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The Undercover Economist [Paperback]

Tim Harford
4.1 out of 5 stars  See all reviews (127 customer reviews)
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Book Description

3 May 2007

Who makes most money from the demand for cappuccinos early in the morning at Waterloo Station? Why is it impossible to get a foot on the property ladder? How does the Mafia make money from laundries when street gangs pushing drugs don't? Who really benefits from immigration? How can China, in just fifty years, go from the world's worst famine to one of the greatest economic revolutions of all time, lifting a million people out of poverty a month?

Looking at familiar situations in unfamiliar ways, THE UNDERCOVER ECONOMIST is a fresh explanation of the fundamental principles of the modern economy, illuminated by examples from the streets of London to the booming skyscrapers of Shanghai to the sleepy canals of Bruges. Leaving behind textbook jargon and equations, Tim Harford will reveal the games of signals and negotiations, contests of strength and battles of wit that drive not only the economy at large but the everyday choices we make.

Special Offers and Product Promotions

  • If you enjoy Tim Harford's The Logic of Life or his Undercover Economist column in the Financial Times, you must try his new book, Dear Undercover Economist ...
    Dear Undercover Economist

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Product details

  • Paperback: 384 pages
  • Publisher: Abacus (3 May 2007)
  • Language: English
  • ISBN-10: 0349119856
  • ISBN-13: 978-0349119854
  • Product Dimensions: 12.4 x 19.6 cm
  • Average Customer Review: 4.1 out of 5 stars  See all reviews (127 customer reviews)
  • Amazon Bestsellers Rank: 977 in Books (See Top 100 in Books)

More About the Author

Tim Harford is a member of the Financial Times editorial board. His column, 'The Undercover Economist', which reveals the economic ideas behind everyday experiences, is published in the Financial Times and Slate. He is also the only economist in the world to run a problem page, 'Dear Economist'. Tim presented the BBC television series 'Trust Me, I'm an Economist' and now presents the BBC radio series 'More or Less'. His writing has appeared in Esquire, Forbes, New York magazine, the Washington Post, and the New York Times. Tim won the 2006 Bastiat Prize for economic journalism and is also an award-winning speaker.

Product Description

Amazon Review

Author Q&A with Tim Harford

Tim Harford

So are you an economic missionary, or is this just something that you love to do?

It began as something that I love to do--and I think I am now starting to get a sense of it being a mission. People can use economics and they can use statistics and numbers to get at the truth and there is a real appetite for doing so. This is such a BBC thing to say--there’s almost a public service mission to be fulfilled in educating people about economics. When I wrote The Undercover Economist, it was all about my pure enthusiasm for the subject; the book is full of stuff I wanted to say and that is always the thing with the books: they are always such fun to write.

Do you think that people these days are generally more economically literate?

People are now aware of economics for various reasons. There are the problems with the economy--there is always more interest in economics when it is all going wrong.

Where is the border line in your new book between economics and sociology?

I don’t draw a border line, and particularly not with the new book. The Undercover Economist was basically all the cool economics I could think of and The Logic of Life was me investigating a particular part of economics. All of the references in The Logic of Life were academic economics papers that I had related--and hopefully made more fun. This new book, Adapt, is very different. I have started by asking what is wrong with the world, what needs fixing, how does it work--and if economics can tell us something about that (which it can) then I have used it. And if economics is not the tool that you need--if you need to turn to sociology or engineering or biology or psychology--I have, in fact, turned to all of them in this book. If that’s what you need, then that’s where I have gone. So I have written this book in a different way: I started with a problem and tried to figure out how to solve it.

What specific subjects do you tackle?

To be a bit more specific, the book is about how difficult problems get solved and I look at quick change; the banking crisis; poverty; innovation, as I think there is an innovation slow-down; and the war in Iraq. Also, I look at both problems in business and in everyday life. Those are the big problems that I look at--and my conclusion is that these sorts of problems only ever get solved by trial and error, so when they are being solved, they are being solved through experimentation, which is often a bottom-up process. When they are not being solved it is because we are not willing to experiment, or to use trial and error.

