. Pasa lo mismo, y esto es mío, cuando en vez de minar bitcoin por separado nos apuntamos a un pool de máquinas que reparte proporcionalmente a los ciclos de CPU que aportamos al pool. Pero al hablar de este pool nos tenemos que comer veintitantas páginas sobre la vida de los paparazzi. Otros temas sobre los que la autora diserta incesantemente antes de hacer su pequeña analogía con las finanzas son las carreras de caballos, la predecibilidad del éxito en taquilla de las pelis de Hollywood, el surf de olas gigantes, el mundo de los sementales equinos, la Guerra del Golfo y los torneos de póker. Que son temas a priori interesantes pero cuando llevas media hora oyendo hablar de sementales y su valor en el mercado dices ¿de qué era este libro, que se me ha olvidado? Solo al final de cada tema te dice "pues esto es como una opción call". Y ahí está su símil. Mucho menos trabajado que las veinte páginas de construcción de la metáfora. El estilo de la autora y sus diatribas te sacan completamente de los conceptos fundamentales que quiere transmitir.
En resumen, buena idea, peor ejecución. Dos estrellas y media que redondeo para abajo.
December 22, 2023
English / عربي
The book by Allison Schrager, An Economist Walks into a Brothel, explores how practical life experiences from various fields such as cinema, sports, entertainment, and the military can be used to understand different types of risks and how to deal with them. It draws on the principles of economics, psychology, and sociology, quoting real-life experiences and situations of various individuals. The author analyzes the skills used to make decisions and manage risks in unexpected and non-traditional circumstances. She demonstrates how economic principles can be applied to these skills.
In general, the author attempts to redefine risk assessment for the reader, teaching them how to deal with risks and make sound decisions in a world full of variables and uncertainties. She also aims to redefine the term "risk" and make it more relatable to the reader by offering a new perspective on risks and their consequences, both negative and positive, for a more successful and stable personal and professional life.
Although the choice of the book's title may seem like a simplistic marketing move, it actually contains numerous practical examples and insights into understanding risks and the economic terms related to them. My overall rating for the book is 3/5, and I recommend reading it.
يتحدث كتاب أليسون شراغر , عالم اقتصادي يدخل ماخور لفهم المخاطر , عن كيفية استخدام الحياة العملية من مجالات مختلفة ( السينما والرياضية والترفيه
والجيش ) لفهم ��نواع مختلفة من المخاطر والتعامل معها وذلك بالاستناد إلى علم الاقتصاد والنفس والاجتماع , ويقتبس تجارب حياتية ومواقف واقعية لأشخاص عدة و يحلل المهارات التي استخدمت من أجل صنع القرار وإدارة المخاطر في ظروف غير متوقعة وغير تقليدية و كيف يمكن تطبيق المبادئ الاقتصادية على تلك المهارات , بصورة عامة تحاول الكاتبة ان تعيد تعريف تقييم المخاطر لدى القارئ وتعلمه كيفية التعامل معها و اتخاذ القرارات الصائبة في عالم فيه متغيرات كثيرة و مليء بالمخاطر , كما انها تحاول ان تعيد تعريف مصطلح " المخاطرة " وتحاول ان تقربه للقارئ عبر تقديم منظور جديد للمخاطر والنتائج ( السلبية والايجابية ) من أجل حياة شخصية ومهنية أكثر نجاحاً واستقراراً , اختيار الكاتبة للعنوان كان تسويقياً بصورة مبتذلة قد يتراءى للقارئ انه كتاب دون المستوى , لكنه في الحقيقة يحوي العديد من الأمثلة الجيدة و العملية حول فهم المخاطر والمصطلحات الاقتصادية المتعلقة بها , تقيمي العام للكتاب 3/5 و أنصح بقراءته .
The book by Allison Schrager, An Economist Walks into a Brothel, explores how practical life experiences from various fields such as cinema, sports, entertainment, and the military can be used to understand different types of risks and how to deal with them. It draws on the principles of economics, psychology, and sociology, quoting real-life experiences and situations of various individuals. The author analyzes the skills used to make decisions and manage risks in unexpected and non-traditional circumstances. She demonstrates how economic principles can be applied to these skills.
In general, the author attempts to redefine risk assessment for the reader, teaching them how to deal with risks and make sound decisions in a world full of variables and uncertainties. She also aims to redefine the term "risk" and make it more relatable to the reader by offering a new perspective on risks and their consequences, both negative and positive, for a more successful and stable personal and professional life.
