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The Undercover Economist: Exposing Why the…

The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are… (2006)

by Tim Harford

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The book is built with examples that many people care (at least somewhat) about to illustrate basic econ principles: Cost of coffee and immigration to illustrate scarcity; latte prices to illustrate price targeting, externality with traffic jams, inside information with used cars and sick people, etc.
The ony problem is that the examples remain in your brain while the principles get muddy. What is a marginal price, anyway? ( )
  kerns222 | Aug 24, 2016 |
Well, I've finally finished this book. Yup, it took some time. I usually like books like this but couldn't find enough to really keep me involved. The concepts of economic conditions which can make one item more profitable than another are here, but not in any particularly interesting way. The opening, which is where you really want to get readers on board with a book on economics, was tiresome. Too bad because the idea sounds good. (Harford writes about why some coffee locations perform better than others and what the price point is needed to achieve continued success. See? Sounds good, but wasn't. At least for me.)

Apparently, I'm wrong on the interest level to Hartford's work because he's got another Undercover book on the market. Sorry Harford, but it's one-and-done for your work. ( )
  RalphLagana | Jan 23, 2016 |
Quite engagingly written. Has the same problem as most popular economics books which is that it keeps asserting things that seem to me false. This makes it rather slow reading, I decided to take a break after the first chapter to ponder what I thought was so wrong about it. I'm not like the author; I don't hang out in book shops, I'm listening to it on audio.

Anyway, the first chapter was quite interesting. It started out with a discussion of the economics of selling coffee at high-traffic locations like subway station exits. Evidently, there is evidence to support that these coffee kiosks are only doing slightly better than even, the cost they pay to rent that location and to be the only coffee shop in the station are high. He goes on to discuss a perfectly sensible theory of David Ricardo about scarcity. While there is no shortage of a resource it is sold at a fairly low cost, because the sellers of the resource compete w/ each other for the buyer's attention. As soon as the resource becomes scarce, i.e, more people want it than can get it, its price goes up, sometimes a lot. In fact, the price of the resource goes up, so that the buyer is only making as much profit as they would make if they chose instead the marginal equivalent resource. The companies that put up coffee kiosks illustrate this principle at work. The owners of the train stations own the property, several coffee companies want the spot, so the rental contract can be made high. But hold on, we've left out the fact that all this wouldn't matter if people weren't willing to pay high prices for coffee. If they weren't, then the renters would have to charge a lower amount to the coffee companies, because they couldn't afford to pay that amount. He claims that the commuters spilling out of the subways are desperate for caffeine and "price-blind". I'm not sure that's the case, likely they are just certain that a Starbucks cup is a necessary addition to their look as they enter their place of work and that the price they are paying is the price they ought to pay because they are the kind of people who are too special to pay any less for their coffee. But that's a small quibble.

In the next part the author discusses banks and it all really falls apart for me. We can match the situation to Ricardo's theory like this. There is a scarce resource, good bankers. There is a demand for good banking, and people are willing to pay for it. Therefore, the good bankers cost a lot, and the bank barely breaks even. But no, that's definitely not what how he seems to be fitting Ricardo's theory to his bank example. Befuddled and a little exasperated here, but willing to try again.
  themulhern | Nov 29, 2015 |
Having read and loved the Freakonomics books, I was recommended this by a friend and thoroughly enjoyed it.

Harford explains some basic economic principles in an easy-going and approachable manner and then goes onto discuss various examples whereby if these principles were followed then people will be better off.

Very well reasoned arguments and thought provoking... ( )
  johnny_merc | Jun 13, 2014 |
Full disclosure--Tim Hartford runs my absolute favourite radio programme ever: BBC Radio 4's More or Less, a topical statistics programme. Yes, you heard me right. Basically, they do fact-checking on audience-recommended bizarre-sounding statistics. It's funny, fun, and relevant, and has the added benefit of actually catching all the zombie statistics that politicians use. Catch NPR ever having anything like that.

