Jump to ratings and reviews
Rate this book

Economics of Small Things

Rate this book
Why are all the good mangoes exported from India? Why should we pay our house help more? Why do we hesitate to reach out for that last piece of cake in a gathering? Are more choices really better? Why do many of us offer a prayer but are reluctant to wear a seatbelt while driving? Are Indians hardwired to get grumpy at a peer's success? What's common between a box of cereal and your résumé?

Can economics answer all these questions and more? According to Dr Sudipta Sarangi, the answer is yes.

In The Economics of Small Things, Sarangi using a range of everyday objects and common experiences like bringing about lasting societal change through Facebook to historically momentous episodes like the shutting down of telegram services in India offers crisp, easy-to-understand lessons in economics. The book studies the development of familiar cultural practices from India and around the world and links the regular to the esoteric and explains everything from Game Theory to the Cobra Effect without depending on graphs or equations-a modern-day miracle!
Through disarmingly simple prose, the book demystifies economic theories, offers delightful insights, and provides nuance without jargon. Each chapter of this book will give you the tools to meaningfully engage with a subject that has long been considered alienating but is unavoidable in its relevance.

296 pages, Paperback

First published November 1, 2020

59 people are currently reading
298 people want to read

About the author

Ratings & Reviews

What do you think?
Rate this book

Friends & Following

Create a free account to discover what your friends think of this book!

Community Reviews

5 stars
25 (13%)
4 stars
48 (26%)
3 stars
87 (47%)
2 stars
18 (9%)
1 star
6 (3%)
Displaying 1 - 25 of 25 reviews
Profile Image for Arun  Pandiyan.
203 reviews54 followers
May 29, 2021
My first exposure to understanding an economic theory was eight years ago when I took a moment to notice, how any time when I asked a shopkeeper for a tube of fevicol, every one of them gave me the exact glue manufactured by Pidilite. I understood the 'concept of monopoly' from such an experience. Till today, the Indian market couldn’t find an alternative for the adhesives from Pidilite Ltd. which is extensively used in the field of construction. Significantly, taking a brief moment to pause and examine the day-to-day activities can explain us how most of our everyday actions, even the seemingly irrational ones, are rooted in some economic logic. In that sense, Sudipta Sarangi’s book deals with the ‘invisible hand’ of economics in our everyday life. By citing many anecdotal experiences, engaging example and analogies, the author explains the specialist topics, mainly the economic theories proposed by Nobel Laureates to general audience in a much simpler language.

The chapters explaining the difference between ‘incentives and bounty’ and why we should be paying our domestic helpers ‘a true equilibrium wage’ were intriguing and gave a new perspective towards the changing nature of labour market and the reason for shortage of domestic workers. For anyone interested in the topics of minimum wage and equilibrium wage, the chapter titled ‘Why we should pay our domestic help more?’ is a must read. While the sociological take on minimum wage revolves around and draws upon the notion of morality and equity, the author as an economist explains the reader why the concept of ‘efficiency wages’ can be an effective strategy for sectors with high labour turn outs than the idea of ‘state mandated minimum wages’ which have to be compulsorily paid in all sectors.

The cognitive impact of poverty has been studied extensively by many development economists including Esther Dufflo and Abhijeet Banerjee explaining how round the year poverty affect the truly poor, leading them to make poor decisions which further their poverty. Sudipta Sarangi delves into the psychological aspect of ‘divided attention’ to scientifically prove and explain how the financial worries of poor leaves them with less mental bandwidth to deal with other life problems, making it harder to concentrate and grapple with issues in a successful manner. Emerging evidences from policy research and intellectuals across various fields have been suggesting that science should be at the centre of all policy making. Keeping in view of that, the author suggests a policy design; considering the cognitive overload of the poor, every poverty alleviation program should cut down red tapes, multiple fill-up forms and interaction between the government and poor and to keep it simplistic in order to wage a successful fight against poverty. Maybe, this is too much to ask for in a country where to receive your pension, you have to typically prove that you’re alive by physical presence.

