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Book review: 'The Price of Everything: Solving the Mystery of Why We Pay What We Do'

Eduardo Porter's book is as much about when prices fail to steer our lives as it is about when they succeed. That the book does not quite deliver what it promises, however, is its saving grace.

January 09, 2011|By Martin Sandbu

The heap of pop economics books — with Steven Levitt and Stephen Dubner's "Freakonomics" at the top — just keeps growing.

How did this genre, which a decade ago was nearly barren, become the jungle it is today?

The books themselves have a ready answer: The benefit to readers of another title exceeds the production costs by enough to make writing it worthwhile. Eduardo Porter, author of "The Price of Everything: Solving the Mystery of Why We Pay What We Do," surely agrees.

The title, however, is misleading. Porter's book is not so much about why prices are what they are as it is about how prices affect our lives — and how we should put the right prices on mispriced things.

"Prices rule. Every choice we make is shaped by the prices of the options laid out before us," he writes in the introduction to his book, published by Portfolio.

So Porter, whose day job is editorial writer for the New York Times, presumably sat down and estimated the price his book would fetch and the amount of time it would take him to write it.

Then he compared that with the monetary value of all the other things he could do instead — from spending more time with his family to practicing for the Coney Island hot dog eating contest — and found that there was nothing else in the world that was worth more to him.

And that's how he decided to write the book.

Or maybe not.

In spite of Porter's introductory declaration, this book is as much about when prices fail to steer our lives as it is about when they succeed. That the book does not quite deliver what its introduction promises, however, is also its saving grace.

For in what has become a crowded field, it is hard to sustain a reader's interest in yet another compendium of more or less interesting — but rarely epiphanic — findings from the conveyor belts of economics departments.

Most of the numbers this book bombards the reader with are the plain measurements that sustain academic career tracks but not much else. Some are cringingly obvious. Others are less predictable and more entertaining.

If a miscellany is your kind of book, you may enjoy such lists. To me, it quickly felt rather like reading the Guinness Book of Records cover to cover.

It helps that the author is less of an economics proselytizer than he sets out to be. Porter seems to subscribe to the premise of all books in this genre: that supply and demand explain all social phenomena.

He sometimes goes along with the common bastardization of economic theory, the notion that every choice you make improves your lot because the price you accept reveals the value of what you get.

But thankfully he often strays off message. The main lesson of his chapter on climate change, for example, is that putting a price on future climate damage is hard. This is, of course, correct: It is only after deciding how to value the future that we can attach a price to that value. But then we cannot use the price we come up with to justify the valuation in the first place. Here, at least, prices do not rule.

At times, Porter states frankly that prices are not everything. He criticizes economics for often ignoring how culture shapes our choices, and has a chapter on "When Prices Fail." Almost in spite of himself, he explains much of the book's pop-historical trivia not by discussing prices at all but by examining varying cultural preferences.

If this makes the book more interesting, it also makes it confusing. It is as if Porter wants to square the thesis that supply and demand are the source of all value with the far less market-seduced pieties of the New York Times' editorial board.

The best chapter is the one with the best title: "The Price of Free." This is where the author's voice is strongest, in both writing and substance. The chapter treats the prices of ideas and intangibles and discusses how the Internet and cheap replication technology will change cultural production such as the music and film industries.

The facts are entertaining and enlightening. I was amused to learn that the copyright law passed by Congress in 1790 excluded the works of non-U.S. authors.

The argument for this — that an increasingly literate population must not be priced out of access to books — is echoed in the "free culture" camp today. Porter ultimately comes down in favor of today's system of copyright and patents. He does not sufficiently challenge the conventional arguments for it, but his discussion is engaging.

Yet in the end, you do not need a review to judge the value of this book. If you bought it, it must be worth at least as much to you as the money you paid for it. Unless knowing the price of everything says little about value, of course.

Martin Sandbu is a writer for the Financial Times of London, in which this review first appeared.

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