The Undercover Economist by Tim Harford brought a new light to economics - Some referred to as a dismal science. Harford thrashed such notion and brought the power of economics to life.
The 10 chapters in the book were like building blocks carefully laying down the foundation, brick by brick that is needed for the reader to pick up the nuts and bolts of an economist.
1. Who Pays for Your Coffee?: Harford introduced the concepts of scarcity and bargaining power. Premium price that we pay for coffee on our morning commute to work is all about location, location and location. Quality accounts but only for a tiny part.
2. What Supermarkets Don't Want You to Know: Price-targeting is the storyline and it is about your customers more than the goods you sell.
3. Perfect Markets and the ‘World of Truth’: What is a perfect market? While we hold market efficiency in high esteem, there are times we need to sacrifice it for the sake of fairness.
4. Crosstown Traffic: This chapter is about 'externalities' and how we can price them. Putting a dollar value on externalities can help us deal with some of the major blights on our society: pollution, congestion, and fights with neighbours.
5. The Inside Story: What are lemons? Lemons exist due to information asymmetric. George Akerlof's revolutionary 1970 paper reveals how inside information dramatically affects markets and why this means it’s virtually impossible to buy a decent second hand car.
6. Rotten Investments and Rotten Eggs: It is about the assumption made at the onset. If it is wrong, it will affect all the projection downstream.
7. The Men Who Knew the Value of Nothing: A brief look at game theory reveals how auctioning radio spectrum air space is like playing poker.
8. Why Poor Countries Are Poor: A case study on Cameroon pointed to corruption as the chief cause of poor countries remaining poor. Adding to the mix - no law, press or democratic opposition to restrain the actions of powerful people - a vicious cycle continues.
9. Beer, Chips and Globalisation : If you want to be rich, it is a good idea to forge links with the rest of the world. A discussion on globalising trends illustrates how foreign investment is good for economic growth and on what is comparative advantage.
10. How China Grew Rich: This final chapter discussed the rapid growth of China. Possible reasons included the right incentives, education, investment and some luck.