I have to confess from the outset that handling numbers has never come easily to me and I have to work really hard at it (which is a pity as it does figure fairly prominently in my job). And although I know that economics is as much about concepts as it is about figures I suppose I have been reluctant to investigate something which on this read has proved to be really fascinating.

In the The Undercover Economist, Tim Harford is trying to get non-economists to think about the world in the way that he does. I will admit that I was sucked into the book simply because his first example was about something I walk past every day, which is the coffee kiosk next to the main entrance/exit at Waterloo Station in London; according to Harford some 74 million commuters use this station every year (and it feels some mornings as if they’re all there at once!) and this kiosk is positioned on the most efficient route out of the station, which is one of the reasons it does so well. The other is that there isn’t another kiosk next door selling coffee more cheaply, and so location means everything to the economic success of that particular business.

Harford talks a lot about the price of coffee and why it is so expensive in large cities like London. It’s not as simple as saying the coffee prices are high because the rents are high; he demonstrates that landlords can only really get away with charging high rents if people are willing to pay high prices for the goods sold in those shops. And commuters tend to be “price blind” because they don’t have the time or the inclination to walk a bit further to find a cheaper coffee.

Last coffee thing: he translates the Starbucks price list from their shop on The Strand in London (as it was when he wrote the book a few years ago) and it really tickled me:

Capuccino = no frills = £1.85

Hot chocolate = no frills = £1.85

Caffe Mocha = mix them together, I feel special =£2.05

White chocolate mocha = use different powder, I feel very special  = £2.49

Venti white chocolate mocha = make it huge, I feel greedy = £3.09

This is how we signal that price isn’t important; we are willing to pay more for not very much difference.

Harford touches on economics and the environment, talking about carbon neutrality and how it often doesn’t make sense, and suggests that just because goods are moved within countries or even very locally, that doesn’t mean the environmental costs of transporting them are small.

He gives a simple definition of economics, which makes a lot of sense to me: the economy is about who gets what and why.

I really enjoyed reading this book, it’s well written and engaging, and for a few days it made me look differently at how I spend my money and what signals I give to shopkeepers. It hasn’t changed my habits but perhaps I do recognise a bit more how my behaviour can be interpreted.

This is my third read for the Non Fiction Five challenge.

 

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