29 June 2007

Tim Harford - The Undercover Economist

I wonder if there's scope for a pop-economics book on the effect of pop-economics books on the behaviour of the population. There are so many out there at the moment - Freakonomics was the last bestseller - and this one is added to the pile.

Harford is an FT columnist and economics writer of some experience, and this book attempts to explain real-world phenomena in terms of basic economic theories - Ricardo and Adam Smith, for example. It's hard to do this right - identifying the audience is tricky. Should he expect them to have a basic understanding of economics, or assume no knowledge at all? Harford tends towards the latter, which means that much of the book is quite simple, but he manages to illuminate a few things even for people who are used to seeing the world in economic terms.

He starts off with the example of coffee shops, something that people can readily identify with. Why is coffee so expensive, and why are there different prices for different coffees? His explanations are lucid, and appear obvious - coffee is sold at a price that people are willing to pay for it (if they weren't, the price would drop) and the high rents coffee shops pay for prime sites are determined less by the landlord and more by the coffee price - competing retailers bid up the price of rent according to what they can afford to pay.

Harford introduces subtle concepts such as marginal rents, comparative advantage and scarcity value, which he repeats like a mantra. This is more of an economics primer than Freakonomics, which was a little specious in its attempt to illuminate economic oddities by showing examples from the fringes. He tries to show why Cameroon is poor and China is rich, with more success in the latter case than the former, but the last couple of chapters lack structure.

Although I learnt a bit from this book, it was neither as entertaining nor as informative as it might have been - I felt it fell between the two.


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