The Undercover Economist (The Undercover Economist #1)

By Tim Harford; Published In 2005
Genres: Economics, Nonfiction, Business
According to one story, Von Neumann was asked to assist with the design of a new supercomputer, required to solve a new and important mathematical problem which was beyond the capacities of existing supercomputers. He asked to have the problem explained to him, solved it in moments with pen and paper and then turned down the request. Von

But many of us love the fact that Ricardo was able, nearly two hundred years ago, to produce insights that illuminate our understanding today. It’s easy to see the difference between nineteenth-century farming and twenty-first-century frothing, but not so easy to see the similarity before it is pointed out to us. Economics is partly about modelling, about articulating basic principles and patterns that operate behind seemingly complex subjects like the rent on farms or coffee bars.

Consider the situation: Money that was provided because of social networks rather than need; a project designed for prestige rather than to be used; a lack of monitoring and accountability; and an architect appointed for show by somebody with little interest in the quality of the work. The outcome is hardly surprising: a project that should never have been built was built, and built badly.

Creemos que el valor que obtenemos de las escuelas y la policía es mayor de lo que nos cuestan en impuestos, pero no lo sabemos con certeza. Cosa que no ocurre con el capuchino.

El capuchino invisible 1,90 libras

Este capuchino secreto es, además, más barato. Entonces

Fight scarcity power and corruption; correct externalities; try to maximise information; get the incentives right; engage with other countries; and most of all embrace markets, which do most of these jobs at the same time.

Hours are long. Wages are pitiful. But sweatshops are the symptom, not the cause, of shocking global poverty. Workers go there voluntarily, which means—hard as it is to believe—that whatever their alternatives are, they are worse. They stay there, too; turnover rates of multinational-owned factories are low, because conditions and pay, while bad, are better than those in factories run by local firms. And even a local company is likely to pay better than trying to earn money without a job: running an illegal street stall, working as a prostitute, or combing reeking landfills in cities like Manila to find recyclable goods.

if there’s a profitable deal to be done between somebody who has something unique and someone who has something which can be replaced, then the profits will go to the owner of the unique resource.

It is not polite to say so, but it is obvious that paying people to be unemployed encourages unemployment. Yet, if a government scrapped unemployment benefit, there would still be jobless people, and supporting the jobless is something that every civilised society should do. The truth is that we have a trade-off: it is bad to encourage unemployment but good to support those without incomes.

La culpa no es de las leyes de la física, sino del sencillo hecho de que, a veces, lo que los modelos dejan fuera es más importante que lo que incluyen.

La economía tiene que ver con la decisión de Yang Li.

La economía trata de quién consigue qué y por qué. En

los márgenes comerciales del café rondan el 150 por ciento; cuesta 40 centavos preparar una taza de café de máquina de un dólar, y menos de un dólar preparar un café cortado que se vende a 2,55 dólares. De

Los reguladores descubrieron que librarse del dióxido de azufre era tan barato que poca gente estaba dispuesta a pagar demasiado por el derecho a seguir produciéndolo. Al

(Screening, the theory of which won enfant terrible Joe Stiglitz a share of the Nobel Prize in 2001, is the art of finding out hidden information by forcing people to act, rather than simply murmur sweet nothings.)

Someone who knows the price of everything and the value of nothing. Oscar Wilde’s definition of a cynic, now commonly applied to economists Imagine

Taxes are often higher when price-sensitivity is low. For example, the government charges high taxes on petrol and cigarettes, not for environmental and health reasons but because people who buy these products need to drive and are addicted to smoking; they won’t change their behaviour much even in the face of large taxes. (If you think that taxes on petrol are motivated by environmental concerns, think again: despite the environmental impacts of air travel, electricity and domestic heating, 90 per cent of all ‘environmental’ taxes in the UK in 2009 were paid by motorists.)

The dictator has to keep the economy functioning in order to keep stealing from it.

There is much more to life than what gets measured in accounts. Even economists know that.

una póliza de seguros depende de la ignorancia mutua. Una

We should aim to make ours a world where people feel free to do things they enjoy, even if others are mildly inconvenienced, but also one where we all refrain from harming other people if the effort involved to avoid harming them is small.

We still don't have a good word to describe what is missing in Cameroon, indeed in poor countries across the world. But we are starting to understand what it is. Some people call it 'social capital, or maybe 'trust'. Others call it 'the rule of law', or 'institutions'. But these are just labels. The problem is that Cameroon, like other poor countries, is a topsy-turvy world in which it's in most people's interest to take action that directly or indirectly damages everyone else.