I’m taking a little break from writing about my honeymoon to talk about some other stuff I’ve been thinking about lately. Don’t worry though, the trip report will go on but for now a review of the latest book I read.
Economics has always been a fascinating topic for me. Even though I kind of poked fun at it during college since my econ major friends literally had to find extra classes to take so they would graduate with enough credits, I still think it is a very respectable and interesting profession. In my daily life, I’m all about figuring out how to be most efficient and do the most amount of work in the least amount of time or make the most amount of money by doing the least amount of work. And that’s what economics is all about.
But at the same time, there are some extremely complex economic theories that although I find interesting, I don’t always have the time or the energy to read about them. Just google ‘John Maynard Keynes‘ the next time you want to fall asleep. What I liked most about Tim Harford’s book: The Undercover Economist is that he does a great job explaining complex economic theories in terms that layman people like you and I can actually understand.
Interesting Stuff for Beginners
Most of the topics he presents are pretty basic economic principles but he does it in a way that makes it interesting and fun to read. Many of the examples he uses relate every day life and you can see how they are applied and why certain things are priced the way they are. I really enjoyed the every day examples he used when he talked about the pricing of a cup of coffee and why business travel costs so much more than coach.
I didn’t know many economic terms before reading the book but along the way Hartford did a great job explaining things like scarcity, price discrimination, relative pricing, marginal cost, comparative advantage, etc. These are all things that I knew existed but couldn’t tell you how they applied to real life until reading the book.
There’s really something for everyone too since later on in the book he takes a step back and looks at some of the bigger issues like healthcare, benefits of globalization and the rise of China. I found these macro sections to be interesting but I will admit they were a bit over my head.
Business Class Travel
As I mentioned, I really liked the examples he gave in his book but one stood out in particular. Why is business class so much more expensive than coach? As Harford explains, the main goal of travel is to get a person from Point A to Point B but companies want to know how they can wring the most money out of the wealthier passengers. The answer is called price targeting.
In order to price target effectively, travel companies need to exaggerate the difference between the best service and the worst. The example he uses is on Brittish trains:
There’s really no reason at all why coach-class train cars shouldn’t have tables, as they typically don’t in the U.K., for instance, except that potential customers for first class might decide to buy a cheaper ticket when they see how comfortable coach has become. So the coach-class passengers have to suffer.
This is just one real life example that Harford uses to explain what a term like price targeting means. Although I read most of the book over my honeymoon, I don’t know if it’s quite pool-side reading, more like fire-side reading. I did find myself a bit confused at times and having to re-read certain passages but overall the book is very easy to read and if you have even an inkling to learn about economics, this is a great beginner to intermediate read.
Ultimately, I’m sure die-hard economists out there will be able to find a lot of flaws in his arguments and I think that’s where some of the mixed reviews come in (4 star rating on Amazon) but for your every day guy/gal this was an interesting read. I’m on a mission to increase my knowledge of economics because I think it’s an important business skill to have going forward so if you have any recommendations for my next economics book, please let me know in the comments section below.
Readers, what do you think about The Undercover Economist? Does it sound like a book you’d be interested in reading or do you have another go to basic economics book?
If you’re interested in buying the book on Amazon, please use our referral link. I get a small commission on all Amazon purchases that you make after clicking the link, not just the book. So it’s a great way to support the site since I know how we all love Amazon 🙂
-Harry @ PF Pro
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PS – Here’s an interesting podcast I listened to last week that has to do with why milk is always in the back of the store.