The Undercover Economist

Mr. Harford is a renowned economist and a gifted writer and communicator, who successfully achieved in this short and well written book the difficult task of explaining to the general public the complexities of key economic principles in very simple terms. However, do not be confused, this book, though equally entertaining, is no Freakonomics [Revised and Expanded]: A Rogue Economist Explores the Hidden Side of Everything . The author's 2008 book, The Logic of Life: The Rational Economics of an Irrational World , is actually more Freakonomics style. Have you heard of price elasticity and price signals, scarcity power, market failures, marginal cost, externalities, asymmetric and imperfect information, moral hazard, stock prices and random walk, and game theory? Mr. Harford manages to explain the concepts behind this jargon in simple words with everyday life examples, allowing you to understand why the production cost of the cheapest oil fields in Saudi Arabia and Kuwait is just around $2 a barrel but we ended paying $50 (or up to $140 last year); why we pay $3 for a cappuccino but coffee growers in the third world just get a few cents for each cup; the rationale behind congestion pricing (the entire Chapter 4 is devoted to this controversial policy and how it also applies for curbing pollution); the economic reasons behind the failures of the US health insurance system; and the predictability of the stock market (the current financial crises proves Harford's point, who wrote about the "rational fools" in March 2005, and within the context of the dot-com bubble). In general terms, the first seven chapters provide the reader an opportunity to grasp key concepts and principles in the field of microeconomics. The three last chapters of the book take a different approach as the book turns more into the territory of macroeconomics, exploring equally interesting and up-to-date issues regarding economic growth, international trade, competition, the theory of comparative advantage, and of course, globalization. The reader is introduced to these concepts with a chapter on Cameroon, used as a case study to explain the reasons for poor countries being poor, and highlighting the role corruption, weak institutions, and trade barriers. The last chapter in contrast, presents how China was able to achieve explosive growth rates during the last three decades, growing faster than any country in history, rising from Mao's disastrous economic experiments through the power of market and prices. Chapter 9 is a must read, as he discusses the main issues regarding globalization in a nutshell. Here Mr. Harford courageously debunks several myths regarding the alleged negative environmental impacts and other associated evils of globalization. Not surprisingly he wisely chose the examples of Cameroon and China to support his point of view. This book comes very handy for the layman especially during these days of global economic crisis. I have a background on economics, and I do highly recommend it for anyone planning or having second thoughts about studying economics, the book will provide you with quite a general picture of what economics is really about. I also recommend it for those citizens interested in understanding a bit more about key economic principles, its everyday application, and who do not want to be easily fooled by politicians, interest groups, the media, nor even by many of the so-called "experts" and "gurus". The world would be a better place if every voter in the planet could grasp the basic concepts presented in this book.

This was a great introduction to the field of economics. He starts off talking about coffee shops and why they are at the top of every major subway escalator in every major city. Why not 2, or 3 shops? Why even 1? Why not a car dealership? He uses this to explain some key principles that then are used throughout the book. I now see things in a different way. Lessons from this book almost inform me daily. For example, I live in a suburb about 30 miles south of Washington DC. Driving down the road and passing a taxi, my wife pondered if a taxi driver in a dispersed county makes more or less than a DC cab driver. After reading this book, I felt fairly confident telling her that they most probably made the same amount of money. Why? Well, you have to read the book. He also gives a compelling argument for free markets and free trade. I don't believe he championed a specific political view (I lean left) but it made issues like trade with China make more sense. It is VERY dense. I suspect the alternative is a book twice the size with more fluff but it really makes your brain hurt from time to time. But what he says is always interesting. Anyway, I would highly recommend this book if you want to better understand what motivates people and how the world works.

First I will point out that I never had a course in econ, so that may be part of the reason I found this work to be so wonderful. In the CD version Robert Ian MacKenzie reads the book so that you think some devilish man is taking great delight in revealing to you the wicked ways of how the world works. Trickery and trust issues are a big part of this. The author, through MacKenzie, points out that the difference in a few cents worth of ingredients differentiates a product sold for about one dollar from one, more special, sold for three dollars. I do agree with another reviewer that the used car argument made by the author is not that tight. But an important concept is being advanced nonetheless. One of the many good takeaways for me is the economists' notion of truth, wherein the truth is determined by what people do and not what they say. What is important to people is shown by what they freely choose when they have the chance, and may have little to do with what they want their government to do or provide for them. It clearly is pro-capitalist, and well defends that view. E.g., while not being in favor of harsh conditions, it notes that sweatshops are not the problem but rather a symptom of worse alternatives the workers in a sweatshop have available to them. Sweatshops didn't cause terrible poverty, but even sweatshops make the lives of workers better. Overall I found this to be great fun to listen to. Intellectually, it is a powerful source of information and ideas to anyone who is not familiar with economics (I can't speak for those who are).

This book really helped sharpen my thinking on vital, everday economic realities. As you read and explore various situations that effect us all, you feel like a lot of foggy misconceptions are being shaved away and a laser clarity is put in their place. I wish everyone would read this book. We would have a lot smarter voting populace if they did. A lot of topics are covered, but none are removed from situations that intimately effect all of us. You get a lot of insight on how various retailers struggle to set the highest price (this chapter alone paid for the price of the book, because it has made me a smarter, better armed shopper.) You learn how the concept of "missing information" makes it hard to buy a good used car as well as for a free market system to create afforable health insurance (the relationship between used cars and health insurance was as eye opening as it was fascinating.) You also learn that ecnonomists have some very good solutions to handling traffic congestion and pollution, if only the politicians would learn and listen. This is just a sample of what is available, all written in a friendly, accessible style. No math, no graphs. Just a lot of clear reasoning and mind expanding information. Reading it was well worth my time. Hats off to the author.