Do you think companies will change to be much more experimental, with more decisions placed in the hands of employees?

I don’t think that is necessarily a trend, and the reason is that the market itself is highly experimental, so if your company isn’t experimental it may just happen to have a really great, successful idea--and that’s fine; if it doesn’t, it will go bankrupt. But that said, it is very interesting to look at the range of companies who have got very into experimentation--they range from the key-cutting chain Timpson’s to Google; you can’t get more different than those two firms, but actually the language is very similar; the recruitment policies are similar; the way the employees get paid is similar.

The “strap line” of the book is that “Success always starts with failure.” You are a successful author… so what was the failure that set you up for success?

I was working on a book before The Undercover Economist… it was going to be a sort of Adrian Mole/Bridget Jones’ Diary-styled fictional comedy, in which the hero was this economist and through the hilarious things that happened to him, all these economic principles would be explained--which is a great idea--but the trouble is that I am not actually funny. My first job was as a management consultant… and I was a terrible management consultant. I crashed out after a few months. Much better that, than to stick with the job for two or three years-- a lot of people say you have got to do that to “show your commitment.” Taking the job was a mistake--why would I need to show my commitment to a mistake? Better to realise you made a mistake, stop and do something else, which I did.

That idea that “failure breeds success” is central to most entrepreneurs. Do you think we need more of it in the UK?

I think that the real problem is not failure rates in business; the problem is failure rates in politics. We have had much higher failure rates in politics. What actually happens is politicians--and this is true of all political parties--have got some project and they’ll say, “Right, we are going to do this thing,” and it is quite likely that idea is a bad idea--because most ideas fail; the world is complicated and while I don’t have the numbers for this, most ideas are, as it turns out, not good ideas.

But they never correct the data, or whatever it is they need to measure, to find out where their idea is failing. So they have this bad idea, roll this bad idea out and the bad idea sticks, costs the country hundreds, millions, or billions of pounds, and then the bad idea is finally reversed by the next party on purely ideological grounds and you never find out whether it really worked or not. So we have this very, very low willingness to collect the data that would be necessary to demonstrate failure, which is the bit we actually need.

To give a brief example: Ken Livingstone, as Mayor of London, came along and introduced these long, bendy buses. Boris Johnson came along and said, “If you elect me, I am going to get rid of those big bendy buses and replace them with double-decker buses.” He was elected and he did it, so… which one of them is right? I don’t know. I mean, isn’t that crazy? I know democracy is a wonderful thing and we voted for Ken Livingstone and we voted for Boris Johnson, but it would be nice to actually have the data on passenger injury rates, how quickly people can get on and off these buses, whether disabled people are using these buses… the sort of basic evidence you would want to collect.

Based on that, are you a supporter of David Cameron’s “Big Society”, which in a sense favours local experimentation over central government planning?

Well, I have some sympathy for the idea of local experimentation, but what worries me is that we have to have some mechanism that is going to tell you what is working and what is not--and there is no proposal for that. Cameron’s Tories seem to have the view that ‘if it is local then it will work.’ In my book, I have all kinds of interesting case studies of situations where localism really would have worked incredibly well, as in, say, the US Army in Iraq. But I have also got examples of where localism did not work well at all--such as a corruption-fighting drive in Indonesia.

Is the new book, Adapt, your movement away from economic rationalist to management guru? Are you going to cast your eye over bigger problems?

The two changes in Adapt are that I have tried to start with the problem, rather than saying, “I have got a hammer--I’m going to look for a nail.” I started with a nail and said, “Ok, look, I need to get this hammered in.” So I have started with the problem and then looked anywhere for solutions. And the second thing is that I have tried to do is write with more of a narrative. This is not a Malcolm Gladwell book, but I really admire the way that people like Gladwell get quite complex ideas across because they get you interested in the story; that is something that I have tried to do more of here. I am not too worried about it, because I know that I am never going to turn into Malcolm Gladwell--I am always going to be Tim Harford--but it doesn’t hurt to nudge in a certain direction.