Further, the author makes an inquiry into the benefits of heterogeneity prevailing in this world and explains us how diversity had actually benefited the economies by flourishing the trade. For example, when the Malthusian theory predicted that, the population growth would outpace agricultural production resulting in famine, poverty and depopulation; it was the trade of food grains, seeds and agricultural technologies between two non-identical partners/countries which proved otherwise. Following Benjamin Franklin’s “Trade has not ruined any nation yet” the author asserts:

“In economic models, for instance, heterogeneity is a crucial factor that ensures trade can happen: If everyone was equally proficient in producing and wanted to consume exactly the same thing, then what is the need for trade? Different individuals might provide different levels of benefits. Heterogeneity tells us how good these solutions are in world where people are not identical. Ultimately, it is the heterogeneity that makes our model better and the world go around. ”

To summarize, this book is riveting for many reasons but most importantly, it makes a reader understand the hardest truth that the economic logic works in a tangentially different mode that is prerogative of one’s moral outlook. However, for anyone interested in basic economics, I would recommend reading ‘Day to Day Economics by Satish Y. Deodhar, before reading this book.
Profile Image for Venky.
1,048 reviews422 followers
May 15, 2021
Scottish essayist and historian Thomas Carlyle coined the term ‘dismal science’ to describe the discipline of economics. It is popularly understood that the inspiration behind such a coinage was Thomas Malthus’ (an economist) dystopian prediction about a surging population always outpacing the production of food grains, and thereby resigning humanity to a perpetual cycle of poverty and adversity. However, Sudipta Sarangi, Department Head and Professor of Economics at Virginia Tech (Virginia Polytechnic Institute and State University), in his engaging book, “The Economics of Small Things” demonstrates that the field of economics need not be dismal in either its literal, symbolic, or figurative sense. By illustrating the application of economics to everyday life, Sarangi juxtaposes wicked wit and wonderful wisdom to instill in his reader a curiosity and inclination towards the subject.

Choosing the most quotidian and mundane of repetitive activities that we all engage in on a routine basis, Sarangi explains popular principles of economics which informs our behaviour without our own knowledge. For example, have you ever wondered as to why your driver obstinately refuses to heed your advice to strap on his seat belt, but bows his head and mouths a silent prayer as your car passes by every roadside temple? Sarangi employs the technique of Game Theory (conceptualized and popularized by giants in the field such as John Nash, Eric Maskin, Roger Myerson, and Reinhard Selten) to explain this paradoxical behaviour when it comes to road safety. There are three players who are involved in the game: the devout driver, the God whose blessings the driver unfailingly invokes, and the seat belt itself. Now the driver has four options at his behest: i) wear the seat belt and not pray; ii)pray, but do not strap the seat belt on; iii) do both; and iv) do neither. The second player, who is God can choose to either keep the driver safe or imperil him. Finally the creation of Swedish mechanical engineer, Nil Ivar Bohlin’s, the unassuming but vitally important seat belt. Every day the driver completes his chores on time, his faith in Providence keeps exponentially increasing, and the poor seat belt is relegated to the confines of neglect. But if only the seat belt would have been included in the Pantheon of Divinity, things would be mightily different!

Similarly why is it that all the best things manufactured in a country are designated for exports and thus consumption in another country. Why is the Alphonso variety of mangoes – considered to be the “king of mangoes” in India the only variety of mangoes from India to be stocked by outlets abroad? Enter the third law of demand initially propounded by Armen Alchian and William R. Allen. This law elucidates that sellers of mangoes would want to high quality mangoes to the US, since a kilogram of high quality mangoes works out to be the equivalent of just a few additional kilograms of low-quality equivalent mangoes.

In explaining the principle of “complementarity”, Sarangi cites the example of a trans-Scandinavian robbery. An intrepid gang of thieves in Sweden stole “designer shoes from store windows”, even though the stores only displayed “shoes meant for the left foot”. It actually turned out that the method indeed had a madness when another team belonging to the same gang was in parallel pilfering shoes meant for the right foot from stores in neighbouring Denmark, which exhibited only shoes meant for the right foot. The robbers who were pillaging from both Sweden and Denmark before assembling pairs and selling them in the grey market were informed by the classic notion of “complementary goods”. This same concept informs the complementarity existing between “different sectors of the economy” such as “the rail, steel and coal industries”. These sectors “feed off each other”. Hence If investment in either of these sectors lags behind, “it will pull the other sectors down and the economy may experience losses”. Investing in just one or two of these sectors can “lead to wasteful expenditure, like spending money on jam but not buying the necessary amount of bread to roll it on”.

