Hidden Order: The Economics of Everyday Life

by David D. Friedman

David Friedman has never taken an economics class in his life. Sure, he's taught economics at UCLA. Chicago, Tulane, Cornell, and Santa Clara, but don't hold that against him. After all, everyone's an economist. We all make daily decisions that rely, consciously or not, on an acute understanding of economic theory--from picking the fastest checkout tine at the supermarket to voting or not voting, from negotiating the best job offer to finding the right person to marry. Hidden Order is an essential guide to rational living, revealing all you need to know to get through each day without being eaten alive. Friedman's wise and immensely accessible book is perfect for amateur economists, struggling economics students, young parents and professionals--just about anyone who wants a clear-cut approach to why we make the choices we do and a sensible strategy for how to make the right ones.

Genres: Economics, Nonfiction, Business, Politics, Psychology, Science, Social Science

352 pages, Paperback

First published January 1, 1996

About the author

from amazon.com:

I am an academic economist currently employed as a law professor, although I have never taken a course for credit in either field. My specialty, insofar as I have one, is the economic analysis of law, the subject of my book _Law's Order_.

In recent years I have created and taught two new law school seminars at Santa Clara University. One was on legal issues of the 21st century, discussing revolutions that might occur as a result of technological change over the next few decades. Interested readers can find its contents in the manuscript of _Future Imperfect_, linked to my web page. Topics included encryption, genetic engineering, surveillance, and many others. The other seminar, which I am currently teaching, is on legal systems very different from ours. Its topics included the legal systems of modern gypsies, Imperial China, Ancient Athens, the Cheyenne Indians, ... . My web page has a link to the seminar web page.

I have been involved in recreational medievalism, via the Society for Creative Anachronism, for over thirty years. My interests there include cooking from medieval cookbooks, making medieval jewelery, telling medieval stories around a campfire creating a believable medieval islamic persona and fighting with sword and shield.

My involvement with libertarianism goes back even further. Among other things I have written on the possibility of replacing government with private institutions to enforce rights and settle disputes, a project sometimes labelled "anarcho-capitalism" and explored in my first book, _The Machinery of Freedom_, published in 1972 and still in print.

My most recent writing project is my first novel, _Harald_. Most of my interests feed into it in one way or another, but it is intended as a story, not a tract on political philosophy, law or economics. It is not exactly a fantasy, since there is no magic, nor quite a historical novel, since the history and geography are invented. The technology and social institutions are based on medieval and classical examples, with one notable exception.

Reviews

[Jason · Rating 3 out of 5]

This books tries to be an economics text book for lay people. I learned quite a bit, but there were many instances where I used the graphs and English descriptions to go, "Oh, he means XYZ in calculus." I'm not sure how clear those passages would be without a good math background (not necessarily calculus, but at least comfort with geometry). In general I feel like I learned a lot about modern economic theory and he had some fun passages that applied economics theory to unusual situations (like dating/marriage) that were interesting. I didn't always agree with all of his conclusions, but then again economics makes simplifying assumptions, so it is rather amazing how often it is correct. One belief that I was challenged on and have changed my mind on is corporate taxes. I now believe that we shouldn't have them (although with that I add a corollary change that they are not people and thus shouldn't be allowed to contribute to political campaigns and engage in political discourse [of course people, i.e. CEOs still can]).

[Josh]

Tough read. This is not a _Freakonomics_ or Sowell's _Basic Economics_. You have to engage the econ part of the brain and think hard. (There is actually a part of the brain that fires heavily in Econ majors and rarely in other college students). Therefore I hated it and felt dumb, and missed a lot.

But after the first third, he turns away from the blackboard, sits down in his armchair, and gives example after example of application in the real world. That was refreshing and I enjoyed it. Still, he refers back to the cost, price, and demand curves to explain why econ can help you understand the application problem, so you still have to think. Boo, no thank you.

On the plus side, I made it through and I learned a bit of real econ, as opposed to reading the other armchair econ books, which teach you how to understand stuff, but don't teach you econ.

