bookspluslife

April 24, 2012

Book: The Undercover Economist by Tim Harford

Filed under: Books — Tags: , , , — krishnafromtoronto @ 12:47 pm

The full title for this book is The Undercover Economist – Exposing Why the Rich are Rich, the Poor Are Poor–and Why You Can Never Buy a Decent Used Car!   I realize that the accompanying picture does not say this, but it was the title in the edition that I read, and I thought it is cute enough to mention here.

This a supremely wonderful, well-written book, and amazing in its broad scope and yet simple to read. You do not have to know any economic principles to follow this and it is told with humour and verve. Again, like Eats, Shoots and Leaves of Lynne Truss (reviewed earlier), the passion for the subject shines through, and is very catching: only this time the object of the passion is economics, and not the English language.

It follows the same path made famous earlier by Freakanomics, which tends to apply pure economics to everyday social problems and attempts to answer intriguing questions, but in my view, this book does it better and takes on a wider canvas.

It starts from first principles, assuming nothing, and takes you through a series of simple, logical, sensible stuff to suddenly radical conclusions – you start to wonder `How did I arrive here?’

Do you want to ponder the mysteries of life such as `Why does a Starbucks Hot Chocolate priced at $2.20 while Coffee is priced at $2.55, Coffee Mocha at $2.75, White Chocolate Mocha at $3.20 and Coffee in a 20 oz. cup is priced at $3.40?” You may think that you know the answer, but the answer the author gives will most likely surprise you!

He compares the placement of products at the very entrance of the supermarkets, and compares the products in two branches of an identical supermarket chain just three blocks apart. What he finds, and the reason behind it, amazed me, and it will amaze you too. The same trick is behind the sales promotion in stores, and how they are done!

Are you very pleased that Environmental awareness is spreading through the planet and that there are Carbon Neutral parties that ensure that even the guests who arrive do not pollute the atmosphere? Are you impressed with their commitment to the environment? Are you glad that Fair Trade Coffee is available so that you can feel good drinking coffee that did not exploit coffee farmers with exploitative prices? Read this book to find out who really benefit by these, and why some of these policies are unintentionally daft! The answers may shock you.

Are you astounded that Britain’s medical authorities have to take a position that if you lose sight in one eye it is OK, but they will get worried if you lose sight in both eyes? Do they really? If so why? Read on.

The story of telecom bandwidth is covered with a superb analogy of two homeowners trying to sell near identical houses which are valued at $300,000 by auctions. One of them ends up with an offer of $3000; the other ends up with an offer for $2.5 million. Why? What did the second homeowner do right?

Why is Cameroon poor in spite of the obvious ways of improvement available to it? How come China, with an equal level of poverty just 15 years or so ago, and a Communist government to boot, managed to make such impressive progress? Why cannot Cameroon do what China managed to do? Read on.

Are you glad that multinationals got their come-uppance for exploiting labour in sweatshops in Third World countries to produce cheap products? (Think Nike and the scandal of its Chinese factories a few years ago.) You want another perspective, again from logical principles? You have to read this book.

Some of the conclusions are so against our ingrained sense of fairness that it is difficult to accept the results; But you can always count on the book making you pause and think, even when the conclusions are unpalatable.

Except for a few (seven or so) pages in the middle where it gets slightly technical (and so feels like you are reading  jargon-riddled arguments), the book is simple, humorous and wonderful to read.

A great read, I enjoyed it. A radical approach to both explaining economic principles and mysteries of life!

I would award it a 9/10

— Krishna

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