Popular Economics

Popular Economics

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Steven Levitt & Stephen Dubner – Freakonomics

Tim Harford– The Undercover Economist

Tim Harford– Dear Undercover Economist

What it is

Levitt, Dubner and Harford write popular economics books (they're ‘popular’ both in the sense of containing ‘popular science’ material, and in selling quite well). “Freakonomics” and “The Undercover Economist”discuss various topics from an economists’ point of view. “Dear Undercover Economist” is a collection of Tim Harford's tongue-in-cheek ‘economic life advice column’ in the Financial Times (which is about everything but personal finance).

All of these books are accessible to non-economists, and are well written. They’re popular enough that you can order them anywhere.

 

What it means to me

I’m a sucker for books that make you go “huh, I hadn’t thought of that”, especially if the material is presented well. The books above are readable first and foremost, with short chapters that don’t overstay their welcome and plenty of anecdotes.

Beyond the insights and the anecdotes, though, these books are very good at teaching you the economists’ way of thinking: Look at the data first. Follow the money. Ask“why” a lot. The opening chapter of “The Undercover Economist” has an excellent breakdown of the pricing of coffee at coffee shops in high traffic locations, such as train stations:

• Why is coffee expensive in high traffic places? Because people will pay for it.
• What happens with the coffee sale proceeds? A large amount is paid in rent.
• Where does the money go? To the owner of the real estate the coffee shop is in.

At first glance, you would expect that the coffee is expensive because the rent is high, and that (for some reasons) people are still willing to pay this. In fact, the rent is high because enough people are willing to pay for coffee. The fact that coffee-buyers pass by is what makes the building valuable.

This sort of thinking is useful when you do any kind of complex systems analysis. It could very well be that what you think of as cause and effect are actually reversed or interact in more complex ways.

“Dear Undercover Economist” is a hilarious exercise in the lighter side of this, taking ‘normal’ problems and analyzing them through a lens that is very atypical (and exaggerated for comedic purposes) – and yet true.

I heartily recommend these books for anyone with an interest in human behavior, anyone looking to improve their analytical skills, and anyone with a train commute: each chapter takes only 20-30 minutes to finish.