I found this book in the Strand Book Festival. I thought this might be another of the freakonomics bandwagon books, trying to spice up economics for the economically-challenged (hmm, was the pun intended ?) like me. So, is it really another of the mass consumption Economics unravelled sort of books ? I’d say it is not.
Tim Harford ensured that the content of the book doesn’t merely remain an interesting read of cases, but also backs it up with some concepts of Economics. It is almost the case of reading an applied economics book (I am not sure if such a subject or book exists, but that is what the book feels like).
So, what does Tim deal with in the book. He picks up everyday happenings (the micro if you might), like the coffee we buy, the traffic we deal with, the stocks we might be interested in buying and the larger picture happenings (the macro so to speak) and tries to model those happenings into the economic mould. I think that is the key aspect of the book. Tim doesn’t let go of his economist hat at no point. The idea is to still ensure that laymen like me can understand the concept of economics he is trying to explain.
A case in point is the first chapter – who pays for your coffee. I think making this chapter the first one might have been a rather smart decision, given that it sets the tone for the whole book. In this chapter, Tim explains that the reason why certain coffee shops charge a premium for their coffees, and no matter what might seem the case, their margins of profit are not really high per coffee. He also talks about how the specialized coffee makers (in UK) despite charging premium on the coffee, don’t really help better the livelihood of the coffee farmers in Africa. In the Crosstown Traffic chapter, he explains the economics of rush hour pricing of the roads and how a local government can benefit from the tolls on the roads. (this kind of model, I guess will not work in India, the reasons being way too obvious). In the why poor countries are poor chapter, he goes on to explain why developing infrastructure, education and health is important for countries to become rich. Merely having a wealth of natural resources doesn’t make the country very rich, rather it is the reinvestment of the wealth back into the country that makes all the more difference. He takes the example of Cameroon, and explains the things that were done wrong. He even goes to explain how a dictator might benefit from the policy decisions if rightly taken, but which are most often not done.
As you can see, most of the book is about the contemporary era, where we see things happen and try to unravel why they happen the way they happen. And it is not that Tim leaves each chapter without a solution – that is the key. Each chapter tries to provide a solution which Tim thinks might help in solving the problem. All in all an entertaining and educating read. If not anything else, it helped me realise that the Cafe Coffee Day counter at work is not making most of it its profits from the small cappuccino priced at 6 INR, but from the cafe mochas, cafe lattes, the black forest cake, the sandwich (priced at 30 INR) and the rest over priced items :).
I will rate this book an 8 out of 10. The loss being, sometimes the drift which the author doesn’t seem to control. A definite recommendation for anyone, irrespective of their interest in economics.