Sunday, September 2, 2007

Beautiful Evidence + Naked Economics

A couple of non-fiction books I've read recently ...

1. "Beautiful Evidence" by Edward R. Tufte

Another interesting look at the presentation of information by Edward
Tufte.  It brings together a lot of his earlier research, with the
focus on how to present "beautiful evidence".  He draws examples from
art and science over the past centuries, from Galileo and Newton to
the modern day.

There's an interesting critique of how Microsoft PowerPoint corrupts
the very information it is used to present.  He cites the example of
how PowerPoint slides adversely affected the assessment of the damage
to the space shuttle Columbia on launch.  Excerpts from the book are
available on the author's web site:

2. "Naked Economics: Undressing the Dismal Science" by Charles Wheelan

Yet another book on economics.  I've been reading a few books on the
subject lately, if only to reassure myself that the subject I learnt
and enjoyed at Uni has been corrupted and perverted by modern

This book tackles the basics: how markets work, and also how they can
fail.  It looks at the role of incentives, human capital, trade and
the supply of money.  The goal is to make economics accessible to the
average person, and I think it succeeds quite well without getting overly

There's a great discussion on the goals of real estate agents.  You
would think that since they get a percentage of the final sale price,
agents would always try to get the highest price for their client.  Not
necessarily so, since working for a higher price will take time, and
prevents the agent from selling more properties.  So turnover is more
profitable for them, but that conflicts with the objective of the
individual sellers.

Another standout for me was that the book reminded me of the
"Efficient market hypothesis":

It "states that it is not possible to consistently outperform the
market by using any information that the market already knows, except
through luck. Information or news in the EMH is defined as anything
that may affect prices that is unknowable in the present and thus
appears randomly in the future."  If this is true, then all those stock
market analysts are are effectively gambling other people's money
in a global casino.  Unless they have access to special (inside?
information, they appear to be just riding hunches.  Read the article
for a critique.

If you want to start reading about economics (the so-called "dismal
science", this is a good start.  Here are a couple more interesting

* "Freakonomics: A Rogue Economist Explores the Hidden Side of
   Everything" by Steven D. Levitt and Stephen J. Dubner
Looks at the economics of the unusual, such as gangs, Sumo wrestling,
the Ku Klux Klan, the naming of children and those sneaky real estate

* "The Undercover Economist: Exposing Why the Rich Are Rich, the Poor
   Are Poor--and Why You Can Never Buy a Decent Used Car!"
  by Tim Harford
Looks at the price of coffee, used cars, health insurance and how
supermarkets price products.  More focussed on the everyday things,
it also ties everything together a bit more than Freakonomics.  Like
"Naked Economics", the book also covers the wider economy as a whole.