There might be an economist sitting near you right now. You might not spot him¾a normal person looking at an economist would not notice anything remarkable. But normal people look remarkable in the eyes of economists. What is the economist seeing? What could they tell you, if you cared to ask? And why should you care? You may think you're enjoying a cup of cappuccino, but the economist sees you¾and the cappuccino¾as players in an intricate game of signals and negotiations, contests of strength and battles of wits. The game is for high stakes: some of the people who worked to get that coffee in front of you made a lot of money, some of them made very little, and some of them are after the money in your pocket right now. The economist can tell you who will get what, how, and why. We hope that by the time you finish this summary, you'll be able to see the same things. Your coffee is intriguing to the economist for another reason: They don't know how to make you a cappuccino, and they know that nobody else does either. There isn't a single person in the world who could produce what it takes to make a cappuccino. Who, after all, could grow, pick, roast, and blend coffee, raise and milk cows, roll steel and mold plastics and assemble them into an espresso machine, and, finally, shape ceramics into a cute mug? Your cappuccino reflects the outcome of a system of staggering complexity. The economist knows that making a cappuccino needs an incredible network of organizations. The complexity of the system that made the cappuccino possible defies easy description: it needs several accumulated centuries of development. The economist reminds us of the pleas of the Soviet official trying to comprehend the Western system: Tell me, who is in charge of the supply of bread to the population of London? The question is comical, but the answer¾nobody¾is dizzying.
"The subtitle of this engaging and sometimes maddening book is “Exploring why the rich are rich, the poor are poor—and why you can never buy a decent used car.” Harford, who writes for the World Bank and the Financial Times of London, seems to want to explain to noneconomists some of the interesting theoretical conclusions that economists use to explain observed behavior and wealth patterns. The book’s subtitle no doubt was created to lure such readers, regardless of whether they have reliable used cars or not, to investigate Harford’s analyses. What readers will find within these pages is an entertaining stroll through some of standard economic theory’s more interesting, and controversial, generalities." Cato Journal
Tim Harford, a columnist at the Financial Times in London, discussed his recent book "The Undercover Economist: Exposing Why the Rich are Rich and the Poor are Poor—and Why You Can Never Buy a Decent Used Car!" in a program sponsored by the Science, Technology and Business Division. Harford is noted for his ability to relate the principles of economics to everyday life in a clear and entertaining style. "The Undercover Economist" takes up such issues as "who really makes money from fair trade coffee, why beer and fries are linked to globalization and how the Mafia makes money from laundries when street gangs pushing drugs don't." The Library of Congress
"The promise of 'The Undercover Economist' is that it will show you the world through the eyes of the economist. On the face of it that doesn't sound like a thrilling prospect. After all, economics is about abstract and arcane matters to do with exchange rate policies, interest rates and obscure aspects of something called monetary policy. The surprise of course is that the book does succeed, and that far from being a dull affair, seeing through the eyes of an economist is a pretty interesting experience after all." Londonbookreview.com
"How to explain the role of economics in society has been a challenge that economists have only recently taken up. In the US, one pioneer has been Steven Levitt with Freakonomics, packed with examples of why people behave as they do: why, for example, they become drug dealers when for most it is a poorly-paid and dangerous lifestyle. Now British economist Tim Harford has taken an even wider look at the practical ways in which economics affects our lives. As the cover on the US edition proclaims, it is a book 'exposing why the rich are rich, why the poor are poor - and why you can never buy a decent used car.'" Independent
"The subtitle of this engaging and sometimes maddening book is “Exploring why the rich are rich, the poor are poor—and why you can never buy a decent used car.” Harford, who writes for the World Bank and the Financial Times of London, seems to want to explain to noneconomists some of the interesting theoretical conclusions that economists use to explain observed behavior and wealth patterns. The book’s subtitle no doubt was created to lure such readers, regardless of whether they have reliable used cars or not, to investigate Harford’s analyses. What readers will find within these pages is an entertaining stroll through some of standard economic theory’s more interesting, and controversial, generalities. Harford is completely mainstream, always entertaining, but sometimes unhappily superficial." CATO JOURNAL
"The author is good at showing how such basic concepts apply across a complex modern economy. After observing that rents in London today are higher thanks to the surrounding Green Belt, which cuts off development, he notes that as an undercover economist, "you start to see 'green belts' of one kind or another all over the place." For instance, professional associations that restrict entry into, say, medicine serve as green belts that shield doctors from competition." The New York Times
Incentives are the cornerstone of modern life. And understanding them or ferreting them out is the key to solving just about any riddle. It isn't just the boldface names inside-trading CEOs and pill-popping ballplayers and perk-abusing politicians¾who cheat. It is the waitress who pockets her tips instead of pooling them. It
In 2007, when the world was staring into the teeth of the biggest economic catastrophe in three generations, very few economists had any idea there was any trouble lurking on the horizon. Three years into the mess, economists now offer remedies that strike most people as frankly ridiculous. We are told
The Millionaire Next Door identifies seven common traits that show up again and again among those who have accumulated wealth. You will learn, for example, that millionaires bargain shop for used cars, pay a tiny fraction of their wealth in income tax, raise children who are often unaware of their family’s
The world’s leading economies are facing not just one but many crises. The financial meltdown may not be over, climate change threatens major global disruption, economic inequality has reached extremes not seen for a century, and government and business are widely distrusted. At the same time, many people regret the consumerism
We look back at the time when the world began a historic transition from industrial capitalism to a new kind of economy based on new principles and new ways of thinking and behaving. And while there are certainly many similarities between what is happening today and what happened over five hundred
Here’s the naked truth: the nice margin that Starbucks makes on their cappuccinos is due neither to the quality of the coffee nor to the staff: it is location, location, location.
The willingness to pay top dollar for convenient coffee sets the high rent, and not the other way around. It is not about quality or brand loyalty or excellent service or any of that marketing nonsense.
Locations suitable for coffee kiosks are like fertile lands¾they produce the best grains¾i.e. they fill up quickly with customers