Book Review: “How Adam Smith Can Change Your Life” by Russ Roberts

“Man naturally desires not only to be loved, but to be lovely.”

                                       —Adam Smith

Russ Roberts is an academic economist best known as the host of the EconTalk podcast, wherein he interviews people knowledgeable in public policy and economics. This book is his exploration of what Adam Smith had to say about living a good life. Roberts thinks it’s a shame that Smith is thought of as an economist before a moral philosopher, and seeks to remind readers through this book of the power of Smith’s moral wisdom. He focuses primarily on Smith’s book The Theory of Moral Sentiments rather than the work Smith is best known for, The Wealth of Nations, which unfortunately is commonly used to legitimize the power of venal self-interest.

How Adam Smith Could Change Your Life explores the idea of acting like you have someone, some ‘indifferent spectator’, judging your actions. Something like a conscience. The importance of introspection is also examined, along with some reasons why self-knowledge is so difficult, the corrosive pitfalls of seeking out fame, how empathy with someone is easier in good times than in bad, and how tempting but dangerous it is to make exceptions in some circumstances. “Smith admits there can be some extenuating circumstances that make the rules of justice more flexible. But he suggests that such an approach to justice is a very slippery slope. He urges us to follow the rules of justice with complete steadfastness; the more we do so, the more commendable and dependable we are.

I also enjoyed P.J. O’Rourke’s On The Wealth of Nations: Books That Changed the World. It is less insightful, but hilarious. My favorite line was, “Money has no intrinsic value. Any baby who’s eaten a nickel could tell you so.”

Further Links:

School of Life’s video profile on Adam Smith, along with his write-up in The Philosopher’s Mail.
Part 1 of a 6 part series of interviews with Dan Klein that inspired the book.
What the professionals had to say: The Wall Street Journal book review.
Buy from Amazon: How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness.


The Theory of Moral Sentiments was Adam Smith’s attempt to explain where morality comes from and why people can act with decency and virtue even when it conflicts with their own self-interest.

Economics helps you understand that money isn’t the only thing that matters in life. Economics teaches you that making a choice means giving up something. And economics can help you appreciate complexity and how seemingly unrelated actions and people can become entangled. These insights and others are sprinkled throughout The Theory of Moral Sentiments. Money is nice, but knowing how to deal with it may be nicer. A student once told me that a professor of hers said that economics is the study of how to get the most out of life. That may strike some of you, even those of you who majored in economics, as an absurd claim. But life is all about choices. Getting the most out of life means choosing wisely and well. And making choices—being aware of how choosing one road means not taking another, being aware of how my choices interact with the choices of others—that’s the essence of economics.

“Man naturally desires, not only to be loved, but to be lovely.”

A modern way to capture what Smith is talking about when he talks about being loved and being lovely is authenticity. We want to be real, and we want the people around us to be real in how they think about us. Respect or love or attention that is inaccurate because I don’t deserve it isn’t real. Someone who is thought to be lovely, but who knows he isn’t, is living a lie.

So if I get praise I don’t deserve, says Smith, it should bother me. The praise feels good. But knowing it is undeserved makes it impossible to enjoy, he says. Why? It’s as if someone else is being complimented instead of you: “The man who applauds us either for actions which we did not perform, or for motives which had no sort of influence upon our conduct, applauds not us, but another person. We can derive no sort of satisfaction from his praises.”

So if someone praises me for my generosity because I volunteered for a community project that in fact I failed to help with, it’s not just that the praise is inaccurate. It’s also a reminder that I missed a chance to be generous. Undeserved praise is a reprimand—a reminder of what I could be.

Our lives are filled with people who want to influence us in so many different ways. People around us want to be loved, just as we want to be loved. Sometimes they fool us into thinking we’re something we’re not, either for strategic reasons or just through an honest mistake. Smith encourages us not to be fooled. He encourages us to face ourselves honestly. But perhaps the biggest challenge we face isn’t detecting false praise from others. Our biggest challenge comes from ourselves. We so much want to be lovely that we can convince ourselves of our loveliness when the reality is otherwise. The wise man may reject the praise he does not deserve. But it’s so hard to be wise. And it’s our own praise that’s hardest to reject.

To rephrase Smith’s original line about being loved and lovely, we want not only to be loved, but we want to think of ourselves as lovely. Rather than see ourselves as we truly are, we see ourselves as we’d like to be. Self-deception can be more comforting than self-knowledge. We like to fool ourselves.

Confronting our frailty and our failings can be too painful. So yes, we avoid situations in which we are forced to confront our shortcomings. It’s much more pleasant to delude ourselves.

The physicist Richard Feynman said, “The first principle is that you must not fool yourself—and you are the easiest person to fool.” Who am I? Sometimes I’m the easiest person to fool. I’m so easy to fool, I can even convince myself that I understand how easy I am to fool. Other people—yeah, they’re fooling themselves. But not me. No way. I see myself honestly. I see myself as I truly am. Believing that may be the biggest form of self-deception.

Not surprisingly, we find it much easier to see the moral imperfections in others than our own shortcomings. Smith is warning us about that asymmetry. One way to correct that imbalance comes from the Baal Shem Tov, the great Jewish mystic and founder of the Hasidic movement, who died the year after The Theory of Moral Sentiments was first published. He said that we notice the flaws in those around us to remind us of our own flaws and to spur us to self-improvement. Our flawed neighbors are the mirror that allows us to see our own imperfections and ideally to remedy them. So when you see the annoyance of a co-worker over something trivial, instead of being surprised that he or she is so sensitive to so minor a slight, ask yourself if there are times when you get annoyed over something silly and unimportant. When your son is impatient, reflect on your own impatience and try to help your son by showing him you can control yourself.

