On the whole a solid book, but Tim Harford’s chapters on micro-economic behavior and game theory are far stronger than the pro-trade arguments he makes in later chapters on improving the lot of poor people around the world. I generally tend to agree with a pro-trade stance, but straw man arguments and bait-and-switch explanations aren’t going to convince anyone except the already convinced.
The Undercover Economist is another in the increasingly popular category of popular economics. I probably should stop buying and reading them because all the ones I keep reading overlap. I don’t need another exposition on externalities, nor another general high-level defense of globalization. The material on externalities was pretty good though, even if I’ve heard that stuff before.
The book contains a fair amount of new-to-me information despite it’s survey nature. While I was familiar with price discrimination, Harford’s chapter on the topic exposed to me a lot of different ways by which businesses achieve the technique. The author also introduced a technique to counter unfairness
from Kenneth Arrow where you give the disadvantaged a head start, perhaps with lump sum payments. The idea intrigues me, though it seems somewhat impractical at solving many issues of justice with a crude application. I want to read more on the topic if I ever find time. A last area I learned a bunch on from Harford is on game theory, particularly his chapter on the auctions of radio spectrum in the U.S., New Zealand, and the U.K. I’m not sure how practical my new knowledge is, but it seems a lot less abstract and complicated than my previous exposure to game theory. (Even in the more complicated forms, game theory is something I’ve wanted to know more about for a while.)
There were some parts that irritated me quite a bit though. Harford spends quite a bit of time discussing price discrimination with regard to medicines generally coming out in favor of it. And in other places he generally argues against government intervention in markets. And yet, there’s no acknowledgment that patent and copyright monopolies are just that: large government intervention. There’s good arguments to be made that they are on balance an economic good. But price discrimination in pills is 100% the result of patent monopolies.
The second major section that irritated me is his defense of globalizing trade policies. The problem here is that Harford’s arguments are quite sloppy. In one place he shows a graph that compares foreign investment in China with reductions in Chinese air pollution as an argument that foreign investment reduces air pollution. The two correlate quite well. But correlation is not causation as any stats wizard will tell you! In another place Harford writes that tariffs increase a country’s political isolation which increases it’s political stability (in the case of repressive government I guess) which increases the power of the ruling elite. His point being that the political elite may be using high tariffs to the detriment of their citizens but helping themselves. Except then every example he gives is not of high tariffs but of externally imposed sanctions (mostly from the U.S.): Cuba, Iraq, Myanmar, and North Korea. Then he moves on as if the point has been proven. It’s crap like that that fails to win over converts to globalization, though it’s subtle enough that I’m not sure many would recognize the source of their unease about the argument.
If you haven’t been reading the rash of popular economics books that have hit the market in the last few years, this is a pretty decent one to pick up. If you have, I suggest skipping it and looking deeper into particular economics topics that interest you.
Title: The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor — and Why You Can Never Buy a Decent Used Car!
Author: Tim Harford
Cover creator: Kathleen M. Lynch (designer) / Lou Brooks (artist)
Imprint / publisher: Oxford University Press
Format: Hardcover
Length: 276 p. (includes endnotes and index)
Publication date: November 2005
ISBN-10: 0-19-518977-9
Subject: Economic history, 1990-
Subject: Economics
Subject: Consumer education
LC classification: HC59.15.H35 2005
