The Undercover Economist

by Tim Harford

Book Overview

"The economy isn't] a bunch of rather dull statistics with names like GDP (gross domestic product)," notes Tim Harford, columnist and regular guest on NPR's Marketplace, "economics is about who gets what and why." In this acclaimed and riveting book-part expos , part user's manual-the astute and entertaining columnist from the Financial Times demystifies the ways in which money works in the world. From why the coffee in your cup costs so much to why...

• Format: Paperback
• Language: English
• ISBN: 0345494016
• ISBN13: 9780345494016
• Release Date: January 2007
• Publisher: Random House Trade
• Length: 288 Pages
• Weight: 0.51 lbs.
• Dimensions: 0.6" x 5.2" x 8.0"

Customer Reviews

Economics for noneconomists

I found Tim Harford's book very revealing and usefull, because it explains complex economic behaviors and phenomenons in a very light, friendly and accessible fashion. From the complexities of markets to important geopolitical realities this book is enlightening. There are some important concepts I handpick from the text: the power of scarcity, the evils of privileged or asymmetric information , markets as information exchanges, moral risks that perverts free trade, the importance of comparative advantages in daily life, game theory as a tool for auctions, all explained in plain words. Without being a political statement, this book shows that free markets are far more beneficials to societies than any other form of economic arrangements because markets put the truth over the table and destroy privileged information and the power of scarcity.

Best Economics Book I've Read

Wow. Granted, I like economic discussions; but, I am NOT an economist (my undergrad was a psych degree). This book was phenomenal. It explained complex economic discussions in simple terms, used excellent analogies (if at times a little too belabored), and avoided almost all political leanings. Highly recommended for anyone who wants a basic understanding of why capitalism produces the least evil and most innovations compared to other government systems, as well as discussions on the prices we pay for choosing capitalism.

An excellent introduction to economics that will interest the novice and the proficient

If you read or think to read Freakonomics, read this book it is far better structured and gives a good overview on many current issues on economics. Mr Harford carries us through the world of economics asking himself questions on the things he observes and trying to proove whether he is doing the correct assumptions. He starts analyzing how markets work and wondering why a coffee cup is so expensive at a railway station, the main reason is one of the market failures: the power of scarcity, this relates that some things are not easy to be replicated, eg a second coffee shop at the railway station. To follow the case the "undercover economist" visits a couple of supermarkets and sees how the tricks work to increase revenue and target the right product to the right customers. Target pricing works as well in other onsets like drugs or transports. Perfect markets, those where no profit can be made other than the cost of capital, are explained afterwards showing their benefits, specially the fact that perfect markets are efficient which as consequence means that products are offered at the lowest possible price. Two other market failures are analyzed: the cost of externalities and information assymetries. In each case the author proposes solutions to overcome this shortcomings with examples of the real world. We learn that the congestion tax in London is a good solution to the problem (externality) created by too many people that try to go by car to London city and find themselves in a traffic jam. Equally Singapore is an example how health costs can be maintained at a low cost overcoming the information gap that patients and insurers have. Two chapters follow where the internet bubble and the auctions for mobile telephony are reviewed explaining in the way how exchanges work and what determines the share price, and what you should think before setting up an auction. The last part of the book takes care of country prosperity. It starts analyzing why poor countries are poor and looks what receipts might help to solve poverty. Next globalisation is reviewed with its consequences, the author is optimistic and gives some data on what has been improving during the last decades. The final chapter of the book is devoted to the rise of China in the last 25 years and what has made China so successful. The author manages to combine a well made case for each issue he develops while being entertaining and interseting, using straightforward reasoning that can be followed by newcomer without being boring to the proficient.

Economics in Daily Life - with a difference!

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!

The Elder Sibling to Steve Levitt's Wild Child

The title of this review comes from the Economist's recent piece on Tim Harford's book. In my view, the Undercover Economist is quite simply a triumph of good writing. Harford turns the "dismal science" on its head, making the concepts that most of us failed to learn in econ 101 understandable and RELEVANT to our everday lives by using them in everyday situations, from walking the aisles of a supermarket to picking the stock market. How many of you have been guilty of the "Grolsch method" of stock picking? Read this book to find out!