On Amazon, we recommend new book ideas to people: “If you like Tim Harford you may like…”, but what does Tim Harford also like?

I read a lot of books, mostly non-fiction and in two categories: people who I think write a lot better than I do, and people who think about economics more deeply than I do. In the first category I am reading people like Michael Lewis, Kathryn Schulz (I loved her first book, Being Wrong), Malcolm Gladwell and Alain de Botton. In the second category, I read lots of technical economics books, but I enjoy Steven Landsburg, Edward Glaeser (who has a book out now which looks good), Bill Easterly… I don’t necessarily agree with all of these people!

When I am not reading non-fiction, I am reading comic books or 1980s fantasy authors like Jack Vance.

Click here to read a longer version of this interview.


'As lively and witty an introduction to the supposedly 'dismal science' as you are likely to read' -- THE TIMES

Inside This Book (Learn More)
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Front Cover | Copyright | Table of Contents | Excerpt | Index
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Customer Reviews

Most Helpful Customer Reviews
64 of 66 people found the following review helpful
5.0 out of 5 stars Not Dismal anymore 2 May 2006
By A. I. Mackenzie VINE VOICE
Format:Hardcover|Verified Purchase
This is a really good introduction to Economics.

As someone who's picked up Economics mostly by reading the business pages of the Independent it's been very useful.

The chatty style belies the fact there's lots of information to be learned from this book.

His central two points are that scarcity dictates price (supply and demand) and that prices are set according to the information available to both buyer and seller.

Along the way you'll find out why your morning coffee is priced the way it is and why it's hard to get a decent second hand car.

Although it's hard to believe in a book about economics, I found this to be a bit of a page turner and finished it in a bank holiday weekend.
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106 of 113 people found the following review helpful
3.0 out of 5 stars not bad 20 July 2006
By tomsk77
I picked this up at the airport and nearly finished in two flights. It's an easy reading explanation of an economist's take on some everyday things and some big issues (like globalisation).

Some of the early stuff (about coffee shops etc) is really good fun. You might not be shocked by it but it is a very effective way of explaining some key economic theories in a very accessible and interesting way.

I was also quite impressed by his explanation and perception of the stockmarket. This is something that I have read quite a bit about and deal with through work and I found myself nodding in agreement with him - that share prices are largely random but sometimes there is a brief opportunity to do something logical and make money, therefore fund managers spend a lot of time money and effort trying to find that 1 in 100 chance. (I still think active fund management is on balance a waste of money but that's another argument). I also liked (though I've heard a version of this before) his comparison of arbitrage in markets to picking a supermarket queue - if one is obviously shorter people join it very quickly.

I thought the section on second-hand car dealers, which goes on to discuss firms marketing insurance products, was also very interesting. Especially the way that providers try and communicate their trustworthiness through marketing etc. Again that confirms to me my perception of how the fund management industry pitches itself to clients.

