Customer Reviews

The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor--and Why You Can Never Buy a Decent Used Car!

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If you read only one pop economics book this year, The Undercover Economist should be it. Harford, a columnist for the Financial Times among other distinctions, has written a book that could almost serve as a textbook for an Economics 101 course. But it's emphatically not dry or dull. Instead, what Harford has done is convey the excitement, the power, and the often counter-intuitive results of economic thought. In so doing, he has written more or less the economic equivalent to The Selfish Gene.

Many recent books (notably Freakonomics) have dealt with the more exciting realms of economic research, such as the application of certain economic models to what most people would consider non-economic behavior. And far more books have talked about "economics" in the context of even trendier ideas like globalization (think The World is Flat or even No Logo). Such books, however, are reflections of marginal (in the case of the former) or unsophisticated (in the case of the latter) economic schools of thought.

Harford presents the orthodoxy in all its glory, and reminds readers that economists really do see the world in a different--and fascinating--way. He explains simple, but often misunderstood, concepts like adverse selection (that is, why health insurance costs too much), as well as even simpler, but far more consequential, economic models, such as David Ricardo's explanation of why landowners, and not farmers, make money from rising crop prices. Along the way, he explains why the prices at Safeway and Whole Foods are about the same--and why the prices for items on the top shelf are higher than prices for the same goods on the bottom shelf.

Granted, the book has its flaws, principally its (market-driven) lack of any equations or graphs and, more important, its refusal to take up any serious questions of macroeconomics. If you want to understand how recessions occur or how federal spending affects the world and national economy, then you're out of luck. But in focusing tightly on basic microeconomic principles--the foundation of the most insightful parts of economics--Harford succeeds in keeping the book accessible and useful.

I just finished this book, which is a bit like a real life cheat-sheet. Give this guy the Nobel prize: he made economics INTERESTING AND FUN for me!!! A dreading challenge, believe me!

Economics is everywhere. We're surrounded by it, but most people do not think about it in they're daily lives. That's unfortunate: one would certainly learn to drive before standing behind the wheel of an automobile. So why not learn about the economic incentives that actually drive most of our own behavior before getting out and getting hit by that $2.90 latte?

Learning about those incentives is not only worth it, as the examples in this book prove again and again; it also helps you make sense of what is happening around you, and therefore make better, informed choices. If one understands how most things are driven by the invisible laws of trade, competition, inflation and cost/spending or tax incentives, then one has less chance to get abused by such a system. Even better: this book shows how to ride that system and take advantage of the inherent value one holds as a consumer.

I am finishing writing this review and am going out get a latte and do some grocery shopping. Now that I've read Tim Harford's book, I know where to go and how to make the best use of the scarce money I have (but I won't reveal the tricks here, as it would be like revealing a surprise end to a good book).

My bet is that I'll be able to save what I paid for the book by the time I log back in to Amazon to see if my review has been picked up or not!

Steve Levitt's "Freakonomics" has made the economics of everyday life a trendy subject for readers and very lucrative for economists. Tim Harford has caught the wave with his own "The Undercover Economist." However, "The Undercover Economist" is far better.

"The Undercover Economist" does an excellent job at explaining much of economics theory through the simple experiences of everyday consumers. We all buy coffee, go to the supermarket, buy airline tickets, buy used cars, and buy or rent housing. He explains the underlying economic forces that apply to our everyday purchasing choices by relying on his extensive background in macro and microeconomics, but also Game Theory, and Behavioral Economics. As a result, he educates the reader in a broad based knowledge of economics ranging from the basic (macro economics) to the cutting edge (Game Theory).

"Freakonomics" deals with obtuse subjects that have nothing to do with consumers' everyday lives. When is the last time you were concerned with Sumo wrestlers or Chicago High School teachers cheating, or whether abortion in the 70s influenced the crime rate in NY City in the 90s. These events have nothing to do with economics but rather regression analysis. Levitt, unlike Harford, never covers basic economic topics like demand, supply, and price elasticity just to name a few.

Harford does an excellent job of tying microeconomic events to the World economy. Your buying a cup of coffee at Starbucks boosts Brazilian coffee exports to the U.S., which affects the U.S. current account deficit that impacts the U.S. demand for foreign capital that may affect interest rate levels and future economic growth. Meanwhile, by focusing on Sumo wrestlers cheating Levitt can't readily explain the Japanese trade surplus. Thus, Levitt boxes himself in a corner with nowhere to go.

