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Saturday, July 15, 2006

Book Review: The Undercover Economist

This is a great book, and it actually lives up to its subtitle:Exposing Why the Rich Are Rich, Why the Poor Are Poor--And Why You Can Never Buy a Decent Used Car! Tim Harford explains a lot of phenomenon through the tools and lenses provided by modern Economics, and covers the main ideas behind the phenomena very well. He has an excellent but brief explanation of adverse selection, for instance, and why it makes it difficult for a fully private health insurance system to work well. Unlike many other authors who leave it at that, he explores a solution (Singapore's) that appears to work well and shows how successful you can be if you are willing to set aside ideology and adopt an engineering approach towards economic problems. (Not that Singapore's solution can be successful in the U.S. politically, but the ideas are worth considering at the very least)

If you don't know much about economics, this is a great book to read. In the process of pondering the phenomena Harford covers (and he covers them much better than any New York Times journalist ever will), you will learn a lot of economics. If you are an economics junkie like me, you're going to enjoy this book, even more so than Freakonomics. It truly is well-written, entertaining, and accurate. I have no fault to find with this book.

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