[Joe Price · Rating 5 out of 5]

The 5 stars is just for economists or econ students, though I think most other people would put it at 3-4 stars. The book provides a number of intriguing explanations to various decisions such as why we give diamond rings when we get engaged or why the British wore bright red uniforms.

[Stephen · Rating 5 out of 5]

Mind-blowing! A little harder than Machinery of freedom but no less rewarding!

[Zak · Rating 3 out of 5]

3.5
Some parts q tough going others v interesting. Doesn't really hide his somewhat extreme
libertarianism

[Marquelle · Rating 4 out of 5]

This book is not what most people would expect from an economics book, even one aimed at the popular audience. From the start, you can tell that the author approaches economics from an unconventional point of view: in his view, economics is not about money. Instead, it turns out to be about value, and how we exchange things of value to obtain others; money need not be involved. When examined from this viewpoint, economics suddenly becomes applicable to study of how we make decisions about nearly anything. Rational decision-making involves, to a certain extent, evaluating relative value of the options.



After dropping this bombshell, Friedman goes on to demonstrate basic microeconomic principles in a variety of contexts, and shows how changing one variable while holding others constant can affect the outcome. For many situations, this produces counter-intuitive results; for instance, he shows how a homeowner is made better off by changing home prices, regardless of whether prices rise or fall.



In the second half of the book, Friedman takes the principles he demonstrated in the first half and shows how they work together, then applies them to a variety of situations. The chapter on personal economics as applied to political actions is, to me, worth the cost of the book by itself; it supplies a rational explanation for why even the best-intentioned elected officials do things that go against the interests of their constituents.



While not openly advocating libertarianism, Friedman's demonstrations clearly display ample reason for a normal person to embrace a free-market, small-government society; nearly every chapter shows how things the government does to make situations better nearly always makes them worse. An efficient free market is, he claims, the best tool for providing the greatest number of people with the best value for their efforts in life. And since he doesn't just claim it, but show it, I believe it.



The half-star off my review is because the books gets kind of technical in spots, requiring careful reading and selective re-reading to be sure of understanding some points. But that's a minor quibble. I highly recommend this book to anyone who wants to learn how to make better decisions and/or wants to understand what makes a free market work.

[Jen · Rating 2 out of 5]

I was told by a friend that this is the book "Freakonomics" wished it could be. I heartily disagree. I'm not dumb or brilliant, I like to think I am slightly above average in intelligence and the author completely spoke above me almost the entire time. He tried to explain things simply and ended up making everything more complex, at least to me. I can handle A to B or even A to D, skipping a few steps, but the author jumped from A to Q and expected his readers to be able to follow with no issues. This has got to be one of my least favorite books in a while, because it made me feel dumber than I like to think I am. I've read Stephen Hawking and while I didn't understand everything he wrote, I understood SOME of it and he wrote in a way that made the reader understand that they really weren't going to get everything. I respected that, because while I felt dumb, it wasn't because he "dumbed" it down and I still couldn't follow it. Yes, economics and quantum physics are two completely different topics, but I understood more of the physics than the economics and the economics was supposed to be the easier of the two! Not impress, I'm going to re-read "Freakonomics".

[Jamees · Rating 3 out of 5]

Not that innovative.

[Ami Iida · Rating 2 out of 5]

the book is an good economics book but Mankiw introductory economics is great than it.
I recommend you to read Mankiw economics.

[Bryan · Rating 3 out of 5]

While there are good parts for sure, and the examples he uses make his point fairly well, it can be slow going in places. It isn't quite what I thought it was going to be based on the title, but is still a worthwhile read.

Perhaps the most interesting parts show that how a group of people, all making the correct decision for their own well being, end up making a poor decision for the group. If everyone in the group uses the same logic, the whole group is worse off. One example he gave was cars going through an intersection that couldn't make it all the way through. They then block traffic for other cars, who then try and get through the intersection but again end up blocking traffic as they don't all get through. Everyone would be better off if only cars that could get through without impeding traffic would do enter the intersection. Overall flow would improve and everyone would get to their destinations faster. However, each individual person, when they were on the edge of the intersection would be better off by blocking traffic. This is not an explanation of how to resolve these issues more than as much as it is presenting why seeming irrational actions can make sense.