Although the choice of the book's title may seem like a simplistic marketing move, it actually contains numerous practical examples and insights into understanding risks and the economic terms related to them. My overall rating for the book is 3/5, and I recommend reading it.
يتحدث كتاب أليسون شراغر , عالم اقتصادي يدخل ماخور لفهم المخاطر , عن كيفية استخدام الحياة العملية من مجالات مختلفة ( السينما والرياضية والترفيه
والجيش ) لفهم ��نواع مختلفة من المخاطر والتعامل معها وذلك بالاستناد إلى علم الاقتصاد والنفس والاجتماع , ويقتبس تجارب حياتية ومواقف واقعية لأشخاص عدة و يحلل المهارات التي استخدمت من أجل صنع القرار وإدارة المخاطر في ظروف غير متوقعة وغير تقليدية و كيف يمكن تطبيق المبادئ الاقتصادية على تلك المهارات , بصورة عامة تحاول الكاتبة ان تعيد تعريف تقييم المخاطر لدى القارئ وتعلمه كيفية التعامل معها و اتخاذ القرارات الصائبة في عالم فيه متغيرات كثيرة و مليء بالمخاطر , كما انها تحاول ان تعيد تعريف مصطلح " المخاطرة " وتحاول ان تقربه للقارئ عبر تقديم منظور جديد للمخاطر والنتائج ( السلبية والايجابية ) من أجل حياة شخصية ومهنية أكثر نجاحاً واستقراراً , اختيار الكاتبة للعنوان كان تسويقياً بصورة مبتذلة قد يتراءى للقارئ انه كتاب دون المستوى , لكنه في الحقيقة يحوي العديد من الأمثلة الجيدة و العملية حول فهم المخاطر والمصطلحات الاقتصادية المتعلقة بها , تقيمي العام للكتاب 3/5 و أنصح بقراءته .
December 20, 2019
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 racehorses, investing in new blockbuster movies, planning your magic show, big wave surfing, and fighting the Iraqi army in the first Gulf War. In addition to this fun, risk ideas are also discussed in terms of financial economics and personal retirement planning.
The intuition for all of these is to link risk to the process of figuring out what one wishes to do and then thinking through the details and what needs to occur (or not occur) for plans to be realized. This all makes good sense but it is surprising how infrequently financial economic terms are presented in contexts that seem divorced from the regular choices people have to make and follow through upon everyday and over the course of a lifetime.
The book is thoughtful and even though I was familiar with much of the material, I finished the book with a sense that I had learned something, and enjoyed myself in the process.
The intuition for all of these is to link risk to the process of figuring out what one wishes to do and then thinking through the details and what needs to occur (or not occur) for plans to be realized. This all makes good sense but it is surprising how infrequently financial economic terms are presented in contexts that seem divorced from the regular choices people have to make and follow through upon everyday and over the course of a lifetime.
The book is thoughtful and even though I was familiar with much of the material, I finished the book with a sense that I had learned something, and enjoyed myself in the process.
April 19, 2020
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 someone without a background in economics.
This book came out a year ago this month, but reads like it was written in a much different time. The intro talks about how this is a wonderful time to be alive as there are no major short terms threats to the human race, and the economy is booming. Fast forward to a year later when COVID-19 changed all that. It is also amusing that one of success stories featured in one of the chapter is the CEO of Carnival Cruises.
The author took a risk when writing this book that life would be the same a year later. This serves to illustrate one of her points: when discussing risk, there is always a chance that the unlikely will happen.
This book came out a year ago this month, but reads like it was written in a much different time. The intro talks about how this is a wonderful time to be alive as there are no major short terms threats to the human race, and the economy is booming. Fast forward to a year later when COVID-19 changed all that. It is also amusing that one of success stories featured in one of the chapter is the CEO of Carnival Cruises.
The author took a risk when writing this book that life would be the same a year later. This serves to illustrate one of her points: when discussing risk, there is always a chance that the unlikely will happen.
August 11, 2019
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.
March 8, 2023
Schrager's book is a good introduction into risk theory. She uses some exceptional examples to illustrate the basic principles. For example, why would sex workers prefer to be in brothel rather than working with a pimp? The immediate discount for their services is higher in the brothel but as Schrager explains the risk tradeoff is ultimately positive - fewer negatives even if it costs some dough. Her other examples point out that we face decisions about risk in all aspects of life and learning how to analyze which risks we should cover and which risks we shouldn't is critical.