Anyway, all that simply goes to note that I was heavily, heavily predisposed to like this book. And I did.

This book covers the basic intuition behind some of the most important economic concepts. It's kind of like what I expected Freakonomics to be: more economics, less freak. Harford walks through various familiar examples and their economic counterparts, mainly avoiding jargon and weaving anecdotes into quite an entertaining book. I'm a computer scientist, not an economist, and my little knowledge of economics comes from algorithmic game theory and similar. It was very interesting to really see how an economist thinks. My major problem with all of the theories that Harford propounded was that they heavily depend on rationality, and maybe more what I might term "utlitarian rationality": that people are not only rational in their actions, choosing whatever strategy gains them the most utility, but that they equate utility pretty directly with monetary gain. I have two real issues with this: first, people really aren't very good at choosing rational actions. Harford neatly sidestepped terms like Nash Equilibria, but he did invoke the concepts--and those are basically impossible for a supercomputer to achieve. How on earth would we expect people to find them? Second, I totally disagree with the notion that people actually measure gain via what economists tend to think of as utility. For an example, look up the "Ultimatum Game": people are so motivated by spite that they behave totally differently than the models would predict. I was actually interested to hear how much these imperfections in our real world disrupted the models, but Harford didn't really address this.

However, that was my only disappointment in the book. I'm slightly familiar with economics and definitely learned something, as well as being entertained by a series of fun facts. For instance, did you know that when IBM created its laser printers, it created the "economy" line by taking the professional printers and actually adding a computer chip to slow down the printer, meaning that economy printers actually cost them more to make? The book is chock full of entertaining tidbits like that. I can't recommend it enough-- definitely a good read for anyone who liked Freakonomics. Oh, and go listen to More or Less. Best radio show out there. ( )
  page.fault | Sep 21, 2013 |
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Harford’s book “leads the reader to the point” where seemingly “outrageous” statements by economists seem sensible, says Tim Worstall in The Daily Telegraph. Anyone confused by “how the world works” will benefit from reading it.
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Amazon.com Product Description (ISBN 0195189779, Hardcover)

An economist's version of The Way Things Work, this engaging volume is part field guide to economics and part expose of the economic principles lurking behind daily events, explaining everything from traffic jams to high coffee prices.
The Undercover Economist is for anyone who's wondered why the gap between rich and poor nations is so great, or why they can't seem to find a decent second-hand car, or how to outwit Starbucks. This book offers the hidden story behind these and other questions, as economist Tim Harford ranges from Africa, Asia, Europe, and of course the United States to reveal how supermarkets, airlines, and coffee chains--to name just a few--are vacuuming money from our wallets. Harford punctures the myths surrounding some of today's biggest controversies, including the high cost of health-care; he reveals why certain environmental laws can put a smile on a landlord's face; and he explains why some industries can have high profits for innocent reasons, while in other industries something sinister is going on. Covering an array of economic concepts including scarce resources, market power, efficiency, price gouging, market failure, inside information, and game theory, Harford sheds light on how these forces shape our day-to-day lives, often without our knowing it.
Showing us the world through the eyes of an economist, Tim Harford reveals that everyday events are intricate games of negotiations, contests of strength, and battles of wits. Written with a light touch and sly wit, The Undercover Economist turns "the dismal science" into a true delight.

(retrieved from Amazon Thu, 12 Mar 2015 18:14:44 -0400)

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An entertaining and pain-free introduction to the key concepts of economics, by a Financial Times writer, this book is part field guide to economics and part exposé of the economic principles lurking behind daily events. Reporting back from Africa, Asia, Europe, and your local Starbucks, author Harford shows us the world through the eyes of an economist, and reveals that everyday events are in fact intricate games of negotiations, contests of strength, and battles of wits. He explains: why picking stocks is like picking a line in the supermarket; the connection between a drunken frat party and getting stuck in traffic; how coffee companies use fair trade products to skim money from customers--From publisher description.… (more)

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