Hidden Economic Principles That Can Change Your Life with Doug Howarth

The Undercover Economist will help you think like an economist without boring you with endless graphs or complex math. By thinking like an economist, you’ll use principles like scarcity, price targeting, the stock market, and game theory to make better decisions every day. By understanding these economic principles, you’ll learn how economics operates in everyday life, why you make the economic decisions that you do, and what happens when these principles break down.

In Doughnut Economics, heterodox University of Oxford economist Kate Raworth argues that the economy’s purpose is to promote human prosperity and happiness. This means 1) an economy that produces enough to provide everyone with the material resources to pursue their highest dreams, but also 2) an economy that does not deplete the vital natural resources upon which life on the planet depends. She likens the economy to a ring-shaped doughnut. The inner circle represents the zone of deprivation—an economy that does not produce enough of the necessary goods and services to meet the population’s essential needs. The outer circle represents the limits of economic growth, beyond which the economy begins to outstrip the planet’s natural resources. She writes that we must stay within these bounds.

In this guide, we have incorporated commentary and insights from other economists, political scientists, and social commentators—in some cases to lend support to Raworth’s ideas, in other cases to present opposing viewpoints and offer a more nuanced and balanced perspective.

Have you ever wondered how the economy works - how millions of individuals can buy and sell goods and services without a master coordinator? Have you wondered why we use money, rather than bartering our services with each other? Why do some nations prosper, while others stay poor despite vast natural resources?

Basic Economics by Stanford economist Thomas Sowell is an incredibly useful, broad introduction to economics. Containing no math, it instead communicates intuitive principles that will help you understand how market transactions work and the effect of policies on the economy. Understand how prices for goods are set, why rent control has bad side effects, and the purpose of brand names.

Tired of competing head-to-head with other companies? Do you feel like your strategy differs little from the competition surrounding you? W. Chan Kim and Renée Mauborgne suggest that the answer to competitive problems is to create a blue ocean: a brand-new market for an innovative idea, allowing your company to avoid competing with rivals—because it has no direct rivals.

In Blue Ocean Strategy, Kim and Mauborgne discuss how you can create such a market by focusing on your product’s characteristics that customers really care about while discarding the characteristics they don’t. This creates a new product offering that doesn’t currently exist, in a space without direct competitors.

In this guide, we’ll explore how to develop a blue ocean strategy, how to execute it, and how to anticipate potential problems. We’ll also look at how a blue ocean strategy aligns with other business strategy frameworks, and where it differs.

Professor Vijay Kumar observes that many businesses claim to value innovation, but few succeed in consistently bringing innovations to market. The reason for this, he says, is that many companies don’t understand how to manage innovation—some don’t even realize that innovation can be planned and managed like other types of projects.

This book is Kumar’s solution to the problem. He lays out a systematic approach to innovation management involving the completion of seven innovation tasks. Kumar also discusses a number of specific tools and techniques you can use in the course of completing an innovation project. We’ll discuss his approach, examine some of the tools he presents, and compare Kumar’s advice to that of other innovation experts, like the creators of Blue Ocean Strategy, Zero to One, and Crossing the Chasm.

Have you ever wondered why so many high-tech products seem to make a sensational entrance, but then disappear before they’re refined enough to become practical? Marketing consultant Geoffrey Moore has an explanation: They fall into a “chasm” that separates the early market from the mainstream market.

In this guide, we’ll explore the chasm phenomenon, analyzing Moore’s model and comparing it to others that examine the way innovations are adopted. Then, we’ll look at Moore’s strategy for piloting a product across this chasm to mainstream success by targeting a niche market, forming corporate alliances to ensure the customer gets a complete solution, positioning your product as the market leader in that niche, and setting up an effective distribution channel.

Economics is the study of how we allocate resources—food, clothing, money, time, effort, and knowledge. Economists begin this study by examining incentives: the driving forces behind our decisions. By understanding how we respond to incentives and the psychological instincts that steer us, we can better understand how market forces work and how governments and firms can use incentives to foster a healthy economy.

In Naked Economics, bestselling author Charles Wheelan strips away the complexity from some of the most powerful theories in economics, allowing readers with little or no background in the subject to understand many of the field’s fundamental concepts. He concentrates on the logical pieces of how and why people behave in certain ways, how markets function, and how governments can design incentive systems that encourage healthy economies.

The Undercover Economist will help you think like an economist without boring you with endless graphs or complex math. By thinking like an economist, you’ll use principles like scarcity, price targeting, the stock market, and game theory to make better decisions every day. By understanding these economic principles, you’ll learn how economics operates in everyday life, why you make the economic decisions that you do, and what happens when these principles break down.

In The Deficit Myth, economist Stephanie Kelton contends that nearly all of the public discourse about national debts and deficits gets the facts entirely wrong. A leading proponent of Modern Monetary Theory (MMT), Kelton champions more aggressive deficit spending by arguing that the U.S. government could finance any program it wishes to create. She advocates a more holistic view of the economy—contending that we ought to focus on poverty reduction, combating climate change, and building a more just and equitable society as the true measures of economic success, rather than focusing solely on the narrow budgetary impacts of legislation.

This guide adds perspective from other economic experts—including voices from outside the MMT community who question Kelton’s theories—in order to present a more nuanced and balanced view of the economic ideas in the book.

Investing experts and laypeople alike often lament the unpredictability of the securities market—financial markets on which investments like stocks and bonds are sold. However, according to one of the world’s leading investors, Howard Marks, this belief in the market’s unpredictability is unfounded. In Mastering the Market Cycle, he argues that the securities market fluctuates predictably based on recurring business cycles and patterns in investor psychology.

In this guide, we’ll begin by discussing the foundational cycles—the economic cycle, the profit cycle, and the credit cycle—that shape the investing landscape and impact the securities market. Then, we’ll turn to the psychological cycles that arise from these business cycles, examining how investors swing between greed and fear and between risk tolerance and risk aversion. Finally, we’ll discuss how these cycles influence the overall securities market cycle and how understanding the securities market is crucial to earning above-market returns.

A massive bestseller now in its 12th edition, Burton Malkiel’s A Random Walk Down Wall Street provides a comprehensive and entertaining introduction to the world of finance. Malkiel leverages his experience as an academic economist and former Wall Street portfolio manager to explain for the lay reader the intricacies of security analysis, asset valuation, and investment theory. He also offers a wealth of practical investment principles that will be useful for novice and seasoned investors alike.

To the outsider, the world of investing can seem daunting to enter—if not outright impossible. But according to investment professional Howard Marks, anyone can learn the basics needed to invest successfully.

In his 2011 book The Most Important Thing, Marks outlines the key tenets of his approach to investing. He argues that the best approach for investors is value investing, which involves determining securities’ intrinsic value and purchasing below it. To practice it successfully, you must learn the nature of market cycles to find opportunities for purchasing mispriced securities, while also learning how to mitigate the risk entailed by investing.

In this guide, we’ll outline the fundamentals of value investing, discuss market cycles and how they’re useful to the value investor, and analyze the common mistakes that often leave investors exposed to unnecessary risk. Throughout the guide, we’ll also examine recommendations from other investors that supplement—and occasionally challenge—Marks’s investing wisdom.