Tim Harford's top 10 undercover economics books




2. Micromotives and Macrobehavior by Thomas Schelling

Thomas Schelling is a hero of mine and repeatedly appears in The Logic of Life. A cold war strategist, he advised John F Kennedy during the Berlin crisis before later falling out with Henry Kissinger. He also helped Stanley Kubrick develop the twisted disaster scenario of Dr Strangelove. When Jimmy Carter was president, he turned to Schelling for help in thinking about climate change. If that wasn't enough, he wrote Micromotives and Macrobehavior, a beautiful collection of essays showing how complex and unwelcome results can evolve from the interactions between agents with simple motives - whether drivers, members of a crowd, or people sending Christmas cards. Where's the economics? It's in there somewhere, and was enough to win Schelling the Nobel memorial prize in economics in 2005.

3. The Poetry of Robert Frost, Complete and Unabridged by Robert Frost

Frost's famous The Road Not Taken is as good an exploration of the economist's idea of opportunity cost as you might wish for. Stopping by Woods on a Snowy Evening touches on the same subject and, for me, is a far more haunting poem. Then there's Mending Wall, an inquiry into whether property rights make for a civilised society - do good fences really make good neighbours? I realise I am not winning Robert Frost any new fans here.

4. Getting to Yes by Roger Fisher, William Ury, and Bruce Patton

It sounds like the kind of awful management book that clutters up airport bookshops, but this super-sharp, practical guide to negotiations is a masterpiece of hidden economics. Most people are frustrated by economists' insistence on expecting the world to be full of mutually beneficial transactions. Fisher, Ury and Patton show you how to benefit by seeing the world that way.

5. The Evolution of Cooperation by Robert Axelrod

The "prisoner's dilemma" is the most infamous piece of game theory, and so also the most widely misunderstood. Game theory describes conflict and coordination using pure maths; the prisoner's dilemma is the quintessence of back-stabbing, distilled into a mathematical function. Axelrod wanted to step outside the known mathematical solutions, and held tournaments instead. He invited academics to design robot proxies, which then competed in a repeated prisoner's dilemma. He discovered that cooperation can emerge in the most unpromising of situations. His conclusions have dated a little - the first tournament was over 25 years ago - but the book is still a joy to read.

6. The Winner's Curse by Richard Thaler

This is the insider's guide to everything that doesn't work in economics. Thaler published a regular column in the academic Journal of Economic Perspectives, politely highlighting - in the most careful, rigorous, impossible-to-ignore way - all the things in standard economics that just didn't add up. The Winner's Curse is the resulting compilation. The winner's curse, by the way, is the reliable tendency of auction winners to bid too much. According to standard economic theory, the winner's curse doesn't exist. Armed with a room full of people and a jar full of coins to auction, I can profitably prove otherwise in five minutes.

7. The Theory of Moral Sentiments by Adam Smith

The father of modern economics is more famous for his richly-described Wealth of Nations. But as well as a practical thinker who liked to poke his nose into the details of economic life, he was also a moral philosopher. The Theory of Moral Sentiments asks an important question for anyone who wants to understand the world and its economy: Why are we moral?

8. The Hare and the Tortoise by John Kay

At first glance this is just a collection of fables and other short articles about management. But Kay knows as much about business economics as anyone. The easy style draws you in, the unexpected insights knock you flat. In case you were wondering, the tortoise was urged by management consultants to become like the hares. Despite their best efforts - and his - he remains a tortoise. The hares are eaten by lions.

9. How to Lie with Statistics by Darrell Huff

Surely the bestselling book ever written about numbers, and it still reads well half a century on. Huff and his illustrator Irving Geis expose dirty trick after dirty trick. Almost incidentally, they give an intuitive course in how to think sensibly about numbers in the news.

10. Why Buildings Fall Down by Matthys Levy and Mario Salvadori

The gorgeous freehand sketches and simple, direct explanations show how easily ambitious plans can go astray. Sometimes nature's whimsicality is to blame: the snow that drifts to lie unevenly on the roof, causing it to collapse; the river that leaves the bridge untouched but scours away the riverbed beneath the supports. Sometimes human error is more to blame: the contractor changes the blueprint in a way that seems innocuous, but isn't. Everyone in public life should read this book and think. Crowds of people are more unpredictable than the weather, and policy structures less well-understood than physical structures. Small wonder that grand policies fall down, too.