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A Lively Look at Beginning Economic Theory
on July 15, 2006
The Undercover Economist successfully avoids mind-numbing equations, boring examples and abstruse subjects.
Using ten themes, Mr. Harford provides a popular platform for the latest thinking on economics.
In Who Pays for Your Coffee? he looks at how a desire for quick access to caffeine allows landlords along commuter routes to charge high rents for take-out coffee locations.
In What Supermarkets Don't Want You to Know? he explores how item choices and pricing are used to create the appearance of competitiveness while encouraging the price insensitive to pay as much as they like. He also explains the theory of why you pay so much more for fancier coffee drinks . . . and even possibly for fair trade coffee.
Perfect Markets and the "World of Truth" considers how economic policy can influence how people make decisions and allocate resources more efficiently such as by raising taxes on fuel while subsidizing the poor with a "head start".
Crosstown Traffic looks at the ways that social problems can be solved by a judicious use of fees, such as by charging for the right to pollute.
The Inside Story examines how imperfect information causes costs and prices to soar . . . as those who know what's good and bad take advantage of those who don't. People sell used cars that are lemons and hold on to ones that are peaches. Those who need health insurance because they are sick buy it while those who are well avoid the cost.
Rational Insanity describes talks about irrationality in economic decisions such as the recent Internet bubble.
The Men Who Knew the Value of Nothing is about describes the brilliant and not so brilliant auctions that economists set up to sell radio spectrum for new services around the world.
Why Poor Countries are Poor contains an unforgettable tale of what it's like in Cameroon and why the economy isn't likely to get better anytime soon.
Beer, Fries and Globalization makes the case for free trade.
How China Grew Rich is a nice study in government policy in China and how it overcame the worst problems of being a centralized economy.
If you know economics, all that will be new in most of these chapters will be the examples, which are fairly new and interesting.
If you don't know economics, you probably won't follow some of the chapters such as Beer, Fries and Globalization.
So this book will be most appealing to those who know a lot about economics and will be interested to see how key ideas can be explained more simply and in a livelier way.
For those who don't know economics, it's a lot better than my economics professors in explaining key ideas. But you may end up learning more than you wanted to know. Many of the chapters are of more interest to economists than the typical non-economist reader. I suggest you selectively read the chapters to focus on the ones that seem interesting to you.
I thought that the last chapter on China had the most interesting material and explained it very well.
Some people will compare this book to Freakonomics. That's a peculiar comparison to make. That book uses economics to provide new perspectives on old problems. This book, instead, tries to teach economics. The two books have substantially different purposes and perspectives as a result.