There are points in her discussion of the financial markets where I think she is a bit off - but these are differences in nuance not substance. For example she suggests that diversification of financial assets in the securities markets is a linear function. All of the research I have read suggests that the benefits of diversification are satisfied for an individual investor at 30 positions. She also seems to endorse using annuities to respond to the risks of retirement - that depends a lot on the initial load for the product and the underlying assumptions about inflation. In general I am not a fan of annuities because the insurance companies structure the deal a bit in their favor.
Aaron Wildavsky wrote a generalized book on risk theory (Searching for Safety) which I also think is very good. But whichever text you choose - this is an area where everyone should have a basic knowledge of the concepts and Schrager's book adds to the resources for people interested in this area.
There are points in her discussion of the financial markets where I think she is a bit off - but these are differences in nuance not substance. For example she suggests that diversification of financial assets in the securities markets is a linear function. All of the research I have read suggests that the benefits of diversification are satisfied for an individual investor at 30 positions. She also seems to endorse using annuities to respond to the risks of retirement - that depends a lot on the initial load for the product and the underlying assumptions about inflation. In general I am not a fan of annuities because the insurance companies structure the deal a bit in their favor.
Aaron Wildavsky wrote a generalized book on risk theory (Searching for Safety) which I also think is very good. But whichever text you choose - this is an area where everyone should have a basic knowledge of the concepts and Schrager's book adds to the resources for people interested in this area.
July 1, 2020
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, reasonably thought-provoking tour, this is a good place to start.
November 29, 2020
АНУ -д биеэ үнэлэлтийг хуулиар хүлээн зөвшөөрсөн цорын ганц муж болох Невадад байх нэгэн эмсийн хүрээлэнгээс энэхүү ном эхэлнэ. Аль ч хөгжингүй эсвэл бурангуй соёл иргэншлийг сүүдэр мэт дагаж байдаг энэ мэргэшил өөрөө маш их эрсдэлтэй. Наанадаж бусдын хүчинд автахаас өгсүүлээд өвчин зовлон, үхэл ч биеэ үнэлэгчдийг хүлээж байх нь олонтой.
Тэгвэл тэр бүх эрсдэлээс хамгаалагдсан орчинд орлогынхоо тэн хагасыг тушаагаад ажилладаг хүмүүс Невадад байх аж. Эрсдэл, орлого, гарз зэрэг ойлголтуудыг санхүүгийн хуурай үгсээр биш иймэрхүү өвөрмөц газар, ажил мэргэшлүүдээр дамжуулан ойлгуулахыг хичээжээ.
Тэгвэл тэр бүх эрсдэлээс хамгаалагдсан орчинд орлогынхоо тэн хагасыг тушаагаад ажилладаг хүмүүс Невадад байх аж. Эрсдэл, орлого, гарз зэрэг ойлголтуудыг санхүүгийн хуурай үгсээр биш иймэрхүү өвөрмөц газар, ажил мэргэшлүүдээр дамжуулан ойлгуулахыг хичээжээ.
July 5, 2023
Excelente abordagem sobre risco financeiro de uma forma simplificada e acessível a todos.
Alguns momentos no livro acabam por ser demasiado descritivos sem acrescentar valor.
A aplicação de conceitos financeiros no dia-a-dia é uma forma excelente de explicar conceitos complexos como cobertura de risco ou produtos derivados como opções de compra ou venda.
Alguns momentos no livro acabam por ser demasiado descritivos sem acrescentar valor.
A aplicação de conceitos financeiros no dia-a-dia é uma forma excelente de explicar conceitos complexos como cobertura de risco ou produtos derivados como opções de compra ou venda.
January 12, 2025
Some interesting stories and insights, but it is generally a fairly basic introduction to concepts of risk in life and finance. If you have read widely on risk, you will not learn much from this book. The examples and case studies are interesting, but I guess as a devoted reader of Taleb I have pretty high standards for a book on this subject.
July 8, 2020
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.
March 5, 2022
Uma abordagem leve, ao alcance de qualquer leitor, mas muito informativa do que é o risco e como geri-lo.
April 7, 2024
I wanted this book to be good. But it isn't. She isn't a story teller. She has these vignettes that should be amazing, but they aren't amazing. They aren't that well written and they barely fit into the introductory finance that she's trying to explain. Honestly, just get some sort of intro to risk and finance for dummies.
