An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk

Allison Schrager offers a highly readable, yet nuanced, guide to navigating the risks inherent in today’s increasingly complex world. A must-read for anyone seeking to command, to govern, or to teach.

General Stanley McChrystal, New York Times bestselling author of Team of Teams

Is it worth swimming in shark-infested waters to surf a 50-foot, career-record wave?

Is it riskier to make an action movie or a horror movie?

Should sex workers forfeit 50 percent of their income for added security or take a chance and keep the extra money?

Most people wouldn't expect an economist to have an answer to these questions--or to other questions of daily life, such as who to date or how early to leave for the airport. But those people haven't met Allison Schrager, an economist and award-winning journalist who has spent her career examining how people manage risk in their lives and careers.

Whether we realize it or not, we all take risks large and small every day. Even the most cautious among us cannot opt out--the question is always which risks to take, not whether to take them at all. What most of us don't know is how to measure those risks and maximize the chances of getting what we want out of life.

In An Economist Walks into a Brothel, Schrager equips readers with five principles for dealing with risk, principles used by some of the world's most interesting risk takers. For instance, she interviews a professional poker player about how to stay rational when the stakes are high, a paparazzo in Manhattan about how to spot different kinds of risk, horse breeders in Kentucky about how to diversify risk and minimize losses, and a war general who led troops in Iraq about how to prepare for what we don't see coming.

When you start to look at risky decisions through Schrager's new framework, you can increase the upside to any situation and better mitigate the downside.

“In this delightful book, financial economist and risk expert Allison Schrager shows us that the same principles employed by multi-billion dollar pension funds can help us improve risk management in our own lives. She teaches these principles while entertaining us with a series of off-the-beaten-path case studies. By creating distance from our own experiences, she allows us to better understand the principles of risk. It works! Whether a complete novice or a seasoned risk professional, the reader is in for a treat: Bon Appetit!” —Robert C. Merton, Distinguished Professor of Finance, MIT Sloan School & Nobel Laureate

“Allison Schrager offers a highly readable, yet nuanced, guide to navigating the risks inherent in today’s increasingly complex world. A must-read for anyone seeking to command, to govern, or to teach.” —General Stanley McChrystal, New York Times bestselling author of Team of Teams

“If you want to understand risk better, you have to go into some unconventional settings.  In the tradition of Freakonomics, that’s what Allison Schrager does as an economist, and her book is not just informative—it’s an entertaining read too.” —Adam Grant, New York Times bestselling author of Originals and Give and Take

“Allison Schrager's An Economist Walks Into a Brothel is the best, most readable, most informative, most adventurous, and most entertaining take on risk you will find." –Tyler Cowen, Professor of Economics at George Mason University

“A colorful, empowering guide to intelligent risk-taking.” —Kirkus Reviews

“Provocative.” —New York Times

“The most entertaining book on risk management ever written.” —Booklist

“Prostitution seems like a long stretch from the risks most of us deal with, such as outliving our retirement funds, but Schrager inventively extracts five life lessons from her interviews with practitioners of the so-called oldest profession, as well as others who’ve chosen unusual career paths.” —Bloomberg Businessweek 

“The genius of An Economist Walks into a Brothel is that Schrager takes theories and research from retirement economics and applies them to other areas of life.” —Inside Higher Ed

Allison Schrager is a senior fellow at the Manhattan Institute, where her research focuses on public finance, pensions, tax policy, labor markets, and monetary policy. She is also a co-founder of LifeCycle Finance Partners, LLC, a risk advisory firm.

Previously, Schrager was a journalist at Quartz, led retirement product innovation at Dimensional Fund Advisors, and consulted to international organizations, including the OECD and IMF. She has been a regular contributor to the Economist, Reuters, and Bloomberg Businessweek, and her writing has also appeared in Playboy, Wired, National Review, Foreign Affairs, and City Journal.

She received her undergraduate degree from the University of Edinburgh and a Ph.D. in Economics from Columbia University.