Book: The Undercover Economist by Tim Harford

Excellent; should be read by everyone who doesn't already know some economics

Tim Harford
The Undercover Economist: Exposing Why The Rich Are rich, The Poor Are Poor -- And Why You Can Never Buy A Decent Used Car!
Oxford University Press, 2005
ISBN-13: 978-0-19-518977-3
ISBN-10: 0-19-518977-9
252 pages (main text)

The Undercover Economist is an excellent book that pretty much everyone should read. At least everyone who doesn't already have a fair knowledge of micro-economics. (That is, the economics of individual transactions.) To many people, that will make the book sound like it's a big bore. I thought that economics was a bore until relatively recently, but it turns out that that's not the fault of economics, but of the way that it's taught and written about.

In my college, people who wanted to go to business school routinely majored in economics. As far as I (or anyone I knew) could tell, the department, or perhaps the school's administration, considered that there were too many people who wanted to do that. And so they made the introductory courses in economics deliberately difficult and annoying. For many years after college, all that "economics" meant to me was a subject that caused people to complain a lot about their homework. That was more than a slight disservice to me and the other the students there. Of course, it seems that plenty of colleges do the same thing and I could equally criticize almost all high schools, where the subject could also usefully be taught.

Why should we care much about economics? It turns out that economics has useful and important things to say about a lot of questions that we run into in daily life, including the value of many policies that politicians propose. Should the United States ratify the Kyoto accords? You can't have much of a discussion about that without deciding how much you want to discount the future. Does the U.S. government's Social Security Trust Fund exist in any meaningful sense? It's hard to discuss that without knowing something about how government bonds work. Does increasing foreign trade harm the American economy? David Ricardo answered that question in the early 19th century.

"OK", you may say, "supposing that I believe that economics is good for me, Are you really claiming that it's not like spinach or Latin." In fact it's not. When it's explained well, much of economics is perfectly comprehensible and, indeed, very interesting.

Tim Harford is thoroughly aware that economists haven't done much to make their subject interesting or even comprehensible to other folks. He sets out to correct that in The Undercover Economist. The title is a bit misleading. There's nothing that Mr Harford, does that's at all undercover. The Economist As Detective might have been more descriptive. The most descriptive title Micro-Economics Made Not Boring probably wouldn't have sold many copies.

If you're willing to believe that economics is important and if you're willing to believe that it can be interesting, does Mr Harford really succeed? Here's an example, from the end of the introduction, of the tone he takes:

    My aim in this book is to help you see the word like an
    economist. I will tell you nothing about exchange rates
    or business cycles, but I will unlock the mystery of
    secondhand cars. We'll look at the big issues, such as
    how China is lifting a million people a month out of
    poverty, and the little ones, such as how to avoid
    paying too much money in the supermarket. It's
    detective work all the way, but I'll teach you how to use
    the investigative tools of the economist. I hope that by
    the end of the book, you'll be a more savvy consumer --
    and a more savvy voter too, able to see the truth
    behind the stories that politicians tell you. (pp. 3-4)

Mr Harford doesn't try to persuade us that all of economics is interesting. He cheerfully admits, "Reading accounts is dull" (p. 8). Happily, the interesting parts of economics are pretty much the same as the useful ones and he does an excellent job of describing and discussing them without getting caught up in jargon. For example, the first chapter is largely devoted to the economics that can be learned from buying a cup of coffee.

Mr Harford does not over-reach. He makes it clear what an economist can and cannot do: "An economist cannot solve these ethical conundrums, but economics can unwrap them so that at least the ethical question becomes clearer" (p. 53).

There's plenty more to be said on all the subjects Mr Harford discusses and some subjects that I wish he had included. But neither of those things is surprising. Mr Harford has produced a very interesting and highly readable book that contains at least most of the economics that every person should know. And that is an impressive achievement.

There are a few small editing errors in the book. The name of the grocery store is "Whole Foods", not "Wholefoods" (pp. 42, 43). IBM's product is the "Laser Printer E" not the "LaserWriter E (p. 51). And there's "ergo" where something like "that is" is wanted (p. 225).

Posted: Tue - December 20, 2005 at 06:50   Main   Category: