Book Review: "The Undercover Economist" - Tim Harford
I rented this book from Quereazant, a book rental store in Bandar Baru Bangi. It was on non-fiction best seller’s list for quite some time. The author, Tim Harford is a young thirty-something British economist who works for Financial Times and as a presenter for the BBC. He has since come up with another economics-for-layman book called The Logic of Life which is currently on best seller’s list in major book stores. You can listen to his radio show More or Less which is downloadable free as podcast from the BBC Radio 4 website.
In Undercover Economist, he looks into everyday phenomena and tries to explain them in terms of economics. According to many, economics is a dismal science but he puts it in such a language that even laymen can understand and relate it with everyday choices that we make.
The one subject that always crops up in his discussions is coffee. I would say this is a clear influence of American culture infiltrating into British life as the British are usually identified with tea! Take coffee and capitalism on the left hand side of the equation and you get inflated prices plus enormous profits on the right hand side. In economics parlance, you may call the equation the Starbucks equation. There are numerous auxiliary equations which Starbucks itself would not like you to know. These include exploitation and price manipulation on one side and Third World countries plus poverty on the other. You can name this equation Capitalism if you like. I am digressing a bit here because as an economist working for FT, a Scripture of Capitalism itself, Tim Harford would not be allowed to venture into this sort of socialist rubbish. But as an economist and heavy coffee drinker (which I imply because he’s so obsessed talking about coffee) he does explain why in a busy London train station, with hundred of thousands of commuters rushing to step into the office before their boss does, there is only one coffee shop with long queues, charging premium price for a caffeine shot. It seems to run counter to conventional economics theory that there should be many more coffee outlets trying to sell coffee when there is obviously a pressing need for more coffee shops (supply) in the face of so much demand (caffeine addicted commuters). He calls it the power of scarcity – the ability of that one coffee outlet to charge high premium due to unavailability of competition.
Of course he does not just talk about coffee. Economics is not just about that black stuff that people put into their mouth while they start reading e-mails in the morning. He also talks about big things like the mind-boggling pace of development in China and why Third World countries like Cameroon remains stagnant. While economics gives choices to millions of people in China to lead the life they want to lead, corruption is identified as the single biggest problem that is plaguing poor countries like Cameroon to lift themselves out of poverty.
His book has been very popular. He has surprised even himself in selling more than 600,000 copies so far. His initial estimate was that he would be satisfied if the sales figure reached 7,000 copies. With his talents of looking at why people make certain choices and not the other, perhaps in his next book, he can give an analysis of why people choose to spend their money on his book and not others. Or perhaps, why people like me, just choose to rent rather than buy.