A very important and common concept in the domain of economics borders on the perils of asymmetric information. Asymmetric information refers to a state where, “both parties are not fully informed about each other.” Nobel laureate Mohammed Yunus used an ingenious but perfectly practicable technique to resolve this issue. In his micro credit financing model that involved the establishment of Bangladesh’s biggest micro financing facility, the Grameen Bank, Yunus insisted that lenders form groups of five to borrow money. It was purely in the interest of the borrower to identify and evaluate four other solvent borrowers. This exercise put a virtual end to the insidious problem of moral hazard as well. The borrower had an uncompromising incentive to ensure that his or her (most of the borrowers were enterprising but underprivileged women) compatriots keep remitting their instalments on time.

Even Mahatma Gandhi makes a fascinating appearance in Sarangi’s absorbing book. Sarangi brings the attention of his reader to an old essay by Gandhi, where he bemoans on the sheer inadequacy of the Railways in providing even a semblance of comfort to passengers being conveyed by the Third Class. But Sarangi, seeking corroboration from French civil engineer, Jules Dupuit, argues that Bapu got it wrong – for once! Driven by the logic and policies of price discrimination, cold and rational economic logic works in a tangentially different mode that is the prerogative of moral outlook. This is exactly the weapon assiduously and at times, brazenly used by manufacturers to make some people pay more for the same product.

A personal favourite of mine from the book is the imaginatively titled concept of the “Cobra Effect”. Coined by German economist Horst Siebert, the Cobra Effect postulates that a perverse incentive constitutes one that embeds an unintended result that is contrary to the intentions of its designers. For example, “apparently, worried about the number of cobras in Delhi, the British colonial government had started offering a bounty to anyone who turned in a dead cobra. The story goes that in response to this, some smart people started farming cobras. As a result, the government finally had to kill the programme.”

“The Economics of Small Things” is a riveting read that makes even the most arcane of topics seem absolutely fun filled yet instructive.
Profile Image for Dikshit Maheshwari.
19 reviews3 followers
September 30, 2022
I fell in love with economics in college, and since then, have been trying to read good books on the subject. The Economics of Small Things brings out the ubiquity of economics in the small things around us. Few interesting chapters and stories, some of which make you love the subject even more. I think the author could have made the script more captivating, hence the rating. Overall, a decent read. Will hold some of the stories in the book close.
Profile Image for Sreehari.
126 reviews3 followers
April 25, 2021
It has been a while since I rated a book as low as 2 stars. This book grabbed my attention from the title but the reader simply failed to explain economics of daily life. He used so many examples to explain his points but they weren't that relatable. Also there were some complex conceps which are not easy to comprehend for a non economics reader.
279 reviews7 followers
December 31, 2020
An eclectic collection of blogs, anecdotes and essays- with microeconomics tying them together. Especially, Game Theory. There is a lot of wit, and if you are from India, you would relate to acts of chappalchori in temples or the chowkidaars of Taj Mahal charging foreigners the proverbial “white man’s discount”. Then there are sobering moments that talk of the economics of discrimination- race and class in the west, while caste and communalism closer home. The game of Chicken is an interesting idea. A game of Dare, to be precise. Sudipta succinctly wraps important concepts such as Nash equilibria and dominant strategies (in Game Theory) in every day events.

A good introduction to concepts in economics without making the subject sound pedantic..
Profile Image for Cynthia Vincent.
Author 1 book4 followers
January 3, 2021
Increased my curiosity in Economics

I remember reading this thin book as part of the curriculum in school in my 9th and 10th grade on Economics. It was a subject that was accompanied with Geography and always the one that was given the least importance. This book, 'The economics of small things' throws light on the simple actions and events in our life and the economics associated with them. It is simple yet explained in a way that makes you fall in love with Economics. A must read for anyone who wishes to understand why a lot of things happen. For example, why only Alphonso mangoes are exported? Can money be enough to banish poverty? etc....
Profile Image for Sandeep Bhat.
144 reviews3 followers
August 8, 2021
The Economics of small things is an attempt to understand Economics of little things in our personal lives and social interactions. Though the book is not supposed to substitute rigourous Economics study, it initiates the beginner by using simple language, lot of examples and humourous language. With 25 chapters with some being reproduced essays of the author, the book talks about importance of incentives, heterogeneity, complementarities, uniform and complete information, cognitive costs and hame theory concepts to talk about various incidents happening around us. Do read both the appendix for interesting trivia.
38 reviews2 followers
February 8, 2023
This is a compendium of various articles written by the author. This a refreshing approach that views economics as a science borne out of observation of our everyday life and interaction with others.
It could be various levels of interest for you depending on your prior knowledge of things discussed in the book. Some topics were quite interesting for me. whereas others were something I read in other books.
It's a light read that does not bore you, it has small chapters and interesting anecdotes. Even if you pick up the book after several days gap, you can still keep up since most chapters are disjoint and add only to the overall approach of the book.
Profile Image for SP.
82 reviews40 followers
December 5, 2020
I really enjoyed reading this book because it’s so much fun yet leaves you feeling so enriched with information.

