Saturday, June 30, 2007

The Undercover Economist

From my reading list in January, I forgot to mention The Undercover Economist by Tim Harford. Harford writes "The Undercover Economist" column for the Financial Times in London; this book is an extension of that column.

I thought the book was quite good. It sounds like a boring topic, but its not... It's basically a look at how the world is set up in the mind of an economist. Harford covers topics ranging from poverty in Africa (why are poor countries still poor?) to the difficulty in buying a used car (the dealer knows whether its a lemon). Each topic is covered from the point of view of an economist.

That may be the books shortcoming however. I have a bachelor's degree in economics. Therefore, when he was explaining topics like scarcity, marginal costs, and market efficiencies, I knew exactly what he was talking about. Unfortunately, I don't think the layman would be able to follow along with the ideas in his book. Don't get me wrong, Harford does a good job in explaining what he's talking about. But when half of the population doesn't understand the basic concept of supply and demand, it's unlikely that they are going to understand that a producer produces where the marginal costs equals the marginal benefit.

So, having said that, if you're interested in economics, this is a great book. If you want a more street level book which is much easier to understand, I'd recommend "Freakonomics", the best-seller from 2006. It's focus seems to be much more on the consequences of peoples actions from the drug trade to the name that parent's choose for their children. It's quite an interesting read and I'd recommend it as well.