An Economist Walks into a Brothel

March 1, 2019
A colorful, empowering guide to intelligent risk-taking.There's a general misconception that the world is divided into two kinds of people: those who take risks and those who play it safe. Not so, writes economist and Quartz contributor Schrager, co-founder of risk advisory firm LifeCycle Finance Partners, in her debut book. Risk is the author's business, and as she notes, taking risks is something we all do every day. From deciding which mode of transportation to take to cross town to choosing extended warranty plans and purchasing airfare, Schrager defines these "calculated risks" as thinking "about risk more strategically [to] increase the odds that things will work out." However, there is a science to risk-taking "that will maximize the chance of success when you do take a risk," and that science is financial economics, which she boils down to "buying and selling risk." No get-rich-quick manual, the book shows readers how to apply the tools and tenets of finance to their daily lives in order to make the smartest calls and achieve the best possible results. As she explains, "once you learn a few key principles behind financial economics, what makes one risky decision easier than another becomes clearer and you can apply your best risk strategies to every area of your life." Among other topics, the author explores the dynamics of risk using the example of Nevada's Moonlite BunnyRanch Brothel, the idea of hedging with a major David Bowie record deal, diversification through thoroughbred racehorse breeding, and the measurement of risk in Hollywood film financing. Throughout, the author uses highly dense financial concepts and simplifies them into easy-to-grasp capsule analogies. The result is a tightly organized yet punchy volume that's both engaging and educational.Like Freakonomics and similar works, this book breaks the mold of traditional starched-collar, data-dense economics journalism.

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