I had an idea of basic economics but Sudipta introduces so many new concepts in such a simple and lucid manner with interesting everyday phenomena that I felt my IQ points go up with each passing chapter.

It’s a must read for anyone who’s looking to learn something new but not in a boring manner. The best part? You don’t necessarily have to reward this in sequence!
6 reviews
January 4, 2021
Difficulty level- Easy/Beginner

Category- Microeconomics/Business

A book that expands what economics can do and solve even in the small things of life? Whether why everyone is hesitant to grab the last piece of a cake or why some of us think that the poor are lazy, is answered with magic of economics.

Highly recommended to anyone who wants to cultivate an interest in economics/social sciences especially students or simply awed by the art of economics.
Profile Image for Pransu Khakurel.
107 reviews1 follower
September 18, 2025
More than a book flowing into concepts the writer chose to compile their opeds and blogs on minor issues in the society to write this book. Short chapters with easy progression were the features of this book and the understanding was more holistic calling for actions as per the economic concepts like incentives, heterogeneity, information, cognitive cost, strategic behaviors and complementaries.

Interesting and mind stimulating read!
Profile Image for Vishal Paudel.
18 reviews
May 7, 2021
Unnecessarily over-Garnished. For example:
"The chappalchori syndicate would have been out of business faster than you could say Salvatore Ferragamo"

Some lessons are easy to understand as the cover claims: "crisp". 2/10 for that.
Profile Image for Hemen Kalita.
160 reviews19 followers
April 8, 2022
Only the first chapter, on microeconomics, is moderately good. The rest of the book is totally trivial .It was supposed to be a book on behavioral economics, but turned out to be a collection of random musings on topics from politics to racism interwoven with some no-brainer financial concepts.
Profile Image for Ujan Dutta.
122 reviews1 follower
May 3, 2023
Author tried capturing a wide range of diverse topics, but I fail to lose interest at couple of times. If I had to compare with the likes Freakonomics and super Freakonomics, this one may not be good enough!
24 reviews
November 18, 2023
Lot of criticisms under this book but it is a good light read if you're looking to explore the concepts of economics as a general knowledge & not in a degree way. It's fun. Don't complain about it being very elementary since the name itself says the economics of small things.
49 reviews
February 25, 2022
This is neither engrossing/entertaining likes of Freakonomics for casual reading... nor it will interest serious readers..
Good first attempt.. with Opportunities for Improvement
Profile Image for Akshay P..
8 reviews1 follower
September 10, 2022
Writer provides very clear links to the economic concepts to the daily life. No too technical and not too generic. Over all it is a fun read.
24 reviews1 follower
August 1, 2022
this book is full of short chapters/stories, each of which is supposed to talk about some economic principle. some of the stories (international MP’s) we’re interesting, others were dull and hard to follow. book caters to an indian/NRI audience which occasionally led to questions, but was a light enough read.
21 reviews10 followers
December 11, 2020
The launch date of this book was announced in advance. I also waited for the launch date and bought the book on the very next day of launch. I was expecting lot of new, interesting and exciting details of our everyday actions that we indulge in as a matter of routine. Though the contents of the book make you give a careful look on every day events that happen around us, yet it looks like the book is not a stuff that you would wait for and get something refreshingly new. While some chapters really provide more awareness of these events, yet it is not a book for which you want to spend money and watch the show.
Ideally this type of a stuff should have been released as a series in some newspaper/magazine where it would have got a better visibility and recognition from many readers and probably would get a much larger readership. However, I do look forward to any new book from the same author given the fact he has done lot of hard work to bring life and logic in every day events and provided us his useful nuances and tips on the same.
Profile Image for Kabith Sivaprasad.
8 reviews
May 26, 2021
The author writes about 4 bafillion anecdotes and gives 6 quintillion examples to explain something elementary. I learned nothing from this book, in fact, it's one of the rare books where I came out knowing less about economics than when I went in.
2 reviews
January 10, 2022
If You're young or just starting to look at economics, this might interest you. If you already have a broad know how abt the workings of the economy then this will bore you. Trivial Stuff
Displaying 1 - 25 of 25 reviews

Can't find what you're looking for?

Get help and learn more about the design.