Book Review: The Undercover Economist

I fondly remember this book because of how spooky the introduction section was to me. Tim Harford begins the book by thanking the reader for buying the book, but then goes on to say that if the reader is anything like him, they’re probably sampling the book in a bookstore while sipping a coffee, judging whether to buy it or not. As it turns out, that is exactly what I was doing.

But the book (which I did buy later) was appealing to me for much more than that. I have written extensively elsewhere about how I hate textbooks. One reason I despise them so is because they introduce concepts in economics first: verbally, diagrammatically and worst of all, mathematically, and only then provide an application of the concept in a dry, mealy-mouthed little “box”. It’s like a chef teaching you how to cook by spending a week telling you how to hold a knife and then, almost as an after-thought saying “Oh, here’s a tomato.”

But right from the first chapter onward, Harford dives right into the real world, shows us a problem we can all identify with, and then asks: how might thinking like an economist help you understand this problem better? That’s the whole point of learning economics! It’s the tool that should be in the “box”, and the world outside of it.

In any case, the book is great because of a secondary reason as well: Harford understands, emphasizes and makes relatable the concept of domain independence. Domain independence essentially say that understanding an idea in one domain shouldn’t preclude you from applying that idea in other domains (I read about this particular phrasing of the idea in Anti-fragile, another book I’d heavily recommend). So while the book is about coffee bars, supermarkets, stock markets and so on, you really should keep in mind the fact that these concepts are applicable in many other areas.

My favorite chapter is the last one, which is on China. Harford explains (some might say far too succinctly) how modern China came to be, but keep in mind that this is meant to be an introductory book. Will people learning economics for the first time, especially Indians, wonder how China is the way it is and why India isn’t? Of course they will: and this chapter is a good first pass at tackling this problem.

Which is not to say that the other chapters are not worth your time, of course – each of them are worth a read, and the book’s purpose is served if it whets your appetite. This is not meant to satiate your curiosity about economics – the exact opposite, in fact. It is meant to make you want to read much, much more – while at the same time making all of what you read much more relatable.

Tim Harford has written many other books, and he used to write a magnificent agony aunt column devoted to economics, and also runs some interesting podcasts – about all of which much more in later posts. But for the moment, suffice it to say¬† that you’d hardly go wrong if you read this book for starters.

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Links for 14th August, 2018

  1. Google will launch in China. I think this is mostly bad news.
  2. On the relationship between a central bank and people who frame fiscal policy.
  3. As they say on Twitter, RT’s aren’t endorsements. That being said, there is much to ponder.
  4. John Le Carre would have had to read Stratechery on a daily basis today. (You should too, by the way)
  5. A World Trade Historical Database.

5 Great Books to Start Learning Economics

It’s a question faced by anybody who’s ever taught introductory courses in economics, and it’s a question that faces anybody who has tried to start learning economics – and it’s high time I tried answering it.

What follows is a very brief description of five books that I think fit the bill: each of these are books that serve as a very good introduction to the subject.

None of them, it should be said, are stand-alone (almost no book ever is). You will need to read many more books to get a feel for the subject. But these are very useful gateway drugs.

This post will simply introduce each book in a paragraph, no more. The title of the book will be linked to the relevant Amazon India page (not affiliate links). Over the next five days, I’ll add a separate blog post about each of these books, and finish the series with books that almost made the cut.

  1. The Undercover Economist: This is a book written by Tim Harford, and is my preferred response when I’m asked “Have you read Freakonomics?” (Yes, but have you read “The Undercover Economist”?). The book is written the way I think great textbooks about economics ought to be written: they begin with real life conundrums and use economic tools to probe at these conundrums, rather than begin with a dry diagram or set of equations, and put the real world application in a “box”. He deal with questions ranging from why coffee costs so much at airports, and ponders the question of how China grew so rich as well. Written in an easy, accessible style, it is a great introductory book to the subject.
  2. Economics, A Very Short Introduction: I came across this book via a blog post written by Brad DeLong, in which he mentioned that he uses an excerpt from this book as a way to get people interested in thinking about economics. I couldn’t agree more: this is probably the best, thoughtful way to start thinking about “big picture” economics. But there’s one caveat: if you are just starting to learn economics, do not bother reading beyond the prologue, which is the first fifteen pages or so. Then spend a good six months or so reading other stuff about economics, and then come back and tackle the rest of the book. But Becky and Desta will be my friends forever – unforgettable characters.
  3. The Little Book of Economics: Greg Ip is the only person I know of whose pocket money, when he was a child, was linked to inflation. This made him a very keen student of economic theory (you might almost say he was incentivised to study economics), and that is probably a causal factor in he writing this book. Again, as with Harford’s book, Ip begins with stuff we can all observe around us, and asks “Why is this so?” – and then uses tools from the economist’s toolkit to tackle these problems. The focus is rather more on so-called “macroeconomics”, but that doesn’t make the book any less interesting. (By the way, if you’re now tempted to ask which of these I should read, the answer is “all”.)
  4. Discover Your Inner Economist: Tyler Cowen is the world’s most prolific blogger by some magnitude, and he also makes the time to write some extremely thought-provoking books, and this is one of them. How much should you pay/tip your dentist (if at all)? Should you pay your daughter to help with the household chores (short answer: no)? Should I finish every book I buy (short answer:no)? These, and other such questions are dealt with in the book in a Cowenish, non-whimsical way that still ends up being entertaining and enlightening.
  5. Day to Day Economics: This book is perhaps more applicable to Indian students than to those from other parts of the world, but Satish Deodhar writes a very accessible book about the Indian economy and it’s workings. It is the closes to being a conventional textbook out of the five I have recommended here, but I mean that in a good way. You will understand much more about the Indian economy specifically for having read this book, and it is well worth¬† your time if you are beginning your journey as an economics student.

Links for 13th August, 2018

  1. On Kurkure and plastic. Whoops, I said the p word.
  2. On long term growth prospects in China
  3. Rafale isn’t the (real) problem. Also see this.
  4. The e-commerce policy doesn’t make sense. And that’s putting it mildly.
  5. Chinese ghar wapsi.

Links for 12th August, 2018

  1. The financial crisis in India’s banks and its linkages to India’s power sector
  2. We’re hopelessly misinformed about immigration (and that’s all of us). The Econtalk link at the end of the post is also worth your time.
  3. John Cochrane on outraging (he also links to the Russ Roberts piece on the same topic)
  4. The New Yorker on Imran Khan’s prospects in Pakistan
  5. On tourism and Indian apathy. This, for me, is an often enraging topic.

Links for 11th August, 2018

  1. On the distressing (?) trend of share buybacks.
  2. The world isn’t as bad as you think, finance edition.
  3. On better monitoring in the development sector
  4. Mark Twain and extrapolation. Lovely read.
  5. Christopher Balding on Pakistan’s bailout by the IMF

Links for 10th August, 2018

  1. Billy Joel interview.
  2. Hey Google, I’m Ashish. Yeah, I know.
  3. Diplomacy in the age of Trump and Xi.
  4. Via MR, FT Alphaville on Pakistan.
  5. On high ROC companies.