Moneyweek book review: The Undercover Economist
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“Few mothers are thrilled to learn that their daughter is dating an economist,” says John Kay in the FT. Most people think economists are obsessed with interest rates, GDP statistics and other tinder-dry issues often discussed with dizzyingly complicated graphs. Enter Tim Harford, who over the past few years has written weekly articles in the FT applying economic principles to everyday life – issues have ranged from flossing teeth to buying leeks – and has now produced a book to show that economics is far more intriguing and relevant than most people believe.
Harford’s “concise and elegant” book is a “lively and witty” introduction to the subject, showing that popular economics needn’t be “an oxymoron”, says Paula Hawkins in The Times. Harford explains why a good second-hand car is almost impossible to find and why organic bananas are never displayed next to normal ones on a supermarket shelf. He also explores why we pay so much for coffee, especially in key locations such as railway stations, a discussion he bases on David Ricardo’s 1817 treatise on agricultural rents.
Just as meadows command high rents if the grain they produce is valuable, prime location coffee- bars cost their owners a bundle in rent because customers are prepared to fork out more. “Rush-hour customers are so desperate for caffeine and in such a hurry that they are practically price-blind,” says Harford. Furthermore, coffee-bar owners are adept at teasing out price-insensitive customers by offering small variations to drinks – at virtually nil cost to the company – at vastly different prices. In short, it seems high coffee prices are largely our own fault. Harford also goes beyond the everyday, tackling China, environmentalism, development and globalisation, outlining why boycotting firms using sweatshop labour is counterproductive and how struggling developing countries can escape poverty.
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Harford’s book “leads the reader to the point” where seemingly “outrageous” statements by economists seem sensible, says Tim Worstall in The Daily Telegraph. Anyone confused by “how the world works” will benefit from reading it. The FT’s Martin Wolf agrees: Harford shows that the “powerful underlying ideas of economics can illuminate every aspect of the world we inhabit”.
The Undercover Economist is published by Little, Brown, and costs £17.99
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