BOOKCASE : The Undercover Economist

• Tim Harford • Little, Brown • $35

This book is freshly minted explanation of some key economic fundamentals with topical, even homely, examples of how things work and sprightly text instead of graphs, statistics and the dense, plodding sentences that are barrier to enjoyment – and even comprehension – in many economic tomes.
Tim Harford has the very marketable gift of de-mystifying economic theories. He shows, with relaxed verbal charm, how economic principles shape our day-to-day lives, explaining traffic jams, high coffee prices and great more besides.
The Undercover Economist deals, in thoroughly unthreatening manner, with concepts like scarce resources, market power, efficiency, price gouging, market failure, inside information and game theory. Discussing these, he’s also letting readers into number of seemingly unrelated secrets: why organic tomatoes are rarely found next to regular tomatoes at the supermarket; why there’s Starbucks on practically every major American city corner; why the gap between rich and poor nations is so great; and how China became, seemingly overnight, an economic success.
Harford breathes life into economic reasoning, making the often esoteric and dull much more accessible and stimulating. Early in The Undercover Economist, he demonstrates how theories like David Ricardo’s 1817 treatise on farm rents can be applied to coffee shop locations and the cost of oil. As Harford puts it: “David Ricardo managed to write an analysis of cappuccino bars in train stations before either cappuccino bars or train stations existed. This is the kind of trick that makes people either hate or love economics … It’s easy to see the difference between 19th century farming and 21st century frothing, but not so easy to see the similarity before it is pointed out to us. Economics is partly about modelling, about articulating basic principles and patterns that operate behind seemingly complex subjects like the rent on farms or coffee bars.”
The particular charm of The Undercover Economist is Harford’s ability to illuminate the economics of small things, the everyday experiences and frustrations that readers can readily identify with and use them to explain the fundamental principles of the modern economy.
One small quibble: tea drinkers may get tired of his constant preoccupation with coffee – Starbucks, corner and railway station coffee shops, and the pricing of cappuccinos. Harford clearly needs lots of the stuff to keep the ideas bubbling. – Ian F Grant

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