One of the most interesting statements that I read was on the legal system where he says, "If I do bribe you, no damage has been done; I have still paid the $20,000 and you have still received it. We have merely eliminated the middleman. This may sound like an odd and corrupt system, but it is how civil law is presently enforced. What we call bribery in criminal law is called an out-of-court-settlement in civil law. (p. 313)" There is obviously more context to the quote, but he gets at how the same action, done in two different contexts, is either reasonable or illegal. He also gives less controversial examples like breaking into a house is wrong, but if someone is lost in the woods it may be okay to do that to call for help.

Overall I would say it is a bit slow in parts, but other parts are great, and it is a worthwhile read. This is probably not an introductory text though, so while I do recommend it, it is not for beginners.

[Edha Singla · Rating 1 out of 5]

Okay so I had high expections from this book and it met none of them. Although I understand that this book does not look at economics from a monetary point of view but, it is such an uninteresting and dry book. I just couldn't relate to it. It just talks about such obvious things, which could have been explained in a much easier and simpler way. For example Henry hazlet's economics in one lesson does the job spectacularly well.

[Steve]

Book is intended to be a friendly, easy intro to economics. It made a real attempt to be easy, and there was a sense of humor, but it was too hard for me to follow without putting in a lot more work than I was prepared to give. Read about 50 pages and it was clear it wasn’t gonna get any easier.

I’ve read a couple other of his books, and enjoyed them.

[Francisco Líbano · Rating 5 out of 5]

I must say I was surprised by the average rating. This book is amazing! It helps you see the world through the lenses of economics in a much more entertaining way than at uni. If you're an economics student, truly understanding this book will give you a better foundation of economics compared to first or even second-year undergrad.

[Diego Ferreras · Rating 5 out of 5]

Wonderful introduction to the economic way of thinking. As usual in David’s writings, the books is full of examples, puzzles and challenges to make the reader think for himself. The writing seems accessible enough for the uninitiated (although I can’t quite judge that myself), but is advanced enough that even experienced economists will find some precious nuggets of insight here.

[Pablo Paniagua Prieto · Rating 4 out of 5]

Great book on economics and price theory, the book is a great introduction into the economic way of thinking with a focus on price theory, Marshallian economics and Chicago-style reasoning, great intro to serious economics.

[R · Rating 4 out of 5]

Good, but slightly too heavy-going for my purposes. That's more a criticism of me than it is the book itself.

[Aaron Phangestu · Rating 4 out of 5]

I didn't expect the book to be this difficult.

[Sarah F. · Rating 3 out of 5]

. It covered everything economics, suggest it if you want a refresher. Not for leisure. ;)

[kyphamus · Rating 3 out of 5]

This book is full of wisdom and alternative ways of thinking - but from a readers perspective I found it hard to get lost in. Writers style didn't connect with me - but perhaps it will for you!

[Seb Draper · Rating 4 out of 5]

Lots of pictures to help out when the words become too much

[Tung · Rating 2 out of 5]

Friedman is a brilliant economist (and son of Milton), and this book is really the forerunner to Freakonomics, in the sense that it was the first of the armchair economics books geared toward discussing data in more interesting and conversational ways. A friend who recommended Hidden Order claimed that it was the book that Freakonomics was trying to be. This is true in the sense that Hidden Order does a far better job of illustrating the pervasiveness of the power of numbers in all aspects of our lives, and how numbers shape the world (choosing the right grocery store checkout line, voting or not voting, why special interest groups are so powerful, choosing the right mate, etc.); Freakonomics simply pointed out a few examples of where underlying data analysis proved invaluable, and then provided potential reasons for the underlying movement of numbers without seeking to tie those theories to existing economic models, whereas Hidden Order attempts to do the tying of numbers to theory. While Hidden Order does a more extensive job outlining the effect that economic theory can have on our daily interactions, it is far less entertaining a read than Freakonomics. Hidden Order reads like a casual and well-illustrated Economics 101 textbook: everything is tied to a formula; there are graphs everywhere labeled “Figure 10-2”; and Friedman often covers an economics topic and then states that he’ll “develop the idea further in Chapter 19”. Overall, an interesting though dry read.