Harford is a better writer. He is a well-established British FT columnist. Levitt can't write for the general public. So, he hired himself a co-author, Stephen Dubner, to put prose to paper. This strategy worked only up to a point, as Dubner wasted much ink on adulating Levitt. As a result, "Freakonomics" comes across as a PR campaign for Levitt. There is none of that self-adulating distraction in Harford's book.

Harford gives credit where credit is due. Levitt truly believes he invented a new science "Freakonomics" or the economics of everyday life. But the subject is as old as economics itself as Adam Smith in his 18th century writings always referred to everyday common transactions between local merchants and consumers. Levitt just invented a meaningless word that turned out to be lucrative. Harford often acknowledges his predecessors (from Adam Smith to Steven Landsburg) and does not claim to have invented a new science. He just intends to educate while he entertains. Harford has been successful on both counts. Levitt has not.

I recommend several other good books on this subject. These include: David Friedman's "Hidden Order: The Economics of Everyday Life", Gary Becker's "The Economics of Life", and Steve Landsburg's "The Armchair Economist."

After having taken nine economics courses at both undergraduate and graduate levels over the years, I found Harford's UNDERCOVER ECONOMIST to be the most enjoyable and penetrating popularization of the subject to date. Better even than Landsburg's THE ARMCHAIR ECONOMIST, Freiedman's HIDDEN ORDER, or Wheelan's NAKED ECONOMICS.

Harford is a good writer and is particularly good at explaining reasons for the disparity of wealth and poverty in various countries around the globe.

Not to mention explaining why Starbuck's coffee costs so much (and it isn't Starbucks who is gaining the lion's share of the profits...)

It also explains why Amazon pricing seemed to vary on my wish lists from time to time! (Targeted pricing based on whether I had deleted my 'cookies' recently...)

There is much else contained here for the curious and informed reader... covering real world examples embracing both micro and macroeconomics.

Excellent. The best introduction to the 'dismal science' yet produced.

Note: Levitt's FREAKONOMICS is more or less a collection of disjointed articles that vary from superb (the economics of Chicago gangs) to mundane (trends in children's names) depending on your interests. Your interest will waver on each topic depending on whether you prefer watching 'The Sopranos' or the Lifetime channel.

Harford's volume, on the other hand, contains much of the important theory you would learn in introductory microeconomics and macroeconomics classes, albeit presented in a much more interesting fashion than you would encounter in almost any business school in the country.

This is a great book to follow up with if you enjoyed Freakonomics. This book's subjects are less amazing but are more practical and he goes into more detail.
Here are some examples:
1). Starbucks large sizes only cost pennies more but they charge much more for them because they want the people who don't care about spending more to have the option to spend more.
2). He explains why countries like Cameroon stay so poor. It is due to the way the government punishes business with ridiculous taxes, and the government is completely corrupt and positions in government are rewarded based on connections.All decisions are based on politics, they have killed capitalism and the reward for capatilism.
3). If we closed down the sweat shops around the world the workers would be forced to go back to digging through garbage dumps for a living.The sweat shops the west think are so horrible are actually a huge step up for these impovershed countries and could lead to manufacturing jobs.Sweat shop workers are like the middle class of their villages.
And much,much,more....
I found this book very thought provoking and enjoyable, I learned that our country is the most advanced in the world through the power of unrestrained capitalism.Because it works!

The title of this review comes from the Economist's recent piece on Tim Harford's book. In my view, the Undercover Economist is quite simply a triumph of good writing. Harford turns the "dismal science" on its head, making the concepts that most of us failed to learn in econ 101 understandable and RELEVANT to our everday lives by using them in everyday situations, from walking the aisles of a supermarket to picking the stock market. How many of you have been guilty of the "Grolsch method" of stock picking? Read this book to find out!

Tim Harford has the clear expression of complex ideas gliding off the page. There is a joy in having insight served up clear and whole, to which he neatly adds wit. It makes for a completely enjoyable book that makes the most of the application of economics to the real world -- a way of thinking about messy reality that polishes its shoes, straightens its tie, and makes it presentable to even the most sceptical.

This book really helped sharpen my thinking on vital, everday economic realities. As you read and explore various situations that effect us all, you feel like a lot of foggy misconceptions are being shaved away and a laser clarity is put in their place. I wish everyone would read this book. We would have a lot smarter voting populace if they did.

