An Economist Walks Into A Brothel: And Other Unexpected Places To Understand Risk
Allison Schrager caught my attention with the title of her book on financial economics and risk. An Economist Walks Into A Brothel does indeed include an analysis of the legal sex trade in Nevada. The topic is a hook, but the analysis and writing keeps the reader engaged. Schrager uses a variety of industries to explore the multi-faceted topic of financial economics.
Schrager starts her treatise with a discussion of risk. Financial risk is not just in the stock markets but also in everyday business. And everyday life. The exploration of mitigating risk in the sex trade allows the writer to introduce the concept of risk in an industry not many of us are familiar with.
A few basic concepts such as supply and demand are introduced in this section. But most of the focus is on finance, which Schrager states is the science of risk. Thus, from the start, the topic of An Economist Walks Into A Brothel is clear.
Toward the end of this introductory section are Schrager’s five rules of risk. These are as follows:
1. No Risk, No Reward
2. I am irrational and I know it.
3. Get the biggest bang for your risk buck.
4. Be the master of your domain.
5. Uncertainty happens. (Schrager, 14-17)
These five concepts are the heart of the book. They are supported by a gamut of economic theory from behavioral economics to diversification to uncertainty. Key premises to understand how the world works.
Diversity in Examples
The use of the wide variety of industries cited by Schrager in order to illustrate her topic serves multiple purposes. First, the diversity (in addition to the Brothel hook) of industries provides a way to reach out to a wide audience. Second, the varying businesses support the notion that risk is inherent everywhere, not just in the stock market. Third, this approach offers a way for the layman to comprehend economic principles.
Studying a legal brothel in Nevada begins the book. But other industries utilized include but are not limited to retail electronics, horse breeding, big wave surfing, Hollywood and the United States Armed Forces. Kat Cole, one of my favorite CEOs and Gun Runner, one of my favorite race horses also figure into the narrative. Thus, Schrager turns what may be considered a dull topic into an engaging and informative read.
An Economist Walks into a Brothel is a comprehensive look at risk. While there are some charts and concepts that knowledge of economics serves as an asset, even those without an economic background can gleam Schrager’s points. She is thorough in her knowledge of the topic and her approach is such that the general public will understand the book.
Even if you are not in business, the concepts of risk apply to the many decisions life posits. So I believe you will gain from this book. Since it is a recent release your library may not have a copy yet. But it can be found in bookstores and online.
The initial business analyzed is legalized sex and naturally there are comparisons with the illegal trade. However, the topic is treated in such a way that I feel the book is still appropriate reading for mature teenagers. The focus is on the business and not the types of services provided.
In fact, if I were still teaching at the community college, I would require my business and economic students to read An Economist Walks Into A Brothel. So, consider gifting this book to those who prefer non-fiction as well as anyone interested in finance. In the case of this work by Allison Schrager the risk is worth the reward.
Additionally, for those of you who prefer online, Schrager has a website. You can access it by clicking here. Consider signing up for her newsletter. I did and I look forward to her twice a month posts.