The Undercover Economist

“Your cappuccino reflects the outcome of a system of staggering complexity. There isn’t a single person in the world who could produce what it takes to make a cappuccino.”

This quote serves as the first example of Harford’s use of micro setting expanding to macro setting. He uses the example of a simple cup of coffee to show how many transactions and choices that readers may take for granted are in fact affected by several economic factors like scarcity and trade.

“Economists study power, poverty, growth, and development. It is hard to wield the models that underlie such subjects and remain unmoved by the real world behind them.”

This quote serves as the justification for Harford’s decision throughout the book to depart from academic objectivity and decry injustice, as well as advocate for solutions to those injustices. His admission of nonobjectivity serves to create a foundation of credibility for Harford’s opinions later on in the book, when he makes arguments against boycotting sweatshops and advocating free global trade as a solution for global inequities. By establishing that he is willing to betray academic neutrality to better the world, he becomes a more reliable source of ethical global development theory.

“Sales are an effective form of self-targeting. If some customers shop around for a good deal and some customers do not, it’s best for stores to have either high prices to prise cash from the loyal (or lazy) customers, or low prices to win business from the bargain hunters.”

This quote describes the economic strategy employed by sellers known as “self-targeting,” which designs the purchase experience in a way that makes customers reveal important information about their buying priorities. It introduces the concept of price-blind and price-sensitive customers, a concept that Harford returns to throughout the book.