There were a couple of points where I diverged significantly from him. First on tax, where he suggests that sales and income taxes discourage effort. This is something I have argued back and forth many times and I just don't buy it.
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104 of 112 people found the following review helpful
5.0 out of 5 stars A lighter side of economics? 6 April 2006
It is because of the success of Amazon that high street booksellers need to provide that little bit more to entice their customers. So we now have bookshops full of stationary, furniture and coffee. When you're next out shopping and want to grab a coffee, head over to the bookshop. Whilst you are there with your Lotsamoccacaféchino, take this book from the shelf and begin to read it. You will find it connects with you immediately.
I don't know much about economics, at least I didn't when I picked this up. But I have wondered what all the fuss is about, especially when I try to keep up with the Budget, camapigns against poverty, and what's happeneing to my pension. The Undercover Economist not only makes economics easier to understand but it is doesn't clutter my mind with macroeconomic theory, fiscal rules and all that stuff.
So as you read the book, soon you will find yourself ordering more coffee, but you'll have a much better understanding of the sophisticated system that you are engaging in, and how you're being ripped off.
The book covers economics in ten interesting chapters - each with a different theme through which it introduces the reader to new understandings of the world of economics. This book will unveil to you a host of neat little theories that explain how every day life works, from why bookshops sell coffee, to world poverty with plenty in between.
What really marks this book from the rest is its humour. There are very few funny economic books and the Undercover Economist is one of them. It reveals that the grey subject matter, so long understood as the dismal science, can really be a lot of fun - if only economics lecturers would be a little less serious about it.
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29 of 32 people found the following review helpful
5.0 out of 5 stars clarity is golden 1 Sep 2006
I have read a number of these economics for the man in the street tomes over the last couple of years, and along with Landsburg's somewhat out of date and rather more complex Armchair Economist this one stands out head and shoulders above the rest.

Harford seems to have mastered the art of making somewhat complex considerations appear extremely natural. If all economists in the media could express themselves so clearly and with such a judicious choice of examples the public would surely be better informed and more engaged with the most important issues of the day.
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30 of 34 people found the following review helpful
5.0 out of 5 stars The Undercover Economist 2 April 2006
This book is capable of performing a minor miracle: reforming the hopelessly economically disinterested. Embarrassing though it may be, I will confess to never having been able to develop the slightest interest in economics. It is always perfectly clear (well, almost always) what economists are talking about, but it is rarely clear to me why they are talking about it. When my son gave me a copy of The Undercover Economist, I was not looking forward to reading it, but Harford captured my attention immediately and kept me enthralled all of the way through the book. He chooses examples (and beautifully and compellingly explicates them) that reveal how economics work in your life; why it matters to understand it. He explained things that had always puzzled me, and stunned me by explaining why things that I had always believed were not actually true. I think about principles from this books surprisingly often. I have since given The Undercover Economist to many friends and students who are equally economically challenged, and they have all had the same experience. I cannot recommend the book highly enough.
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Most Recent Customer Reviews
5.0 out of 5 stars It's worth your time!
After studying Economics for 2 years at A-level and 1 year so far at University.. I regret not picking this book up earlier... Read more
Published 3 days ago by Serg
5.0 out of 5 stars Five Stars
Love the man
Published 4 days ago by neighbour
5.0 out of 5 stars interesting
Published 14 days ago by María José Betés
1.0 out of 5 stars Very boring. Economics is not just about coffee
I usually like these new inspiring perspectives on economics. But it is simply to much coffee and too Little substance
Published 15 days ago by Mogens Brock
5.0 out of 5 stars Thoroughly enjoyed!
First time reading this author but thought it worth a go after enjoying the Freak series from Levitt and Dubner. Read more
Published 18 days ago by frazer
5.0 out of 5 stars brilliant book
good insight into economics for those without an economics background. The examples used (cost of a cup of coffee, cost of healthcare) are things most people can relate to.
Published 1 month ago by Rainforest Barbie
5.0 out of 5 stars LOVED THE BOOK
Published 2 months ago by fahima rashid
4.0 out of 5 stars Review: The Undercover Economist by Tim Harford
It takes a special kind of effort to be so behind the times that I’m reviewing The Undercover Economist more than three years after it was published, despite having it on my “must... Read more
Published 2 months ago by Dr. Simon Howard
4.0 out of 5 stars Demystifying Economics
This a smart and pragmatic approach to economics for beginners. Tim Harford is very good at explaining important but counter-intuitive economic principles to intelligent readers in... Read more
Published 3 months ago by Ross
5.0 out of 5 stars Great for everyone!
Whilst the first few chapters are quite simple for econbuffs they do offer a much cleaner explanation than we would be used to. Read more
Published 4 months ago by DIOMIDES MAVROYIANNIS
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