Is This the Best Book Intro Ever?

I would like to thank you for buying this book, but if you’re anything like me you haven’t bought it at all. Instead, you’ve carried it into the bookstore cafe and even now are sipping a cappuccino in comfort while you decide whether it’s worth your money.

This week, while wondering around my office either procrastinating on work or a problem set (I don’t remember which) I picked up Tim Harford’s book The Undercover Economist. (It’s fun to work in a building entirely filled with other students of economics, because there are books like this lying around everywhere.) It’s a book that’s been on my radar for a while, but for one reason or another I’ve yet to pick up. I sat down at my desk and started reading the introduction. Which continues:

This is a book about how economists view the world. In fact, there might be an economist sitting near you right now. You might not spot him–a normal person looking at an economist wouldn’t notice anything remarkable. But normal people look remarkable in the eyes of economists. What is the economist seeing? What could he tell you, if you cared to ask? And why should you care?

You may think you’re enjoying a frothy cappuccino, but the economist sees you–and the cappuccino–as 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. My hope is that by the time you finish this book, you’ll be able to see the same things. But please buy it first, before the store manager throws you out.

Your coffee is intriguing to the economist for another reason: he doesn’t know how to make a cappuccino, and he knows that nobody else does undercover-economist-covereither. Who, after all, could boast of being able to 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. There isn’t a single person in the world who could produce what it takes to make a cappuccino.

The economist knows that the cappuccino is the product of an incredible team effort. Not only that, there is nobody in charge of the team. Economist Paul Seabright 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 answer–nobody–is dizzying.

When the economist drags his attention away from your coffee and looks around the bookstore, the organizational challenges are even greater. The complexity of the system that made the store possible defies easy description: think of the accumulated centuries of design and development, from paper upon which the books are printed to the spotlights that illuminate the shelves to the software that keeps track of the stock, not to mention the everyday miracles of organization through which the books are printed, bound, stored, delivered, stacked, and sold.

The system works remarkably well. When you bought this book–you have bought this book by now, haven’t you?–you probably did so without having to give instructions to the bookstore to order it for you. Perhaps you did not even know when you left your home this morning that you were going to buy it. Yet by some magic, dozens of people took the actions necessary to fulfill your unpredictable desires: me, my editors, marketers, proofreaders, printers, paper manufacturers, ink suppliers, and many others. The economist can explain how such a system works, and companies will try to exploit it, and what you as a customer can do to fight back.

Now the Undercover Economist is gazing out of the window at the traffic jam outside. To some people, the jam is merely an irritating fact of life. To the economist, there is a story to tell about the contrast between the chaos of the traffic and the smooth running of the bookshop. We can learn something from the bookstore that will help us avoid traffic jams.

While economists are constantly thinking about the things going on around them, they are not limited to discussing local matters. If you cared to engage one in conversation you might talk about the difference between bookshops in the developed world and libraries Cameroon, which have eager readers but no books. You might point out that the gap between the world’s rich countries and the world’s poor countries is huge and appalling. The economist would share your sense of injustice–but he could also tell you why rich countries are rich and poor countries are poor, and what might be done about it.

Perhaps the Undercover Economist seems like a know-it-all, but he reflects the broad ambition of economics to understand people: as individuals, as partners, as competitors, and as members of the vast social organizations we call “economies.”

This breadth of interest is reflected in the eclectic tastes of the Nobel Prize committee. Since 1990, the Nobel Prize in Economics has only occasionally been awarded for advanced in the obviously “economic” things, such as the theory of exchange rates or business cycles. More often, it has been awarded for insight less obviously connected with what you might have thought was economic: human development, psychology, history, voting, law, and even esoteric discoveries such as why you can’t buy a decent secondhand car.

My aim in this book is to help you see the world like an economist. I will tell you nothing about exchange rates or business cycles, but I will unlock the mystery of secondhand cars. We’ll look at the big issues, such as how China is lifting a million people a month out of poverty, and the little ones, such as how to avoid paying too much money in the supermarket. It’s detective work all the way, but I’ll teach you how to use the investigative tools of an economist. I hope that by the end of the book, you’ll be a more savvy consumer–and a more savvy voter too, able to see the truth behind the stories politicians try to sell you. Everyday life is full of puzzles that many people do not even realize are puzzles, so above all, I hope that you will be able to see the fun behind these everyday secrets. So let’s start on familiar territory by asking, who pays for your coffee?

Needless to say, I bought the book. Used. For a penny. Plus shipping and handling. From someone somewhere (and anywhere) in the world. Amazing!

[Building His Kingdom] with Actual Evidence

In the summer of 2012 I read two books (ok, I read more than two books, these are just two highlights) More Than Good Intentions By Dean Karlan and Jacob Appel and Nudge by Richard Thaler and Cass Sunstien. Both of these books were incredibly insightful and fun to read—a rare combination in books about policy, poverty, economics, and psychology.

I’ve wanted to write a blog piece about these books and their implications for quite some time, but never felt quite ready. That is, until now. What follows is a blog piece that took me over a year to write.

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