Muttal Nihari Vajpayee pulls out some fun economics in his review of The Naked Economics by Charles Wheelan.
Are you intrigued by:
- The effect of a dog pooping in public on the economy.
- The reason behind the policy of a free meal when you don’t get a bill then?
If your answer is yes, then, The Naked Economics: Undressing the Dismal Science by economist, journalist and founder of the Centrist Party Charles Wheelan is a read you should look out for!
Priced a little above thousand Indian rupees, Naked Economics strips the complexity which economics carries explaining some of the most fundamental concepts and their implications in a way everyone can understand.
5 things from Naked Economics which challenge the social paradigm are as follows:
1.Incentives matter a lot.
Adam Smith, a social philosopher said that “It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest. In our routine life we witness a lot of marketing campaigns, buy one get one free promos, 10 percent extra, happy hours and much more. These are not done out of sheer love, but because the company will do whatever it takes to fulfill its own interest. Unfortunately no lunch is free!
2. Taxing and Dating – What’s similar?
Driving a SUV not only involves the private cost of buying, repairing, fueling and maintaining, but also the cost which leads to global warming and a gas guzzler tax can not only limit this, but also encourage automobile manufacturers to produce more energy efficient cars. This is where the idea of imposing new taxes can be actually helpful as opposed to the misconceptions people have regarding the taxation policy.
The same logic works with the case of dating. When you date a person, you not only make someone worse off by reducing the prospect of that person getting a better guy/girl but also invest a lot of time in romance which can pretty well be invested somewhere else. Depression caused due to breakups can decrease the productivity of your unit and this is an added cost which comes with a date (provided it doesn’t work out pretty well). How about a dating tax?
3. Discrimination is inbuilt!
With all sorts of discrimination around, statistical discrimination assumes that a female who wants a family will take a maternity leave and there is a high probability that she might leave after it. Further it goes on to a construct which suggests that black prisoners have spent their time in prison because they are most likely to be sent to prison as compared to whites. (28 % vs 4 %).This is the paradigm which can be extrapolated to the behavioral pattern of classroom seating arrangement. People who sit at the front are generally expected to perform better as compared to ones sitting somewhere else in the class.
4. Despite the structures in place, market is amoral.
It provides us with the goods that we want and not the ones we need. This explains as to why some of the best doctors are performing cosmetic surgery and why drug cartels are getting into the business of manufacturing submarines to store drugs.When you cast a vote, you become a part of the same dilemma. Politicians promise you the ideas which you want like free WiFi, but not the ones which you need like better practical education or improved standard of living.
5. Why do Political Parties Take bad decisions?
The dilemma between private and public sector’s allocation of resources can be explained with a single statement by Charles Wheelan, private sectors allocate the resources where they find the maximum profit and the public sector allocates resources where the political process leads them to. This sums up some of the worst economic decisions taken by political parties throughout the world.
Didn’t know a lot of these did you? Well, ofcourse you didn’t! Go on then, grab this awesome economics book!