The Undercover Economist
by Tim Harford
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Book Reviews of The Undercover Economist
Book Review: Enlightening read, entertaining.
Summary: 3 Stars
This book kind of over billed itself, with the marketers adding "why the rich are rich, the poor are poor and why you can't find a good deal on a used car." This book doesn't read like Freakanomics, Blink or Tipping Point, unfortunately, because the author does have a lot of good things to say and does do a good job of explaining economic terms and theories in laymen's terms.
I'd recommend this book to anyone that is interested in a better understanding of economics and demystifying some of the jargon and terms used on news broadcasts and in newsprint. There are often people of all strips talking about demand, supply, cost, profit and other things that they know little about or sometimes, worse, think they know something but in reality have an understanding that is completely backwards.
Economics theory builds upon a basic foundation and understanding that foundation and the nature of the bricks laid upon it are crucial to having any grasp of what an economist is talking about when he pontificates or simply gives a lesson. Some things are agreed upon by most, but not all things come under a consensus of what is true and what is false and what is unknowable.
If I'm confusing you a bit here, no worries, read this book and my ramblings will sound completely coherent and simple. The knowledge required to totally grasp the theories and the intricacies of markets and why things are priced how they are is such that if you could totally get this book you wouldn't need to read it.
I think most people would benefit from a reading of this, as most people are blind to economic theories and how markets actually work, and therefore are often beguiled by politicians. I give this work a strong recommendation to those interested in econ and those that are students of it as well.
Book Review: Easy to Read and Educational
Summary: 4 Stars
I highly recommend this book. As I wrote in my review of "Naked Economics: Undressing the Dismal Science" (another excellent book for economic laypersons), I believe it's important for citizens to have a basic understanding of economics because as this author writes, "economics is about people".
This book is a nice supplement to "Naked Economics" because it thoroughly covers some subjects either not covered at all in that book or only mentioned there (Naked Economics also addresses subjects not covered here), such as the chapters devoted to "game theory" and corruption in developing countries.
Unfortunately, like many economists, this author believes that environmental destruction, child labor and sweatshop conditions are necessary "short-term" evils or necessary means to a better end in the developing world. He also misrepresents the positions of those who protest such conditions. I respectfully disagree with these assessments.
That said, a significant chunk of this book is devoted to describing major impediments to a free market: scarcity power (ex: a trade association is able to get unreasonable laws passed to limit competition), externalities (ex: external costs shifted to taxpayers as a result of pollution by power companies) and limited information (ex: the inability of a woman to negotiate an equitable salary with a potential employer who knows what her male colleagues are being paid while she does not). Discussion of these issues was extremely interesting and thorough.
I know this is a review of "The Undercover Economist" but, primarily because the other book struck me as a bit more readable for the economic layperson, I'd recommend reading "Naked Economics" first. If you're hungry for more after completing that book, then you can't go wrong with this one.
Book Review: Economics in Daily Life - with a difference!
Summary: 5 Stars
Tim Harford's "The Undercover Economist" is in many ways a return to the fundamentals of economics. In recent years, the field of economics has seen a growing influence of quantitative modeling and econometrics, to the extent that the medium has become the message. The complexity and elegance of the modeling often obscures the fact that these are mere tools for the study of economic behaviour. At its foundation, economics is the study of human behaviour with the focus on how people make decisions by applying (consciously or unconsciously) the basic economics concepts of scarcity, relative pricing, comparative advantage, marginal cost etc.
Harford is a columnist for the respected Financial Times and it shows in his clear and almost conversational writing style. He almost entirely avoids the use of jargon and technicalities, using simple logic and even common sense to explain economics ideas. His use of everyday situations to illustrate his points makes the book read like a collection of anecdotes, with the difference that the anecdotes serve to buttress the theme in the background. Readers will doubtless enjoy his application of economic reasoning to shopping at the supermarket, pricing of a cup of coffee, health insurance and so on. And for those who like the bigger picture, Harford's explanation of the benefits of globalisation and the rise of China are top drawer.
I wish he had not glossed over the free loader issue while discussing externalities. Similarly, in explaining the problem of asymmetrical information in used car sales, he glosses over the role of independent 3rd party information providers who can help in restoring the balance of information. Perhaps he will attack these in a future book? I for one will stand in line to buy it!
Book Review: Slightly disappointing but good fun all the same
Summary: 3 Stars
Tim Harford is a sharp-minded columnist for the Financial Times, one who spends most of his time applying the laws of economics to everyday problems. His book, "The Undercover Economist", is a natural progression from his FT column: each chapter starts with a simple premise, from the price of a cup of coffee to the difficulties of buying a used car. Along the way, Harford attempts to undercover the broad economic issues that underly even the simplest transactions.
It's a tactic that has managed to draw in even the least business-savvy of readers, and his analyses of the various transactions we don't often think about are good fun. His sceptical approach to 'free trade' goods and environmentally-friendly business is particularly refreshing in this era of buzzwords and eco-hype.
But overall, the book is a disappointment. Harford's chapters don't meld into a cohesive whole, with each one coming across as a self-contained column or essay without forming an overarching argument. In fact the only real opinion in the book is the rather predictable one favouring unfettered capitalism and laissez-faire liberalism, a claim which is never really explored in depth.
I also think it falls firmly into the 'popular economics' camp of books without really improving the genre. Yes, economics can be fun - but at some point the coffee cups, apple cores and used cars have to be put away so the facts and theories can be taken in. Harford makes a few attempts at didactic, explanatory writing, but they never last long. It seems like this book doesn't want to be an introduction to economics, but on the other hand can't avoid being one because of its desire to please those turned off by facts and figures. All this confusion leads to a confused product.
Book Review: Definitely a fun read
Summary: 4 Stars
I had the pleasure of receiving this book from my sister recently. I didn't expect it, but it was one a reading list of mine. My gosh, I wish I had read it earlier. I've read Freakonomics before and that ... was agony. I disliked Levitt's writing style. When I came across this, this was a very surprising change.
Harford writes incredibly interesting and points out many things that are not common to the average eye. Now, when I'm buying groceries, rather toothpaste, I cannot help but think, am I overpaying? Why are there so many alternatives? This book will indeed change your insight on how you look.
The post below me said that most of this material is covered in economics 101. Yes, he is right in some sense. If you don't learn what opportunity costs are in ec101, ask your college for a refund! Yet, many of the insights that Hartford provides, such as why is Starbucks run the way it is, is much different than what you would expect out of ec101. I have yet to find a professor that could teach like Harford has expressed in this book.
If you enjoy learning about the world, certainly read this book. You do not have to be passionately interested in economics to enjoy this. In fact, Harford writes to appeal to a much larger market here. You can tell some of his interests when he explains certain concepts in much too great detail, yet, those that are interested in economics will be pleasantly overjoyed.
Give this book to an undergraduate in college or a high school junior/senior. Not all the concepts will be knew to some, yet, there is a lot of interesting thought that comes through. You can tell that Levitt has great interest in this subject and writes with such passion and vigor.