Economics demystified (for the developed world only)

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	• The Undercover Economist (Unabridged) Tim Harford audible.com average customer review:based on 2 reviews view larger image
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Economics demystified (for the developed world only)

Harford is a mecro-economist, a bridge between macro and micro economics. Harford explains macro-economic phenomena such as retail pricing, stock market behavior, taxation, health-care, environment, and licensing air-waves; by one-by-one getting inside the heads of each stake-holder on that poker table and dissecting their behavior in accordance with the first principles of economics: scarcity and choice. However, the insights only go as far as the developed world does. In the last 3 chapters where Harford tries to similarly explain the woes of the poor and developing worlds with examples of Cameroon, Belgium and China; his views quickly appear shallow and cliche, lacking the same wisdom as the rest of the book. 70% of the book is therefore a 5-star, and the rest is a 2-star.

The book loses its panache is in trying to decipher globalization and the developed world through the "X-ray goggles of the undercover economist". Harford falls into the trap of taking the usual one-dimensional view of large developing countries (India and China in particular) as if they are obviously in a certain step in their evolution to become more and more like the developed world. These simplifications might be half true, but hardly insightful. Any statement of generalization about either India or China is like generalizing about North and South Americas combined (a contiguous land-mass with about a billion people) or Europe and USA combined (the developed nations with about a billion people). How valuable or insightful can any statement about the Americas as one entity or USA & Europe as one entity be? It is as futile, therefore, to attempt the same for either India or China without having an appreciation or perspective on the infinite diversity of the subject.

With the Undercover Economist, Tim Harford de-mystifies the wiggling jelly of economics (where you cannot kill farm-destroying birds without suffering population explosion of farm-destroying insects and so on). What sound like conundrums are actually logical explanations of common-sense causal chains. For example, he explains that "more rational the behavior of stock market investors, the more erratic the behavior of the stock market becomes." I try to summarize: rational investors would buy shares today if it was obvious that they would go up tomorrow, but then everyone would buy today driving the price high enough so that it cannot go higher tomorrow. Rationality would obviously and consistently second-guess rationality, implying rationality cannot lead to predictable behaviour. The only thing left then is unpredictable news, which is a random event. This means that shares would behave like random walks. But if this was absolutely true, it would be a paradox, since rational investors would not invest in shares and only invest in predictable alternatives. The balancing point then lies somewhere in between. Harford then goes on to draw parallels with supermarket queues and how everyone tries to predict the fastest one, and a game of poker with players analyzing the outcome based on fundamentals yet betting based on their understanding of what the other players are thinking.

A very readable economist with a fun and easy style. References to Nobel Laureates in Economics, and key theorems of importance would also make you keep going back to the book. This is one to keep.

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Economics for noneconomists

I found Tim Harford's book very revealing and usefull, because it explains complex economic behaviors and phenomenons in a very light, friendly and accessible fashion. From the complexities of markets to important geopolitical realities this book is enlightening. There are some important concepts I handpick from the text: the power of scarcity, the evils of privileged or asymmetric information , markets as information exchanges, moral risks that perverts free trade, the importance of comparative advantages in daily life, game theory as a tool for auctions, all explained in plain words.

Without being a political statement, this book shows that free markets are far more beneficials to societies than any other form of economic arrangements because markets put the truth over the table and destroy privileged information and the power of scarcity.

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