"There is much more to life than what gets measured in accounts" – Tim Harford is one of the most refreshing statements coming from an economist. A few refreshing comments from an economist in the book make me sit up and read the book cover to cover twice so as to digest the content in the book, which examines some seemingly obvious phenomenon and uncovers the underlying truth behind them.
To begin with, the author says economics is all about "Who get what, when and Why". Pretty much the entire book is structured around analyzing various scenarios, markets etc to show that most of the world life events run based on a few basic economic principles and everyone needs to have these principles in mind so that they can get an additional economic perspective about various things in life.
This book definitely made me think critically on various aspects and has definitely changed the way I would view any market transaction in the future.
Let me try to summarize some of the key aspects that I came across in the book.
Why do markets fail: Markets fail when the bargaining power goes out of whack between the buyers and sellers. This can happen in the instances of monopoly or scarcity power. Secondly, this can also happen in cases where the transaction is not transparent,i.e one side possesses inside information when compared to the other. Thirdly, externalities sometimes stifle markets in their nascent stages itself. A detailed understanding of Externalities and Inside Information is provided in the book which is delightful to read, especially because the examples cited are the ones which we come across usually in our daily lives. The book has one full dedicated chapter on the reasons behind China’s success story. The chinese success story based on the economic principles of Scarcity power, Maximize incentives, Correct Externalities, Fight Corruption and Embrace markets serves as a fitting example of the framework suggested in the book.
My biggest take away from the book is about Key hole economics derived from medical field.
Key hole surgeries allow surgeons avoid huge incisions and cause side effects. It is similar to identifying the right problem and working on it. This is so very important way in which economics can be used to solve vexing problems.
Fixing of Singapore insurance is a great example of key hole economics.
This book should be read by anyone who is interested in wearing an economist goggle while analyzing an issue ,or, working on a problem