September 7, 2020
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.
April 6, 2020
“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 lecture on the principles of financial economics and how they can be used in our everyday lives to make us better problem solvers and risk takers. We will come to understand why we need risk in our lives to push us forward toward our desires and how to manage that risk effectively.
“You take risks, large and small, everyday, in all parts of your life”
Risk is everywhere and when approached with the right skills set, we can use it to our advantage. To hide from risk is futile and disabling. To come to understand it is essential. An Economist Walks into a Brothel will introduce you to the rules of risk and the inherent rewards that come with taking them. You will learn how risk is measured, estimated and how to turn data into risk evaluations. You will become able to discern from the different types of risk and perhaps even overcome your own risk averse nature.
“The difference between who succeeds and who fails isn’t who takes the boldest risks - it's who takes the smartest risks”
What is impressive about this book, its fascinating cast of characters aside, is how relatable it is. It is written in an entertaining and accessible manner, a distinct contrast to most risk literature out there, while also being extremely informative. It breathes life into subjects like insurance, hedging, options and rates while also demonstrating an insightful understanding of the foibles of human nature. It shares with us a framework for looking at the world and within ourselves in a way that can help us take risks while maintaining some perspective of what we stand to lose and/or gain.
“If we avoid risk our lives won’t move forward”
An Economist Walks Into a Brothel is the kind of book that entertains, informs, and changes the way you see the world. It offers a surprising level of intellectual depth for a book on financial economics that you don’t need a degree from Wharton, or even know what Wharton is, to understand.
Overall score: 4.3 / 5.0
In a sentence: Being better at taking good risks requires some financial economic principles and a sense of adventure.
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 lecture on the principles of financial economics and how they can be used in our everyday lives to make us better problem solvers and risk takers. We will come to understand why we need risk in our lives to push us forward toward our desires and how to manage that risk effectively.
“You take risks, large and small, everyday, in all parts of your life”
Risk is everywhere and when approached with the right skills set, we can use it to our advantage. To hide from risk is futile and disabling. To come to understand it is essential. An Economist Walks into a Brothel will introduce you to the rules of risk and the inherent rewards that come with taking them. You will learn how risk is measured, estimated and how to turn data into risk evaluations. You will become able to discern from the different types of risk and perhaps even overcome your own risk averse nature.
“The difference between who succeeds and who fails isn’t who takes the boldest risks - it's who takes the smartest risks”
What is impressive about this book, its fascinating cast of characters aside, is how relatable it is. It is written in an entertaining and accessible manner, a distinct contrast to most risk literature out there, while also being extremely informative. It breathes life into subjects like insurance, hedging, options and rates while also demonstrating an insightful understanding of the foibles of human nature. It shares with us a framework for looking at the world and within ourselves in a way that can help us take risks while maintaining some perspective of what we stand to lose and/or gain.
“If we avoid risk our lives won’t move forward”
An Economist Walks Into a Brothel is the kind of book that entertains, informs, and changes the way you see the world. It offers a surprising level of intellectual depth for a book on financial economics that you don’t need a degree from Wharton, or even know what Wharton is, to understand.
Overall score: 4.3 / 5.0
In a sentence: Being better at taking good risks requires some financial economic principles and a sense of adventure.
September 1, 2021
The title of this book is catchy and it sounds like a punch line should follow (although a “one armed economist” would have been even more daring).
Understanding risk and risk management isn’t typically at the top of anyone’s hit parade. But, ALLISON SCHRAGER has done a formidable job of making this topic relevant. And, with countless baby boomers needing to plan and manage limited funds during their retirement years, the book could not be more timely.
The author has a PhD from Columbia in Economics and instead of hitting readers over the head with models, stats, graphs and policy arguments, she takes readers into the field where we can see how parties from all walks of life, deal with the issue of risk. This is “Applied Economics 101.”
First stop, the Moonlight Bunny Ranch - a Nevada brothel where management teaches staff how to negotiate with prospective clients, hedge their risks, and plan for the days when their corporate assets will have depreciated.
Then, we meet countless other individuals from restaurant owners/managers to poker players, horse breeders to army generals and big wave surfers. This is a fun ride.
Schrager explains the difference between hedging and insuring in ways that are humorous and (wait for it)... titillating.