A lot of topics are covered, but none are removed from situations that intimately effect all of us. You get a lot of insight on how various retailers struggle to set the highest price (this chapter alone paid for the price of the book, because it has made me a smarter, better armed shopper.) You learn how the concept of "missing information" makes it hard to buy a good used car as well as for a free market system to create afforable health insurance (the relationship between used cars and health insurance was as eye opening as it was fascinating.) You also learn that ecnonomists have some very good solutions to handling traffic congestion and pollution, if only the politicians would learn and listen.

This is just a sample of what is available, all written in a friendly, accessible style. No math, no graphs. Just a lot of clear reasoning and mind expanding information. Reading it was well worth my time. Hats off to the author.

"The Undercover Economist" covers a broad array of economic concepts, mainly using anecdotes and easy-to-understand hypothetical examples to illustrate the benefits of things like free trade and market pricing. Strikingly, you can read pages at a time without encountering a single number -- the book is clearly aimed at an audience which was scarred by too many graphs and charts in high school. I am fairly familiar with the economic concepts already, but I enjoyed the book too -- the author's easy-flowing writing style and sense of humor make the economic lessons go down easy. The wealth of real-world examples, from a comparison of India to China, to a proposal of how American health care could be improved, to an examination of why coffee seems so expensive, provide strong backing for the author's arguments. In my case, the book is preaching to the choir, but it also might sway people who considered themselves anti-globalists without ever considering the unintended consequences of their beliefs. "The Undercover Economist" is a good and interesting read.

A lot of people are going to draw comparisons between The Underground Economist and the inexplicably popular Freakonomics particularly since the author of Freakonomics is used as the leading quote on the cover. The fact of the matter is that Freakonomics had very little to do with traditional economics per se while Underground is pretty much an economics books with some coolness added to keep it entertaining. The first chapter is essentially a primer on supply and demand.

Tim Harford is an economist from England who pushes a free-trade, pro-globalization agenda. In fact two of the five authors with quotes on the back cover have pro-globalization books in their `Author of' section. The second to the last chapter is a hard sell of globalization and the final chapter is a portrait of the happy results of globalization in China. Harford also comes down on taxes saying they are inefficient and destroy competitiveness. Instead of a progressive income tax he argues in support of a flat sales tax. It all sounds like a sale of conservative economics which isn't necessarily a bad thing as long as it's done with honesty and clear thinking (many conservative economists have such an ideological bias that they become useless).

The author spends a chapter on healthcare in the United States and demonstrates how flawed it is. The system is hugely expensive, highly bureaucratic, extremely patchy and unpopular to most American's. Harford writes, "United States government alone spends more than the combination of public and private expenditure in Britain, despite the fact that the British government provides free health care to all residents" In fact no country spends more as a percentage of the GDP as American's. Not even close. And as a final kick in the teeth American's aren't even particularly healthy when compared to the rest of the developed nations. However, rather than look to his own country's model for health care or Germany's or Canada's Mr. Harford looks to Singapore. It seems as if the author has mind melded with the Bush administration in believing that American's are over insured and need to look into Health Savings Accounts which to the best of my knowledge don't address ANY of the problems the author recounted. The book contains some real insight on why health insurance is often incompatible with a market based economy but the idea that we should just scrap it in favor of only catastrophic health insurance seems to deny that anyone could possibly be nickeled and dimed into poverty.

The author also has some interesting views on handling pollution. The idea is that companies can buy the right to pollute using vouchers. Initially it seems to be a horrible idea but the thinking is that since businesses regularly inflate the cost of keeping clean we ask them to put their money where there mouth is. If the vouchers cost enough businesses will try to find cheap ways to stay under the emissions threshold rather than pay the voucher cost and the problem is solved in a very market based manner. On the other hand the author tends to discount environmentalism as a small cost (2 percent of manufacturing) and of little real concern to businesses. If this is true than why do business interests in the United States spend millions on think tanks and lobbying if it's no big deal? Global Warming is a huge deal and business seems willing to do just about anything to suppress legislation.

Besides globalization the author doesn't seem to really be an ideologue. He is clearly a fan of market based economies but admits that participants often don't act sensibly. He's no cheerleader for the stock market by pointing out that price to earning ratios of companies are still vastly inflated and gives a great explanation on why internet companies lack any scarcity power making their ridiculous stock values in the late 90's look like nothing more than a fools dream. The Underground Economist is a very good book. Unlike Freakonomics it is legitimately an economics book and most assuredly has an agenda. Not that that's a bad thing.