Monday, October 17, 2005

Currently Reading: Naked Economics

Naked EconomicsNaked Economics by Charles Wheelan lives up to its pitch: "Undressing the dismal science".

I studied a subject called "Economics and Industrial Psychology" in my undergraduate study in India. It was a really really boring. The textbook was amazingly dull and could have worked very effectively as a sleep aid for an insomniac. The lectures used to be... well I don't know how they were... coz I don't remember attending them ;-). The only thing I do remember is barely scraping through the exams.

Anyway, so economics somehow never registered as an interesting topic in my memory. But my interest was aroused by some of my latest readings on the fair trade movement. I realized that many of the terms thrown around didn't ring any bells. Terms like "market based solution" and "inefficiencies in the market" and "market barriers" only symbolized indecipherable financial lingo used by well dressed "analysts" on TV. So I went to my local library and hunted down a book that will explain "economics in plain English". So far this book has done just that in a very very readable, entertaining style. Still reading the book, but will point a couple of interesting things here.

:: The author, Charles Wheelan, is the Midwest correspondent for The Economist. So checked out the website for The Economist. Now this is a weekly magazine which you can subscribe to. So you need to be a subscriber to access the premium content online. But the website gives you an option to view an online advertisement and get a free one day pass to the premium content online. You can do this pretty much every day. This, according to my recently acquired knowledge of economics, is aligning the incentives of the advertisers to those of the readers. I had to click through three pages of the ad to reach the homepage. This amply ensured that the stuff being advertised (CISCO products) registered in my brain. In return I got to read all the premium content. I wish NYT would follow a similar model instead of the 50 bucks a year "Times Select"

:: My second observation: The author, in the third chapter, tries to explain "externalities" associated with economic decisions (in this case, his purchase of a SUV). He says:
"...Nor do I have to compensate asthamatic children who will be made worse off by the exhaust I generate as I cruise around the city getting nine miles to the gallon. And I have never mailed a check to the people of New Orleans who may someday find their houses underwater because my CO2 emissions are melting the polar ice caps. Yet these are the real costs associated with driving a less fuel-efficient car."
This book was published in 2002. I wonder what kind of shock he must have felt when he saw the horrible aftermath of hurricane Katrina this September. It must have been terrible to see ones own written word come true so literally. I still haven't read the whole book, but Charles Wheelan does appear to be sensitive to many of the environmental issues of the day.

So far, an all round good read about economics. Suggestions about similar books on the topic would be welcome.

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Siel said...

Wow -- This book sounds scarily prescient. Will have to put it on my wish list --

gawker said...

You might find this post and this one by Rahul and Sunil interesting. They talk about how economics can be applied to the preservation of the environment, making it a win win situation for all.

Transmogrifier said...

Siel: Thanks for the comment.

Gawker: I went through the posts and they are really interesting, thanks. You should have a look at The natural step framework which I think is another tool that tries to handle economics of sustainability. I came across it through a post on sustainablog. I don't know much about it but the TNS Canada website has lots of useful information about it.