Everyone can explain why the stock market rose or fell yesterday. No one can predict what it will do tomorrow. It’s all just ex post facto storytelling—the narrative fallacy.

The biggest challenge to applying Smith’s insights on self-deception is the tendency to see those around you as blind to their own faults, overconfident in the research they champion, and unaware of the deep truths behind the worldview you champion. There is a temptation to say of all people besides yourself that they are the easiest people to fool. But it isn’t so. Remember Feynman’s insight: you are the easiest person to fool. Don’t deceive yourself about your lack of self-deception.

Admitting ignorance can be bliss.

We have all the tools of contentment at hand already. You don’t have to conquer Italy to enjoy the fundamental pleasures of life. Stay human and subdue the rat within. Life’s not a race. It’s a journey to savor and enjoy. Ambition—the relentless desire for more—can eat you up.

“The great source of both the misery and disorders of human life, seems to arise from over-rating the difference between one permanent situation and another.”

The grass on the other side of the fence often appears greener. We imagine we’d be happier if only we were richer or more famous or had a better job. Greed, ambition, and vanity are how Smith characterizes the vices that push us toward dissatisfaction with what we already have.

Smith sees nothing wrong with what we moderns call success. It’s the passionate pursuit of success that corrodes the soul, in Smith’s view. Certainly a relentless pursuit of money and fame can ruin your life. But if the gadgets and material success that come with money can be so destructive, why do we pursue them so zealously? And if they rarely make us much happier, if at all, why take the chance? How does Smith explain our pursuit of so many unhealthy goals?

One answer is that we are simply mistaken or ignorant—we think that being rich and famous will indeed make us happy. But Smith sees something more pernicious at work, and it comes from our desire to be loved and lovely. Remember that Smith uses the word loved to encompass not just romantic love. When he says we want to be loved, he means paid attention to, liked, respected, honored. We want to matter. We want people to notice us, to think highly of us.

We’re just not wired to be content with what we have, no matter how much.

Smith in his book and with his life is telling us how to live. Seek wisdom and virtue. Behave as if an impartial spectator is watching you. Use the idea of an impartial spectator to step outside yourself and see yourself as others see you. Use that vision to know yourself. Avoid the seductions of money and fame, for they will never satisfy.

My great-great-grandmother, who must have been born around 1870, told my father that if he was ever down or depressed he should go outside and tell his troubles to a rock. Abraham Lincoln used to write angry letters of recrimination to his generals and put them away, unsent, in a drawer. Sometimes it’s good to get something out of your system without anyone other than yourself knowing about it. One of the best pieces of advice I’ve ever received is to hold your anger for a day before you think of acting on it. The mere passage of time softens the emotion and can prevent you from saying or doing something stupid—or, worse, destructive—that you will inevitably regret.

Smith’s claims about our emotions create another way to understand these ideas. Talking to a rock or writing a letter to someone who will never see it is a way of tapping into Smith’s insight about strangers. What is less empathetic than a rock? Or a file drawer that receives the unsent letter? Or, in modern times, when you send an e-mail into the “Drafts” folder? The value of these exercises isn’t just the expression of the emotion but the expressing of it to someone or some thing that isn’t empathetic at all.

The rules of justice are relatively black and white. If I owe someone ten dollars, justice requires me to pay him back when I agreed to pay him back. There’s nothing complicated or unclear about my obligation. Smith admits there can be extenuating circumstances that make the rules of justice more flexible. But he suggests that such an approach to justice is a very slippery slope. He urges us to follow the rules of justice with complete steadfastness; the more we do so, the more commendable and dependable we are.

Once we start to think that the rules of justice can be ignored in special circumstances, we are no longer trustworthy, and we become capable of the greatest villainy. Smith gives two examples—the thief and the adulterer—of how such rationalization can get us in trouble: “The thief imagines he does no evil, when he steals from the rich…what possibly they may never even know has been stolen from them. The adulterer imagines he does no evil, when he corrupts the wife of his friend, provided he covers his intrigue from the suspicion of the husband, and does not disturb the peace of his family. When once we begin to give away such refinements, there is no enormity so gross of which we may not be capable.”

Smith understands something deep about human nature with this warning. Hard and fast rules are easier to keep than rules that are slightly relaxed.

In the fable by Aesop, the sun and the wind argue over who is stronger. They decide to settle their dispute using a man walking below them—which one can get the man to remove his coat? The wind blows hard and then harder. But all the man does is clutch his coat tighter and tighter. Then the sun comes out. And the man, suddenly feeling the warmth of the sun, gladly removes his coat. The wind isn’t just ineffective. The wind actually gets the opposite result. Paradoxically, it can be better to leave some things alone rather than to try to steer them.

The Theory of Moral Sentiments is overwhelmingly a book about the people closest to us, the ones we can actively sympathize with—our family, our friends, and our immediate neighbors. The Theory of Moral Sentiments is a book about our personal space—how others view us and how we interact with them. It’s not a book about strangers. It’s a book about the people we see frequently, some every day, and how our interactions with those around us shape our inner life and our behavior.

In The Wealth of Nations, Smith is writing about how we behave in a world of impersonal exchange, which is inevitably a world of strangers. In Smith’s day, you knew your butcher, but you did not know the farmer who raised the cow. You did not know the wagon driver who took the cow to the slaughterhouse. You did not know the steel forger who made the knife that slaughtered the cow. Most of the people responsible for the piece of roast or mutton that arrived on your plate in 1759 were unknown to you and unknowable. Today I know even fewer of the people who create the products I enjoy; the power of specialization has been unleashed to a degree that might surprise even Smith.

The Theory of Moral Sentiments simply has a different focus from that of The Wealth of Nations. It doesn’t represent a different view of human nature or a different theory of how people behave or a more optimistic vision of humanity. It’s about a different sphere of human interaction.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s