The Undercover Economist – Tim Harford

I can’t say enough about this book. It simply amazes me how Tim takes everyday things in our lives (supermarkets, insurance, environment) and uncovers the hidden economics in all of them. It further amazes me how much of an impact an economist and his policies can have in affecting our day to day lives. Their deeper understanding of the workings of the world is indeed something to covet.

I wish I could remember all I have read in this book. But given history screams harsh judgements about my retention capacity, here’s my attempt at boosting it by writing in my own words what I read.

I liked his presentation of Economist Kenneth Arrow’s work: “All efficient outcomes can be achieved using a competitive market, by adjusting the starting position”. He calls it the head-start theorem.

Markets are like races. They force industries and people to perform: produce goods that are needed, produce them in the most efficient way, allow competition to drive prices such that they reflect their value as perceived by people. In some sense, they are like a running race where everyone is doing their best. While this is desirable, it can leave fairness off the table sometimes.. What if we have weak runners? Is it ok for them to always lose? Arrow’s work says we need not. His solution is to not interfere with the race, but rather rearrange the starting blocks.

Lets look at the example he gives. But first some background. Government have taxes at their disposal to raise money to provide the services they do. Now they could have a blanket rate for everything but they have to be clever than that. Taxes affect prices which in turn affect consumer choices. Thus, it would make sense to have higher taxes on goods to which consumers are less price sensitive. That way, the sales stay as they are and government gets the tax it wants. Consider domestic fuel. People find it hard to cut down on fuel consumption. Government can use this information to impose heavy tax on fuels hoping this would not affect people’s choice much. Another aspect to consider is environmental consequences. A way we can make people pay for their choice to affect the environment (by using more fuel) is to tax it more.

So far so good. But this also means, anyone who can’t afford heating will face a harsh winter. Tim points that many seniors die due to inadequate heating in Britain every year. If we were to apply Arrow’s work to this problem, we would leave the taxation on domestic fuel as is. Instead government could support the elderly with their heating bills. This is akin to giving a weak runner a head start in a race.

His discussion about health insurance is interesting. Insurance is a curious case for markets to solve given the lack of information. Insurance companies face a formidable task: they need to decide premiums based on imperfect information. Who/how many of insurees will fall sick? If they charge too less premium they will go bust because of claims. If they charge too much, they will drive away healthy insurees who will opt out; further driving premiums higher and getting into a vicious cycle leaving many uninsured.

He looks at both private (US) and state provided (Britain) health insurance and points out flaws in them. A private and voluntary policy like in US will make people opt out, if their resources need to be employed elsewhere (food/clothing). If only people who fall sick take insurance, this will drive up the premiums and force more people out of insurance coverage. State provided health insurance is good but as evident with Britain’s example the system is overcrowded where patient’s face long waits. Furthermore, it takes away the choice of treatment out of a patient’s hand: the doctor decides what the treatment is. You either take that or you get nothing.

Here the author gives an example system (employed in Singapore) which tends to work slightly better than the above options. This involves giving maximum responsibility and choice to patients. They chose their treatments and pay for most of their medical bills. Government /insurers step in only for catastrophic(expensive) bills and to aid the poor. This system mandates having a savings account dedicated to health (reduced taxes will put money in this account, government will help poor by contributing to this account). People pay for most of their medical bills using this account and only the largest bills (rare) is where the insurance steps in.

Finally, loved his line: “Want a bargain? Don’t try to find a cheap store. Try to shop cheaply.”


Bo’s lasting lessons: The Legendary Coach Teaches the Timeless Fundamentals of Leadership. – Bo Schembechler  and John Bacon.

I am not exactly a sports enthusiast but I happen to hang out with one and it seems sports enthusiasm can be infectious; especially if you are at Michigan. So surprisingly myself, I picked this book where legendary football coach Bo talks about what it takes to be a leader.

Hearing Bo talk about Michigan football tradition I must say puts things in perspective for me about the passion my fellow wolverines feel for Michigan football. Being a foreigner with just a passing interest in sports, I hope I can be forgiven for taking four long years to get to understand this!

In this book Bo talks about essential qualities for a leader by exemplifying them with his own career as the head coach of Michigan football team. His passion, his discipline, his integrity, his emphasis on execution before innovation and most importantly his keen interest in all -round development of his players speaks volumes about how great a mentor he was. Some of his lines that will stay with me:

“Early is on time and on time is late”

“Those who stay will be champions”

I still don’t claim to understand the ins and outs of football but I can’t wait for our first game now! Go blue!

David and Goliath – Malcolm Gladwell

I thoroughly enjoyed this book. Easy read (especially after a crazy day with work, it becomes difficult to motivate reading and ease of reading is much appreciated) but still so full of new perspectives for me. Its very impressive in my opinion to have the patience to rethink well-accepted dogmas and the author precisely does that.

