The Undercover Economist - Tim Harford

The Undercover Economist


Tim Harford

 Full disclosure--Tim Hartford runs my absolute favourite radio programme ever: BBC Radio 4's More or Less, a topical statistics programme. Yes, you heard me right. Basically, they do fact-checking on audience-recommended bizarre-sounding statistics. It's funny, fun, and relevant, and has the added benefit of actually catching all the zombie statistics that politicians use. Catch NPR ever having anything like that.

Anyway, all that simply goes to note that I was heavily, heavily predisposed to like this book. And I did.

This book covers the basic intuition behind some of the most important economic concepts. It's kind of like what I expected Freakonomics to be: more economics, less freak. Harford walks through various familiar examples and their economic counterparts, mainly avoiding jargon and weaving anecdotes into quite an entertaining book. I'm a computer scientist, not an economist, and my little knowledge of economics comes from algorithmic game theory and similar. It was very interesting to really see how an economist thinks. My major problem with all of the theories that Harford propounded was that they heavily depend on rationality, and maybe more what I might term "utlitarian rationality": that people are not only rational in their actions, choosing whatever strategy gains them the most utility, but that they equate utility pretty directly with monetary gain. I have two real issues with this: first, people really aren't very good at choosing rational actions. Harford neatly sidestepped terms like Nash Equilibria, but he did invoke the concepts--and those are basically impossible for a supercomputer to achieve. How on earth would we expect people to find them? Second, I totally disagree with the notion that people actually measure gain via what economists tend to think of as utility. For an example, look up the "Ultimatum Game": people are so motivated by spite that they behave totally differently than the models would predict. I was actually interested to hear how much these imperfections in our real world disrupted the models, but Harford didn't really address this.

However, that was my only disappointment in the book. I'm slightly familiar with economics and definitely learned something, as well as being entertained by a series of fun facts. For instance, did you know that when IBM created its laser printers, it created the "economy" line by taking the professional printers and actually adding a computer chip to slow down the printer, meaning that economy printers actually cost them more to make? The book is chock full of entertaining tidbits like that. I can't recommend it enough-- definitely a good read for anyone who liked Freakonomics. Oh, and go listen to More or Less. Best radio show out there.