Analysis Of Tim Harford 's The Undercover Economist

Author Wheelan writes, "Life is about trade-offs, and so is economics." Indeed, so is Naked Economics. This book promises to be a good introduction to economics for the layman. Throughout the book, the author uses easy-to-understand language and vivid examples to illustrate his points in strategic places maintaining a sense of lightness with the readers in reading the material. Here is a summary of each of the 12 Chapters of the book Naked Economics: Undressing the Dismal Science by Charles Wheelan.

The book is categorized into five sections: theological and ethical properties, basic assumptions of economics, macroeconomics, microeconomics, and international

READ: Naked Economics: Undressing the Dismal Science, Charles Wheeland, W.W. Norton, 2003. Completely- cover to cover.

Chapter 1, the Lesson: One of the greatest fallacies associated with economics is that there is an abundance of economists selfish interests involved. Because are selfish nature men tend to see only the immediate effects of decisions. This is especially true when it comes to economics. Every group has it’s own interests and because of this certain policies that may benefit one group, may not benefit another group. Because of self-interest, groups will banter back and fourth persistently until a solution is reached. This is one of the first causes of

READ: Naked Economics: Undressing the Dismal Science, Charles Wheeland, W.W. Norton, 2003. Completely- cover to cover.

David Colander defines economics as "the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs, and political realities of the society” (Colander, 2010, p. 4). Coordination in this definition refers to production content, method, recipients, and even quantity. To think like an economist one must analyze every situation by comparing the costs and benefits and make any decisions based on those findings (Colander, 2010). The study of microeconomics zeroes in on the individual and analyzes how economic forces affect the choices he or she makes.

Can greed and self-interest benefit our society’s economy? majority of people would say, but one man by the name of Adam Smith would’ve disagreed. he believed that profit motive even greed could be good for the economy. This very theory spiraled an onset of controversies and debates. However, his theory shined in the right light; justified is the best solution for the economy.

Economics can be applied in many situations where you wouldn’t normally expect it found. In “Freakonomics”, by Steven D. Levitt and Stephen J. Dubner, the authors attempt to reveal what is happening behind the curtain of modern day life by comparing what you would think are two completely different people or subjects, and they relate these seemingly uncommon topics to more sophisticated economic concepts. The authors initially claimed that there was no theme, but after reading the book I have realized that there are many misunderstandings in the standard wisdom that we know due to the fact that people usually do not look into the motives of a given situation to uncover the truth.

As an avid problem solver, I had often been encouraged to take up Mathematics as a degree. However, I find myself engulfed in an increasingly uncertain economic landscape, where even the most intuitive economists cannot prevent suboptimal outcomes. In Mathematics I enjoy the challenge of finding the right answer, but the challenge of finding the right answer where one might not even exist has drawn me towards economics.

2. The key economic concept that serves as the basis for the study of economics is:

“It is as important to examine what we forgo, as well as what we will get if we choose one alternative over another.” In other words, before a change is implemented into an economy, careful consideration of all other alternatives and their possible outcomes must be thoroughly examined. However, unforeseen outcomes often arise due to the imperfectability of humans.

Historically, economics has focused on the study of the distribution, production, and allocation of scarce goods, and how firms and individuals make decisions while inevitably facing trade-offs between costs and benefits. Economics has slowly evolved as a discourse community characteristic of quantitative theories that seek to set the stage in which economic and political policies and decisions can be diffused through the nation and the world. The field of economics is a discourse community whose purposes are to quantitatively analyze economic research questions, come up with hypotheses, construct models and equations to test the hypotheses’ validity and argue about its findings. Economic scientists and professionals gather and publish their

When I was first given this assignment I was extremely perplexed at how I would even begin to finish it. I had no idea how economics related to my life in anyway. I hadn’t thought about it critically and I struggling terribly. Thanks to some much needed help from a fellow classmate, he allowed me to get an idea of things from his own essay. After reading not one, but two other essays, I was so surprised at how oblivious I had been. I never realized that just about everything that goes on in my daily life is, in fact, economics. I never realized that from the things I buy to the money I earn from working is all economics. The things I miss out of while working or going to school is a complete opportunity cost. Or even

imagine living in a world in which there are infinite amounts of goods and resources to satisfy every human desire. People will not find need to budget their limited incomes, businesses will not worry about the cost of labor, and governments will not have reason to tax its citizens, or give importance to environmental issues. People living in this society will be equal to one another and everything would be free, like water in the ocean and sand in the desert. All prices would be zero and society will not find need for markets or financial institutions. Unfortunately we do not live in a utopia of limitless possibilities; we live in a scarce world of unlimited wants. Given unlimited wants, we must make the best use of our limited resources, a science our ancestors have developed and named economics. This study measures how societies use scarce resources to produce valuable commodities and distribute them efficiently among different people.

What further intrigued my interest in the subject itself were the questions related to those every economic aspect, such as, "Why have I not ever come across such principles? Where are these principles applicable? What would happen if the graph dropped further down?” These questions pushed me to look for answers, and luckily I found answers with the help of Internet, but it was not just the ending; it was just the beginning as these questions opened doors to new ones, hence the reason as to why I am strongly motivated in pursuing the field of Management Sciences and/or Accounting and Finance.