An interesting, quick, easy to read summary of some novel thinking about how economics affects our every day lives. I've bought several excellent used cars in my life so I don't agree with all the analyses. Nevertheless, if you like economics, some passages are thought provoking.

One of my many regrets about my misspent college days is that I never took a course in economics. It was not until I got involved with several documentary projects dealing with economics that I started to learn about it through books. One of the best is Tim Harford's "The Undercover Economist." In this book, he explains why normal people do things that defy common sense: pay a big price for a cup of coffee or build a library in a third world country that can't hold any books because the roof can't keep out the rain. Long ago, in a book called Systemantics: How Systems Work and Especially How They Fail , I learned that systems work best that are designed to run downhill. That's one reason it's hard for reformers to get people to do the right thing if it involves more cost or effort than the wrong thing. Harford clearly knows the difference between uphill and down, and in ten delightful chapters, he explains it to his readers. This is an excellent book with which to start learning about economics. It's easy to read, a lot of fun, and really informative.

The science behind this book is, in the end, a dumbed-down version of what you would learn in Economics 1 at any college or university. The author explains basic principals such as externalities and Adam Smith's "unseen hand"; there are no break-through insights here. On the other hand, this is no college textbook. It is much more fun to read and much more accessible. There are no formulas or math. The concepts are explained in simple English, and then immediately applied to everyday life situations such as the price of coffee at Starbucks, health care and traffic. Whether or not you know anything about economics, you won't be bored. Most importantly, this book helps people think in rational terms about hot-button issues like free trade and the environment. The author has his own views -- we all do -- but his approach to issues is rational. He encourages us to think critically, rather than simply reacting emotionally. For that reason, if no other, this is a worthwhile book and the world would be a better place if everyone read it. Note: my undergraduate degree is in economics, although that was a long time ago and I have not studied it, nor used it in my job for about 20 years.

I just finished this book, and I thoroughly enjoyed it. I'm so glad that the public is taking a stronger interest in economic issues. The Undercover Economist does a great job of advocating the economist's perspective on many of today's foremost controversial issues - immigration, foreign trade, price controls, income redistribution, among others. It does a great job of teaching the reader to think more like an economist with comperable issues. What it is not is a replacement for learning to look at new situations which don't mirror those listed in the book; however, it doesn't purport to be such a book, it merely aims to give the perspective listed above. Tim Harford's language is very clear and precise, often humorous, and agreeable. He is not condescending to those who disagree with him; instead, he takes a, "Well, that's a way to look at it, but I believe this way is better because..." type of attitude, which is wonderful and reinforces his credibility. Overall, a wonderful book for anyone interested in learning more about the "dismal science" which this book makes much less dismal.

This book is a great way to start thinking like an economic. As a student in a business school I found many concepts used in my classes

Ich hatte das Buch gekauft, um unterhaltsame neue Einblicke und die Zusammenhänge des täglichen Lebens zu bekommen. Analog zu Freakonomics. Dieser Wunsch wurde nur geringfügig erfüllt. Tatsächlich ließe sich das Inhaltsverzeichnis auch umformulieren zu Überschriften wie: perfekte Märkte, Macht der Einkäufer, Steuern, Monopole, Externe Effekte usw. Viele wesentlichen Elemente dessen, was man in der Mikroökonomie im Grundstudium lernt, werden in diesem Buch in Prosa gepackt, zu netten Geschichten gestrickt und mit guten Beispielen geschmückt. Ein freundliches leicht lesbares Buch. Es nimmt einen Teil der trockenen Theorie der VWL und ersetzt sie durch mehr Lebensnähe. So fehlen die Formen und erklärenden Graphen, dafür sind alle Elemente sehr anfassbar. Wer hat nicht schon einmal drüber nachgedacht, warum der Kaffee hier 1€ kostet und auf der anderen Straßenseite 1,80€? Trotz einer gewissen Enttäuschung 5 Sterne, weil er seine Punkte wirklich sehr anschaulich transportiert.

Tim Harford’s “Undercover Economist” is a clear and well argued read. You don’t need any prior economic knowledge to understand his key arguments and he explains things in clear and simple language. The book is along the same lines as a raft of populist social/science books - perhaps the most obvious comparison is with Steven Levitt’s “Freakonomics”. However, while the two share an easy reading quality, Freakonomics is more concerned with micro economics (and human decisions) while Harford also covers macroeconomic arguments. Of the two, I found Harford’s more interesting and insightful. It seems more concerned with explaining things than going for the shock value. That’s not to say that there are not some contentious issues - the economic view of sweatshops for example won’t thrill everyone but his arguments are well reasoned. There is a clear development of Harford’s approach - from the importance of scarcity right up to looking at the reasons for China’s development. The content of the chapters is cross referenced so you get a real sense of an argument building. The concept of Harford as an “undercover economist” is the only area that doesn’t live up to the promise. Sure there are times when he uses the idea to explain why things are as they are from an economist’s point of view - notably looking at coffee prices - but while there are times when it is a useful device, for much of the book the undercover concept is a bit spurious. It’s really more of an explanation of why the world is as it is economically. It’s both an enjoyable read and a very good and clear introduction to some key economic ideas that will give some useful examples to explain the key ideas.

Wether you're an economics student, or an economic graduate, this book helps you to widen your view of the economy and to take back some concepts that you maybe forgot during the years. Absolutely recommended. If English isn't your native language you can still go for it, it's pretty comprehensible.

Hard work at times but great book