He talks about how well-accepted advantages are not necessarily so and how well-accepted disadvantages are not necessarily bad. I particularly like how he weaves a single coherent message using such varied examples like lower class sizes, big armies, attending better ranked universities, dyslexia, civil rights movement in Birmingham and so on. His reminder on understanding the limits of power is I think a good read for world leaders.

I am guessing the one thing this book will make you do is, the next time you think you have a disadvantage, you will rethink!

It’s been a long time since I was here. Many things have kept me off blogging, but I guess most important of it was I forgot why I started blogging in first place. For if the motivation is strong enough for a task, we can find time to do it.

I recently happened to remember that one of the reasons of starting this blog was to keep in touch with writing. And so, in spite of the fact that a PhD pursuit can make demands on your life that make finding time for anything else criminal in some eyes, I am planning to read many books this year and planning to write a bit about them too. Here’s first of such entries.. By the way, the title (hopefully) translates to “Old and new ideas about living life”.

*Khalil Gubran – The Prophet

I did a presentation on Gubran recently and it would be sad if I didn’t read one of his books. This is a nice read; written so long ago but I can relate to it, parts of it at least! The book presents his thoughts on myriad of topics relevant in day to day life. Thanks to a friend who recommended that I read it.

I am not sure I want my mom to know I am reading about marriage but here is an excerpt on his thoughts on marriage:

Love one another, but make not a bond of love;
Let it rather be a moving sea between the shores of your souls.
Fill each other’s cup but drink not from one cup.
Give one another of your bread but eat not from the same loaf.
Sing and dance together and be joyous, but let each one of you be alone,
Even as the strings of a lute are alone though they quiver with the same music.
Give your hearts, but not into each other’s keeping.
For only the hand of Life can contain your hearts.
And stand together yet not too near together:
For the pillars of temple stand apart,
And the oak tree and the cypress grow not in each other’s shadow.

*Lean In – Sheryl Sandberg

I cannot claim to know many books which talk about women in (or not so in) workforce and their challenges. So it would be difficult to rate this one. But being one of “these women” still in workforce, I am glad I read this book. More glad the author took time to write about this.

She succinctly points out what keeps women from gaining equal footing and I would be lying if I say I don’t see/face these challenges. So in all, its good we are talking about this. I hope anyone out there who sincerely cares about scanty women representation in workforce finds time to read this book. Finally, hoping to employ all that I learned from this book.

          Reminiscing school days with a fellow Don Bosconian at work the other day, I couldn’t help but recollect this one particular song that had a deep impact on me.  We had performed this song as part of a skit on Don Bosco. On researching about it I found that it was composed by Mitch Leigh and was written for the 1965 musical “Man of La Mancha” inspired by Miguel de Cervantes’s seventeenth century masterpiece “El ingenioso hidalgo don Quijote de la Mancha” ; something which is on my reading wishlist (I wish after two levels of spanish, I can read this in spanish 🙂 Que agradable pensamiento!! ).  Here are the lyrics of this beautiful song :

To dream the impossible dream
To fight the unbeatable foe
To bear with unbearable sorrow
To run where the brave dare not go

To right the unrightable wrong
To love pure and chaste from afar
To try when your arms are too weary
To reach the unreachable star

This is my quest to follow that star
No matter how hopeless, no matter how far
To fight for the right
Without question or pause
To be willing to march
Into hell for a heavenly cause

And I know if I’ll only be true
To this glorious quest
That my heart will lie peaceful and calm
When I’m laid to my rest

And the world will be better for this
That one man, scorned and covered with scars
Still strove with his last ounce of courage
To reach the unreachable star..
The fight the unbeatable foe..
To dream the impossible dream..

Here’s my first blog after moving to wordpress. I am not a poet but I had penned this down for my departmental magzine and this poem is dedicated to my Mother.

Born into this world as one among millions.
And no star shone on my birth
For no prophecies prevailed
But I was Your little one My Mother..
Your Special one ..Your star!

Secure from the harshness of the world
I closed my eyes in Your arms
No fear I felt, no pain.
You gave me strength My Mother
You gave Your own, so I could exist
Sleepless You were for my night’s sleep,
How sacrificing have You been!

You loved unconditionally but with discipline
And instilled courage to face life
Firm you were when I erred,
But your heart wept when I was in pain
Slow but steadily My Mother,
You carved this stone into a sculpture!
How patient have You been!

Winged was I now; aspiring to fly independently
And your arms now chained me…
But patient You were My Mother..
And forgave my mistakes.
Yet tutored me the lessons of life
How forgiving have you been!

Dreams I saw; but feared to follow them
But you made me believe in myself
You showed this star of yours it’s place up high in sky
Your star now shines upon this world My Mother..
And I see contentment in your eyes…

But will this star ever shine so bright
To bring a gleam in your eyes?
And so, oh Lord to thee I pray
For your bounteous My Mother says;
I desire no paradise, nor the luxuries of this world,
But I ask for one thing & only one thing
Let no deed of mine ever hurt that Heart,
Which is to me is so Divine!