Good Book Review About The Undercover Economist By Tim Harford
The Undercover Economist by Tim Harford, The Financial Times columnist, is one of the best seller books about the economy written in popular nowadays “easy-to-understand” language. The person that lacks economic education can acquire the main ideas of the book. Harford uses simple language and a variety of life experience examples and interesting stories to support and explain major economic concepts and theories. The author considers the fundamental market principles in the light of daily routine which most people are familiar with. In such way he paints a picture of how the economic system actually works.
The book consists of ten chapters. Each chapter studies separate economic phenomenon. However, all of the chapters are correlated and create Harford’s complex vision of the economy. The first three chapters of the book are dedicated to basics of the classic economic theory. The author describes the concepts of scarcity, the price-generating mechanisms and perfect market conditions. He uses smart and actual examples: how Starbucks cup of cappuccino price is generated; or just gives general advice how to shop in a supermarket.
Despite the entertaining part of the book, at some point the reader can start feeling a bit disappointed as the author explains the postulates that were established long ago and are numerously highlighted in other books. However, further chapters reveal popular and Nobel Prize winning theories of the late twentieth century such as game theory, price externalities and imperfect information theory. Harford gradually illustrates the market evolution and how it changes our lives. He successfully explains how microeconomic basic principles affect the world’s “big picture”.
The novelty and value of the Undercover Economist is contained in Harford’s attempt to solve acute social issues and answer all-time big philosophic questions. For instance he tries to measure human life through the American private insurance sector or persuades that purchasing a used car is always a bad bargain because you never know the real value while the seller does. Harford proposes the solution to constant traffic jams, researches world globalization process and forecasts the behavior of financial markets after the dot-com internet bubble. Sometimes he tries to jump above his head by touching the global issues that cannot be fully discovered within one chapter. It seems that the chapter about poor countries such as Cameroon and Nepal is not complete and author tries to target too many issues at once. The chapter about dealing with air pollution is rather controversial despite the presence of rational thoughts.
One way or another, the book represents a solid work performed by Harford. Moreover, the book carries his unique philosophy. Harford explains that economy is not about the GDP, math calculations or pure rationality. The real economy consists of human relations, social burdens and traditions that cannot be calculated or predicted for sure. The author stresses that GDP cannot account for air pollution or traffic jams, the game theory is so complicated that only genius like Neumann can actually effectively adopt it. And how can the system be rational if “President Franklin Roosevelt introduced an income tax of rate of 79 percent, but the threshold was so high that the tax was paid by only John D. Rockefeller” (76).
The Undercover Economist is one of the books to read before any other economic literature. The book is not innovative or industry-breaking, but it gives more understanding of how the economy works than most of theoretical textbooks.
Harford, Tim. The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor--and Why You Can Never Buy a Decent Used Car! Oxford: Oxford UP, 2006. Print.