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The Undercover Economist made for interesting reading. For me personally it was an excursion into an area I thought that a. I had no interest in and b. I remembered nothing about from my economics degree. I was actually surprised that I found some of the explanations too basic, and that apparently I did remember a fair chunk of first-year microeconomics (I actually had to resit that exam, I did so badly the first time round ;-).

The first part of the book (chapters 2 - 5) is essentially a high-level introductory course in microeconomics, except without the graphs, and with a lot of stories which pull out the relevance of microeconomics to our every-day lives. Tim Harford takes us through the theory of perfect competition (or how a perfect market would work and why it would be efficient), and then spends three chapters talking about the most common modes of market failure (scarcity power/anything that moves us away from perfect competition, externalities, and asymmetric information). He uses some interesting real-life examples to illustrate all of these: he's almost got me sold on road pricing (to be fair I was pretty sold on road pricing before that), and the example he uses for asymmetric information - the US healthcare system - is particularly powerful and relevant right now. Anyone involved in the current US healthcare debate should read chapter 5 of this book.

Part 2, or chapters 6 and 7, gives us an introduction to game theory, through the examples of the stock markets and the auctions for 3G mobile phone licenses.

The last part (chapters 8 - 10) focuses heavily on international development, covering "why poor countries are poor" (perverse incentives and lack of institutions), the benefits of globalisation, and "how China grew rich" (controlled economic liberalisation).

For a fluffly left-wing liberal like me, The Undercover Economist sometimes makes uncomfortable reading. There is a remarkably elequent defense, for instance, of sweatshops. They are, so Harford's argument, better than a whole host of alternatives available to the local population (such a scavenging on landfill sites) and they are a step up on a journey towards something better. Boycotting companies who operate sweatshops hurts the employees of those sweatshops and benefits organised labour in the West. (Harford incidentally also identifies trade unions as an example of market failure of the scarcity power/imperfect competition variety.) Uncomfortable reading indeed, yet some of the arguments are extraordinarily poweful, particularly when it comes to international development.

Probably one of the book's weakest points is glossing over some of the practicalities of implementing perfect competition. Harford admits to the three big modes of market failure and goes some way towards proposing a solution rooted in "keyhole" microeconomics - small interventions targeting the specific problem. Yet, how exactly one would implement a road pricing system which genuinely addresses all externalities generated by road transport, and who would actually get the money generated by such a system or decide how it is spent remains unexplained.

Harford also acknowledges that while markets do create the most efficient outcomes, they don't necessarily create fair outcomes. He goes some way towards proposing that fairness can be created by adjusting the starting positions and letting the market take care of the rest, but again, this is vague on practicalities.

Ultimately, Harford, like Keynes, would like economists to be "like dentists" - able to give specific advice and make specific interventions to achieve certain outcomes. And while some days I wish we could live optimally ever after in a technocracy, The Undercover Economist has actually convinced me that that is not practical.

Something else that struck me while reading the book is how quickly some parts of it have aged. Particularly the chapter on stock markets left almost no impression at all in my brain: the book was published in 2005 and in 2009 any stock market crash or financial crisis before the current one (other than the Great Depression) hardly seems worth talking about. I would actually quite like to read what Tim Harford has to say on the current crisis.

I am also a loyal listener of Tim Harford's Radio 4 show More or Less and thus was both shocked and delighted to find what could possibly be described as an instance of improper use of statistics. Have a look at the stats quoted for China's exports in chapter 8 and those in chapter 10. Colour me puzzled. ;-)

Finally, Bechdel. Yes, non-fiction, we could use the "not appliable" cop-out. However, something struck me in the final chapter. Harford devotes half a sentence to explaining how China's one-child policy has contributed to its rapid growth by freeing up women's time for work outside the home. I would absolutely love to read a Tim Harford take on the subject of women working outside the home, the challenges of childcare, and the effect all this has on the economy. Pity he didn't choose to go down that path. Thus, Bechdel fail. ( )

Well-written and interesting look at many aspects of economics and basic games theory in everyday life. Know going in, though, that he's a dedicated free-trade advocate, and while his info and analysis are excellent as far as they go, he does not put together the "scarcity" aspects at the beginning og the book with the ways globalization is reducing the number of options as companies get bigger and bigger, and options become fewer and fewer- thus leading to artificial scarcity, high prices, and artificially low wages. ( )

A better book than Freakonomics, Harford is wide-ranging without being scattershot like Levitt and Dubner. I found myself disagreeing with Harford in some places but have to admit he made me reconsider some things that I would never have expected to. Worth the read, but read with a critical eye. ( )

Good overview of economics, definitely opinionated guy, but well worth the read. Explains why trade tariffs are usually a bad idea, why buying products from 3rd world is OK and better for the world, and how to create incentives to solve problems. ( )