Book review: “Hidden order …” by David Friedman
February 19th, 2004 at 4:57 pm(Full title: “The Hidden order: Economics of everyday life”)
The goal of this book is to explain everyday life in economic
terms. More specifically, in terms of “economic equilibrium”,
proving that the society has organized itself into an efficient
economic state.
This subject interests me a lot, so I decided to buy and read the
book.
Generally, I was not dissapointed. Friedman (a physics Ph.D. turned into
an economist) uses deductive, yet entertaining and readable
approach to explain how various things in life can be explained
economically. Mostly finance-related stuff like prices,
taxes, tariffs, rent, currency rates, trade balances etc. but also
things like military tactics (based on game theory), organized
crime, children’s behavior and even marriage.
The approach the book takes is a very nice one from an educational
point of view, in my opinion. The author first starts with trivial
examples - a simplyfied economic system. He explains how things
work under these restricted conditions, and then starts to expand
the scope to more complicated economies.
The treating of game theory is especially good, as it touches a
compelling subject in a very readable manner.
One fact about the book I don’t like, though. Friedman doesn’t spend
enough time explaining the basics of economics he relies on. It’s as
if he assumes some initial acquintance with economics - supply/demand
curves, for example. I think I understand more economics
than the average Joe, but I never learned it officially. Even if I
have an intuitive comprehension of what supply/demand curves are, it
still doesn’t mean that I will immediately grasp why these curves
“shift”, how their slopes are related, and what do the areas between
them (on the graph) mean. Maybe I just hoped for an easy book, one that
wouldn’t require thorough analysis of the material. I think
that the author could, in any case, make the problem go away with
a 10-20 page explanation of the economics basics he uses, especially
the various tricks with supply/demand curves. In my opinion, it would
make it a far better book.
To summarize, “The hidden order” is indeed recommended, but more for people who
already have some understanding of economics - ideally who took some
basic economics courses in Uni. Maybe I’ll reread it some day after
I’ll have a better grasp of the subject.
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