AP Book Review: The Price of Everything

If you agree with the saying that everything has its price, then Eduardo Porter's book, "The Price of Everything: Solving the Mystery of Why We Pay What We do" may be the book for you.

An Associated Press press writer penned this review. I just thought it was worth sharing.

An engaging exploration of why we pay what we do

By LAURA IMPELLIZZERI

AP Business Writer

"The Price of Everything: Solving the Mystery of Why We Pay What We Do" (Portfolio/Penguin Group, $27.95), by Eduardo Porter: New York Times editorial writer and longtime journalist Eduardo Porter offers an engaging rumination proving the adage that everything has its price. And he means everything: work, women, even faith and the future.

Porter explores the factors we weigh, consciously and unconsciously, in making decisions about things we don't traditionally think of as having prices. And he shows that in every imaginable context our choices are influenced by circumstances and our available alternatives — more than by finance and logic.

Such thinking helps explain numerous apparent paradoxes that Porter highlights, including the fact that people seem more willing to give blood for free than if they are paid $25, and more willing to travel across town to save $20 on a $100 sweater than $20 on a $1,000 computer.

Time is worth more or less money depending on who is spending it, just as one person's trash is another person's treasure. So there's a whole lot more than supply and demand going on.

That is, people are obligated, whether by physical circumstances or community and family roles or other situational factors, to consider where they are, their personal history, social norms and fairness in making any economic choice. Institutions and governments likewise: Porter even casts the Protestant Reformation in terms of prices and benefits. After centuries of charging wealthy people ever-increasing fees for indulgences and pardons, the Catholic Church finally hit a ceiling when reformers opened alternative churches that provided more core services to more of the faithful, nearly for free.

He offers an equally price-driven prediction for future modern churches. In historic contrast in other industrialized nations, the ranks of the faithful are likely to keep growing in the U.S. because of the wide supply of customer-oriented services American churches and other religious institutions provide. The U.S. has a large supply of religion, offered at relatively low prices.

While an elegant and enjoyable read, "The Price of Everything" is also timely: Porter makes a strong case in the wake of the recession that it's silly for economists and policy makers to assume people act according to rational assessments or even in their own best interest. Not only could nothing be further from the truth, he says, that's as it should be, and economists can no longer ignore this reality in their modeling and theories — or policy advice.

This complexity means Porter actually can't explain why we pay what we do, as his title promises. Of course not. It's just too bad he doesn't lay out more clearly the new, more holistic ways we could think about the global economy, and he doesn't suggest more constructive frameworks for future economic thought.