She also does a wonderful job of explaining how placing too much faith in planning can work against us. “If you try to plan everything and think you have too much certainty, you create vulnerabilities. If you try too hard to predict everything that can happen and shift from the realm of certainty to uncertainty you build vulnerabilities into your force (i.e. plan)…”
The book is filled with thoughtful checklists and principles by which to gauge and assess our own risk management situations. I look forward to her future publications.
By the way, did you hear the one about the rabbi, the priest and the one armed economist?
Understanding risk and risk management isn’t typically at the top of anyone’s hit parade. But, ALLISON SCHRAGER has done a formidable job of making this topic relevant. And, with countless baby boomers needing to plan and manage limited funds during their retirement years, the book could not be more timely.
The author has a PhD from Columbia in Economics and instead of hitting readers over the head with models, stats, graphs and policy arguments, she takes readers into the field where we can see how parties from all walks of life, deal with the issue of risk. This is “Applied Economics 101.”
First stop, the Moonlight Bunny Ranch - a Nevada brothel where management teaches staff how to negotiate with prospective clients, hedge their risks, and plan for the days when their corporate assets will have depreciated.
Then, we meet countless other individuals from restaurant owners/managers to poker players, horse breeders to army generals and big wave surfers. This is a fun ride.
Schrager explains the difference between hedging and insuring in ways that are humorous and (wait for it)... titillating.
She also does a wonderful job of explaining how placing too much faith in planning can work against us. “If you try to plan everything and think you have too much certainty, you create vulnerabilities. If you try too hard to predict everything that can happen and shift from the realm of certainty to uncertainty you build vulnerabilities into your force (i.e. plan)…”
The book is filled with thoughtful checklists and principles by which to gauge and assess our own risk management situations. I look forward to her future publications.
By the way, did you hear the one about the rabbi, the priest and the one armed economist?
June 15, 2019
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 everyone involved. Who knew that there is a definite difference in the risk of making a horror film versus an action film? Military planning, even with the technological advances in military equipment, must be able to be flexible and change rapidly depending on changing conditions, so the military, which seems to value chain of command decisions, must also encourage those on the ground to think quickly and creatively and make alternate decisions on their own in the moment. The author interviewed professionals doing many kinds of work to get their insights on how they manage risk. The result is easy to read and entertaining while teaching valuable lessons.
July 9, 2019
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 risk in general but not during crises, when everything moves in one direction.
4. Insurance allows protection of the downside while retaining the full upside, minus the fees of insurance. Options mitigate risk as it is a form of insurance; unfortunately it has become a kind of gambling when people only buy options in the hope of earning more. Also, with more safety features, people take more risks (Peltzman effect). Also, sometimes the insurance company itself can go under when crisis happens (AIA in 2008).
5. How to prepare for risk? Know what the goal is, and plan accordingly. Don’t play with money you cannot afford to lose.
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 risk in general but not during crises, when everything moves in one direction.
4. Insurance allows protection of the downside while retaining the full upside, minus the fees of insurance. Options mitigate risk as it is a form of insurance; unfortunately it has become a kind of gambling when people only buy options in the hope of earning more. Also, with more safety features, people take more risks (Peltzman effect). Also, sometimes the insurance company itself can go under when crisis happens (AIA in 2008).
5. How to prepare for risk? Know what the goal is, and plan accordingly. Don’t play with money you cannot afford to lose.
May 11, 2019
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 level as well. With spreadsheets and various automated platforms so prevalent and statistical jargon so entrenched, I see too many pros being way too quick to put risk o n autopilot. It’s refreshing to step back a bit from all the high -faulting stuff and remember what the heck we’re actually trying to do and, with a refreshed point of view, double check to see that we’re really managing risk as effectively as we can.
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 level as well. With spreadsheets and various automated platforms so prevalent and statistical jargon so entrenched, I see too many pros being way too quick to put risk o n autopilot. It’s refreshing to step back a bit from all the high -faulting stuff and remember what the heck we’re actually trying to do and, with a refreshed point of view, double check to see that we’re really managing risk as effectively as we can.
May 10, 2019
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 Alison's ability to simplify them. People seeking to understand a bit more of the basics of the financial world should benefit from the time spent reading the book.
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 Alison's ability to simplify them. People seeking to understand a bit more of the basics of the financial world should benefit from the time spent reading the book.
February 23, 2020
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 generous to rate it as a 4.
January 13, 2020
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 7, 2019
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.
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.
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