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This is an entertaining and informative journey through some aspects of economic theory. By using contemporary examples (such as the various factors that influence the price of a cup of coffee), Mr Harford removes some of the mystery and explains how some of the conclusions consumers may draw can be both logical, and flawed. While this won't make your coffee any cheaper, it may make some decisions more informed. And you can always strike up a conversation with your fellow coffee aficionados about the analysis of coffee rents. Just wait until they've had at least one coffee first.
Readers should note that this book addresses market behaviour rather than social issues. Most readers will consider sweatshops to be inherently bad: however the alternatives for the participants need to be considered as well.
Like other books in this field, this could be a starting point for discussion. Knowing more about the way in which supply, demand and the markets which address both work gives some insight into a field which is often seen as full of dry, mechanistic arcana. Who knows? You may even understand the used car market.
Jennifer Cameron-Smith
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Harford is a mecro-economist, a bridge between macro and micro economics. Harford explains macro-economic phenomena such as retail pricing, stock market behavior, taxation, health-care, environment, and licensing air-waves; by one-by-one getting inside the heads of each stake-holder on that poker table and dissecting their behavior in accordance with the very first principles of economics: scarcity and choice. However, the insights only go as far as the developed world does. In the last 3 chapters where Harford tries to similarly explain the woes of the poor and developing worlds with examples of Cameroon, Belgium and China; his views quickly appear shallow and cliche, lacking the same wisdom as the rest of the book. 70% of the book is therefore a 5-star, and the rest is a 2-star.
The book loses its panache is in trying to decipher globalization and the developed world through the "X-ray goggles of the undercover economist". Harford falls into the trap of taking the usual one-dimensional view of large developing countries (India and China in particular) as if they are obviously in a certain step in their evolution to become more and more like the developed world. These simplifications might be half true, but hardly insightful. Any statement of generalization about either India or China is like generalizing about North and South Americas combined (a contiguous land-mass with about a billion people) or Europe and USA combined (the developed nations with about a billion people). How valuable or insightful can any statement about the Americas as one entity or USA & Europe as one entity be? It is as futile, therefore, to endeavor the same for either India or China without having an appreciation or perspective on the infinite diversity of the subject.
With the Undercover Economist, Tim Harford de-mystifies the wiggling jelly of economics (where you cannot kill farm-destroying birds without suffering population explosion of farm-destroying insects and so on). What sound like conundrums are actually logical explanations of common-sense causal chains. For example, he explains that "more rational the behavior of stock market investors, the more erratic the behavior of the stock market becomes." I try to summarize: rational investors would buy shares yesterday if it was obvious that they would go up tomorrow, but then everyone would buy yesterday driving the price high enough so that it cannot go higher tomorrow. Rationality would obviously and consistently second-guess rationality, implying rationality cannot lead to predictable behaviour. The only thing left then is unpredictable news, which is a random event. This means that shares would behave like random walks. But if this was absolutely true, it would be a paradox, since rational investors would not invest in shares and only invest in predictable alternatives. The balancing point then lies somewhere in between. Harford then goes on to draw parallels with supermarket queues and how everyone tries to predict the fastest one, and a game of poker with players analyzing the outcome based on fundamentals yet betting based on their understanding of what the other players are thinking.
A very readable economist with a fun and easy style. References to Nobel Laureates in Economics, and key theorems of importance would also make you keep going back to the book. This is one to keep.
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I really enjoy that the book came in record time and in perfect condition. They had said that it was used, but excellent condition and yet...it was more than that! It was soo nice! Thanks a bunch.
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I grabbed this book from my local bookstore after being drawn in by the title. I've always had an interest in economics as whole, but never took the time to really dig myself into some reading material (besides the voluminous textbook I was forced to trudge through in college).
Mr. Harford does a satisfactory job of trying to explain the devil in the details behind many of society's microeconomic transactions. Like a few of the other reviewers, I did find the text to be a bit dry, but maybe it's a cultural thing (I believe he is English). That being said, I think it's fair to say that after a second reading, one should be able to have a fairly strong grasp of the ideas the author puts forward. Tim takes us through economic ideas such as marginal value, externalities and scarcity and presents multiple examples of these in action. I particularly enjoyed his challenges put forth to a lot of popular ideas (Anti-Globalization, Environmentalism), based on standard economic thought.
I believe this book is an excellent starting point for further study of the world of economics.
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Nutshell review - Like several other books in this same vein the Undercover Economist provides interesting and engaging insights into the "dismal" science. A worthwhile read for us armchair-economists.