BOOK REVIEW ‘THE UNDERCOVER ECONOMIST’ BY TIM HARFORD

Introduction

I found this book in the library when I was supposed to be studying. Good call because this was actually a great revision book for MICROECONOMIC POLICY! Look at the contents page…. It’s practically the syllabus… The chapters are not sequential so you can pick and choose what you read about and the topics are all have ‘everyday applications’ as the whole idea of the book is to look at the world around you with ‘the eyes of an economist’ so each theoretical concept is introduced with real world evidence.

Style

Tim Harford is a great author because he’s so easy to read. Sometimes a book will say ‘no previous knowledge of economics necessary’ but they’re flat our lying. That’s not the case with Harford as he builds up your knowledge from the beginning and then adds to it with every chapter.

Content

I’m not saying that you can ace Micro Policy with this book but the basic concepts are explained in a way that make it easy to build on with the lecture notes. Here are most of the topics that Harford explores and explains:

• Ricardo’s theory of rent & scarcity power
• The value of the marginal
• The effects of rent control
• The effects of immigration
• Price discrimination (including location pricing)
• How perfect markets work and why we use them (1)
• Efficiency vs fairness in taxation
• Market & Government failure
• Dealing with externalities
• Asymmetric information/incomplete contracts/moral hazard
• Efficient market hypothesis
• Game theory and auctions
• Competitive and absolute advantage
• Rent seeking

Also topics such as the rise of china, the recent financial crisis and environmental issues are also discussed

Conclusions

‘The Undercover Economist’ is well written and covers a lot of material in a non-convolute way. Topics of recent interest are discussed thoroughly using concepts that Harford introduces through storybook examples and anecdotes.

Usefulness

If you are taking Microeconomic Policy you should read this book. It’s like revision but easier. I thought I understood the topics presented in lecture but Harford is able to go through the concepts with more leisure so that the examples he used still stick in my mind even a year after I first read them.

Notes

(1) I re-read this chapter a lot because it explains why economists continue to use models of perfect markets when they’re so inapplicable to the real world

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HOW MANY PEOPLE HAD SEX TODAY?

The other day we had a society meeting. That was over pretty quickly because we’re a very organised bunch but eventually we got around to a different topic:

How many people in the UK were having sex at 18:03 Sunday 29th September?

(Please keep in mind that this is based on HEAVILY estimated data! You’re quite welcome to point out where our estimates were wrong but they were just estimates based on our collective knowledge.)

• The population of the UK is 62 million. Let’s say 60 million for the sake of maths
• Discount 50% of the population (>65 years/
• Account for the fact that it’s 18:00 on a Sunday = the only people likely to be having sex are those in relationships
• On average people in established relationships have sex three times a week so they have a 3/7 chance of having sex today
• 3/7 of 30 million = 3.4 million
• 24 hours in a day – 7 hours for sleep = 17 hours to potentially have sex
• 3.4 million / 17 hours = 100, 000 people having sex each hour

So. After that we saw that someone had already asked this question. The answer is that on any random day on a random hour sex happens an average 5.5 million times in a population of 6.7 billion (we’ve done enough maths for today… We’ll pretend that’s the current population….) We already set the population of the UK at 62 million which means if we round the numbers it means we were right! In the UK 100,000 people are having sex each hour!

So yeah, considering how much leeway we took with the numbers, we got pretty close!

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