[Maria (Ri) · Rating 3 out of 5]

I finally finished this one. It is pretty heady which is what took me so long to read it. I would only make it through a couple pages at night before drifting off to sleep. It is more of a daytime read! LOL

This is not easy economics reading like Freakonomics, etc. This book would be awesome for a college economics class. It has very detailed information like you would learn at the level of a college course, but it is presented in a more entertaining way than a textbook. Having said that, it is definitely at the level of a college course, not bedside reading!

I did learn lots about economics that I didn't know before and for that I am grateful. I think about pricing a lot differently now. It also taught me that pretty much everything I thought about monopolies was wrong! I also was intrigued by the discussions on tax incentives for business/farm bill subsidies/etc. What a different country the US would be if our legislators as well as general population understood the true nature and effect of subsidies and incentives!

This was a tough read, but worthwhile. If I had read it in a college course, I would have given it 5 stars, but since it was difficult for pleasure reading, I'm sticking with 3 stars.

[Diana Marie · Rating 4 out of 5]

This book is not a quirky, behavioral economics book. Don't be fooled by the title. It is a complete review of everything that I ever learned as an Econ major. While it gets a bit wordy at times and is rather dry, it is a great, condensed version of everything in basic economics - and for this aspect, I give it 5 stars. But since the only part of it that I was truly interested in were the last two chapters, I give it 3 stars. Instead of straight-up economics 101 lectures, I would have preferred creative examples, incorporating the same information and teaching the same lessons. This is an analytical economics textbook disguised as an interesting, thought-provoking read.

[Anna · Rating 3 out of 5]

One of the random interests I have is unusual perspectives to economics, and this seemed to fit that category. The contents seemed interesting, and some chapters were rather interesting (economics of crime or marriage). But not all chapters were interesting, and it took over a month to finish me the book (still skipping some of the parts with incomprehensible charts). Some chapters, while still interesting in topic, we're written in a boring way. The Undercover Economist is a much more interesting book about the same topic.

[Terry · Rating 3 out of 5]

Exciting book about an exciting topic. This book had enough depth to cover topics like marginal values and demand curves, and enough practicality mixed in to make for an interesting mix. Friedman has advanced degrees in physics and law and he chooses to teach economics because there are plenty of parallels to draw into this subject. He has a good libertarian bent, but I don't know how an understanding of economics could lead to any other political view.

[Kenny · Rating 4 out of 5]

A very good read, I find this book excessively reductionist, i.e. the explanations (Friedman brings libertarian economics to a popular audience very well) are based on assumptions that are unrealistic (people are purely driven by profit type of thing) but a good introduction to that style of economic thought if you read critically.

[Paul Childs · Rating 3 out of 5]

This book is more complete and detailed than books like the Undercover Economist or Freakonomics, but it is also much harder to read since it is written in a dryer more textbook like fashion. Parts of the book were interesting and other parts tended to make me nod off. This book would probably be best for someone that has a more than passing interest in the subject.

[Mark · Rating 3 out of 5]

Interesting...however much denser, and therefore less readable than other economics books I have made it through...namely Armchair Economist, The Drunkard's Walk, and Freakonomics - the remedial member of the family.

[Tyler Nice · Rating 2 out of 5]

This book is a bit misleading. Not a pop-Econ book. There is some challenging material in here. If you are looking for a fun light Econ read, I recommend looking elsewhere. Try Charles Wheelan's Naked Economics...

[Tobias Ratschiller · Rating 4 out of 5]

"Hidden Order: The Economics of Everyday Life" is a comprehensive introduction to economic theory through practical scenarios. Solid and in-depth read for someone who has not wasted four years studying economics.