I recently finished reading The Undercover Economist by Tim Harford (You might recognise the name from his always humerous columns in The Financial Times). In my opinion this is one of the best business books published in years and a highly recommended read.
The book is basically a view on everyday life seen through the keen eyes of an economist. It is a well-written summary of all the things you (most likely) forgot from the dull text books on macro (and micro) economics or rather all the things you should remember, or know about if you never studied economics.
Mr. Harford starts out by providing the foundations in terms of basic supply and demand relationships and their implications. Through a series of both funny and relevant real life case studies the reader is then guided deeper and deeper into the layers of modern economic theory where quite a few of them are highly related to purchasing (like how to not get duped in an auction through amongst other things the application of game theory as an example).
I think it is becoming increasingly important to remember the impact of modern economics on the realm of purchasing and the ‘deductive reasoning’ argumentation style that often holds such a big part in it.
I do not want to take anything out of the experience of reading this excellent book so I will opt for a quote from the introduction and hope it inspires you to learn more:
This is a book about how economists view the world. In fact, there might be an economist sitting near you right now. You might not spot him – a normal person looking at an economist wouldn’t notice anything remarkable. But normal people look remarkable in the eyes of economists. What is the economist seeing? What would he tell you, if you cared to ask? And why should you care?
You may think you’re enjoying a frothy cappuccino, but the economist sees you – and the cappuccino – as players in an intricate game of signals and negotiations, contests of strength and battles of wits.
The quote above triggers the obvious question in the context of this blog: How do you know when you are sitting next to a purchaser procurement professional?
