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Abstract:
In The Undercover Economist, Tim Harford, a columnist at the
Financial Times, uses a sense of humor and racy prose to
transform the dismal science of Economics into a subject
that interests and educates the lay reader.
About the Author: Tim Harford, a columnist at the Financial Times, is the
undercover economist of the book’s title. Hartford, as he
goes about his daily routine, observes economics at work in
various settings - from the coffee shop where he has his
morning coffee after a commute from the suburbs, to the
supermarkets where he shops for groceries. He then describes
the tricks of trade he encounters, from the point of view of
an economist. He also draws larger lessons in economics for
the reader, from his observations. |
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The book, which seeks to bring Economics to the masses, belongs to the same
genre as Freakonomics, the best selling book by Steven D. Levitt and Stephen
J. Dubner If Levitt and Dubner sought to ‘explore the hidden side of
everything’, Harford sticks to more mundane phenomena in his explorations.
However, like Freakonomics, The Undercover Economist succeeds brilliantly in
transforming the dry-as-dust economic theories that we learnt in the
classroom, to insights that can be applied in our day-to-day life.
Harford is a fan of free and competitive markets. According to him,
competitive markets reveal the world of truth - in this case, the truth
about the value of goods and services - and result in the efficient
utilization of resources. In such a situation, companies make the right
things in the right way in the right proportions, and their products go to
the right consumers. However, efficiency is not the same as fairness.
Therefore, we have governments imposing taxes and providing subsidies to
achieve a fairer distribution of resources. Hartford however suggests other
methods to achieve both efficiency and fairness, with the help of market
forces.
When markets not perfect, or where externalities are present, distortions
occur. The example that the author gives is that of road use, where the
costs of using public roads are not related to the extent of use. This leads
to congestion and additional costs - to the environment and the general
public.
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