The Lucifer Effect: Review

Brain is the master of all evils and devils. Yet, we have understood it so little. How are human behaviors shaped, were human born good, can good people turn evil etc. remain unending questions.

Among subjects in undergraduate level, psychology deals with this kind of issues and brain the most (unless your major is neuroscience). My encounter with two psychology classes in my under shaped my ways of thinking in a positive way (at least I think so.) It is in those two classes that I got to hear the name Phillip Zimbardo, a prominent professor of psychology of Stanford University. It is from there that I started to follow lectures, speeches and the book.

The book stems from his worldly famous Prison Experiment at Stanford. He who organized the experiment was also shaped by the experiment. That is he was also turned bad by the system he set. Another uncontrollable fact was he happened to get to know his wife because of the experiment!!!

The author tries to answer these questions in this book:

“Is it possible for a good person to turn evil? Do you think you have an inner demon, or do you think that you could ever be swayed by bad influences, people or systems? Could you or someone you know ever rob a bank, steal from a neighbor or torture another human being? You'd be surprised at some of the good people who have found themselves doing truly evil things! Could this happen to you?”

Buddha believed that human were born good. Ignorance makes people do bad things by forming ill-willed desires and/or blinding ones from seeing that their actions would lead to harmful consequences. These are coincidentally also the main ideas of this book. The author backs up his arguments by the empirical evidence, especially the Prison Experiment.

Final Words

It is very easy, but maybe irresponsible, to just say that dictators such as Pol Pot, Stalin, Hitler etc. are evils. But it is not a responsible move to say that they are not nationalists. Consider the case of Pol Pot of Cambodia. He was selected, although not totally by his merits, to study in France. He could choose to live happily doing a decent job in Cambodia or France after graduation but he chose to write opinions in a magazine criticizing the government on the unjust (in his subjective opinion) environment in his country and chose to fight against the government. He escaped to the forest, lived with modestly and feared the purge by the incumbent government troops.

Maybe none of us dear to sacrifice that much for our country or community. However, the sacrifice alone is far from deserving the label of a good person. Under his reign, the estimated of 1.7 million people died, starvation was prevalent, and people lived with the fear of death every second for unknown reasons. In this regard, the question of good people and bad people should be reconsider, and this book may enlighten its reader, I believe.

Full title: The Lucifer Effect: Understanding How Good People Turn Evil
Publisher: Random House Trade Paperbacks; Reprint edition (January 22, 2008)
My rating: 5/5
Author:  Philip Zimbardo

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Theoretical Research vs. Empirical Research in Economics

Back in Waseda University, I was wondering what a theoretical research in economics is and how different it is from an empirical one. Most students from Cambodia, at least, choose empirical research for both undergraduate and graduate studies. I do not like empirical research because  I would have to look at computer screen with millions of data there. It took me quite a long time to see the difference and finally I chose empirical research. Here I hope to help you see the difference in a short period of time.

Theory, as it sounds, is about explaining how things work. For instance, you may say consumer behavior of spending this month is dependent on their income this month. If you think this is correct, you will find proof to prove that your income this month affects your spending this month. Thus, your research here is empirical. If you think that your behavior of spending this month is dependent on your income this month, next month and several months ahead, you will do a theoretical research because you are modifying the previous theory. 

Is theoretical research about description? If you are a genius, it is true! your description of the theory is more than sufficient. For instance, F.A. Hayek's The Use of Knowledge in the Society is a theoretical paper which uses only words to describe his theory. You may find plethora of such paper as well. However, as a student, even in a Ph.D program, theory research tends to mean utilization of mathematics. You will have to use mathematics to prove your theory. Milton Friedman's Permanent Income Hypothesis, for instance, utilizes the simple concept of marginal utility of consumption. 

Mathematics is not about calculation only. Its underlying concept is the most important part in theoretical research. For instance, Y= X and X=Y are different, with the latter meaning that Y causes X; X happens as a result of Y.  If you like this kind of concept in mathematics, you will find theoretical paper interesting. 

Empirical research is about proving or disproving an existing theory. The theory may not be a perfect one for you to prove or disprove. Using the above example, you may think incomes for two months determine your behavior of spending this month.  In that case, you have to modify the theory first; that means somehow you will include the theoretical part in addition to the main part of your empirical research. Still, your research is an empirical one. Nonetheless, it is not important to classify if your paper an empirical or theoretical one. You definitely can do both in a paper. 

See my Master's Thesis as an example of theoretical research in economics.

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An Example of Theoretical Research in Economics, Master's Thesis

My Master's paper is not the best paper, nor is it rigorous. It is not published any where else. I publish it here with the sole purpose: to allow you to take it as an example for your research and write a better one.

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Rich Dad, Poor Dad

I was curious about finance and surfed the web for the best book for laymen like me. The title came up but I did not dig into it. However, when I walked in different libraries in my graduate school of Waseda University, I frequently saw it in both Japanese and English versions, which means it is seemingly popular. So I decided to read it. I put it in my iPhone, printed out some pages and also borrow the English version from my library. 

The book is fun to read, plain, coherent and very insightful. I did not get bored reading any part of the book. In fact, I greatly enjoyed reading it. Not only his writing skill that keeps me reading it till the end but also the issues he is trying to deal with that arouses my curiosity. Below are some main ideas he deals with.

Work for Other or Run Your Own Business? 

If  you were born in a family who owns no business, like my family, you tend to focus on secure job and wage you receive per month. At worst, you even hate businessmen as you were taught, by religion perhaps, that profit is a sin. There is a high chance you were taught that aspiration to acquire wealth is bad and you have to control this kind of sinful ambition.

