Book Review: Undercover Economist

If you’re looking for a well documented, accessible book on economics that will keep you giggling, try:

Harford, Tim. 2006. The undercover economist: exposing why the rich are rich, the poor are poor–and why you can never buy a decent used car! Oxford: Oxford University Press.

Mr. Harford writes in a clear and sometimes playful style to illustrate basic economic principles. For example, here is how he describes how coffee shops gets customers to expose just how much they’re willing to pay for their coffee:

Take a Starbucks, any Starbucks. (…) The price list looks like this:


Hot Chocolate $2.20

Cappuccino $2.55

Caffe Mocha $2.75

White Chocolate Mocha $3.20

20oz Cappuccino $3.40


Or, to translate:


Hot Chocolate — no frills $2.20

Cappuccino — no frills $2.55

Mix them together — I feel special $2.75

Use different powder — I feel very special $3.20

Make it huge — I feel greedy $3.40


Starbucks isn’t merely seeking to offer a variety of alternatives to customers, it’s also trying to give the customer every opportunity to signal they’re not looking at the price.

The book is wide ranging, from coffee, to health care and international poverty. On each of these topics he draws some surprising conclusions.

While I’m still a firm believer in a strong public option for health care, I think Mr. Harford makes a strong case for a health-care system without it. He thinks we should adopt a model like Singapore’s and at least one commentator agrees. I’m not ready to advocate for it here because I suspect we’d get the “pay on your own” portion without the strict regulations and public catastrophic health plans that seem to make the Singapore system work.

Underground Economist is well documented with end notes and has a good index.

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