The feature article at Tech Central Station today is a wonderful review by Arnold Kling of Tim Harford’s book The Undercover Economist. Kling does not shrink from making the “inevitable comparison with Freakonomics.” Kling gives his “enthusiastic recommendation to The Undercover Economist” over its best-selling rival. (Click HERE to read Kling’s review of Freakonomics). Kling writes, “[Undercover Economist] more accurately reflects economics and has much higher educational value.”
What does buying organic food say about you? It might say that you believe that it is healthier to ingest food grown in a certain way. But to Tim Harford, it also says that when it comes to price, you are a sap, willing to hand a store high profit margins. He ends his discussion of the organic food rip-off by issuing a plea to organic-preferring consumers to shop more price-consciously and “not let food retailers exploit your enthusiasm.”
Thus does Harford explain “price targeting,” whereby a seller tries to identify saps who will overpay for a product. Once you get the idea, you can see examples all over. For example, just the other day in the Wall Street Journal, Holman Jenkins went “undercover” to expose the Toyota Prius and other hybrid smugmobiles.