Even if you were born in a family who owns a (successful) business, perhaps it is not your choice to continue the business. You may like working in a company, for a government or charity organization or run a different business instead of fulfilling your parents' wish to continue their business. 

This book would help you answer this question. Spoiler: the answer of course varies from one person to another. 

Can You Become Rich?

Throughout this book, he teaches readers about financial literacy you may have not learned elsewhere. He teaches not only that you can become rich ( I am not talking about every one being a millionaire), but also that you should want to become rich. Of course not all people aspire to become rich or exceptionally rich. There are also significant number of people who desperately want to be rich. In either case, instead of saying you should become a millionaire, he just wants to share his experience of how you can unlock your potentials to increase your wealth, thus the wealth of the society.

Government or Entrepreneur?

Again, this book touches the debate of how far the government should intervene in private life. What the use of business is in the society?  What is the use of government then? Are you sure you know it? 

Does Smart Mean Rich? 

Of course not, exclaim you. Rich does not imply smart as well. However, it is a sad thing when you are smart when stay poor, or when you are rich but stay dumb. 

Final Words

What the most important concept in this book is that he does not say you have to be an entrepreneur, to work in a government sector, in a private company or else. Ask yourself what you like and do best, and plan for it, but in addition to it business is important. The concept of business can raise your wealth in a great deal. Raising your wealth is not a sin. In stead it means you provide goods or service in return for the wealth. 

I believe this book will change your mindsets, for good, toward education, business, government and society.

Full title: Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!
Author:  Robert T. Kiyosaki
Publisher: Plata Publishing; 8.2.2011 edition (August 16, 2011)
My rating : 5/5

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The Constitution of Liberty

The book as well as the author are well-known but not as one would expect, although the ideas have changed the world in a great extent. Most students of economics do not even know his name. Some professors do hear his name but never actually read his books. That is my experience while I studied in Japan as well as of today when I asked people around me about that... Of course, if you read only textbooks, you would probably never hear his name. I got to know his two most famous books The Constitution of Liberty and The Road to Serfdom when I read Milton Friedman's Free to Choose and Capitalism and Freedom. I borrowed The Constitution from my library, read a few pages of it, and decided to own it ( I mean buy it, not steal from the library!)

Academically, Hayek was lonely in his time until he won the Nobel Prize in Economics in 1974. The world faced the threat of communism, and in the free world governments were very big as well. From price floor, price ceiling, regulations to extensive government programs, one can find various examples of insatiable government intervention in the economy. Liberty and free market economy were considered obsolete.

Its Influences

As a member of a poor family and a student from a poor country, a country where communism took controls for approximately 25 years, I had no idea what the rule of law is, nor did I know what it mean by free market economy, liberty, democracy and communism. This book did shed light, very bright one, on me. Maybe leaders across the globe were as ignorant s as I was as well. After all, it was Margaret Thatcher and Ronald Reagan that applied theories in his book and revolutionized their  economic policies against the mainstream.  

Main Points

The Institute of Economic Affairs reserves the rights and published this book for sale and for free in the internet. In that version, there are summary, forewords and comments from other professors that already well summarize the main points. Thus, I will talk only about the main points of the book that influenced me and in my own words.

This book is about the interconnection between all factors in the society, not limited to economy. It deals with law, politics, human and economics altogether. By that, it seems the foundations of law, politics and economics, among others, are just one. For instance, freedom in politics is freedom in economics if there is freedom.

This book mainly is a compilation of Hayek's article in various journals. One article that won my deep admiration is Why the Worst Get on Top. People tend to think that a country, for instance, would prosper if it is run by a good king. Or an economic policy would be successful if the policy maker is a good and well qualified person. What its relation is there with that the bad people getting on top then?I challenge you to read this chapter, to begin with.

Conundrums

Even among Hayekians, there are debates on the necessity of social safety net and subsidy on education.

Keynesians believe, at least in the short-run, that lowering interest rate can cut short recessions or boost the economy in the short-run and hitherto it may end up in inflation in the long run. Hayek disagreed and became the main opponent of Keynes in this matter. (See also Free to Choose) Mal-investment is another huge problem. High risk high return. The high interest rate, in the same sense, reflects the high associated risks. If the government makes the interest rate artificially low, investors are misled by the cheap credit and invest in the wrong way, resulted in for example housing bubble and dot com bubble.

Keynes believed that macroeconomy can hardly be at equilibrium. Thus, the government must take a very active role in matching the demand and supply of macroeconomic factors, especially control the money supply. Hayek disagreed. He thought private sectors can supply the money to match with their own demand the way they do in other supply. Private sectors respond to the fluctuation of demand and supply faster and more efficiently. Thus, Hayek proposed the denationalization of money.

My Intervention

Denationalization of money? Is it the first time to hear this? When I read this book, it was my first time to hear it, and all I thought of was the considerable cost of money exchanges between currencies issued in one country. Can you imagine the U.S having 60 currencies for instance?

As time goes by, I read more books on economic history. It has been the state that requires by law all people in their territory to use single currency issued by the state. I think one can infer from this fact. Politics plays higher role than economics in this debate.

Author: F.A. Hayek (1899-1992)
Publisher: The University of Chicago Press (October 15, 1978) and Institute of Economic Research
My rating: 5/5.
This book is complimented by another book of his The Road to Serfdom

See also: Econlib review of Hayek

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