The Undercover Economist

Macro and micro settings are literary devices that first explain a concept in small individual examples and then zoom out to explore how the same concept affects many people on a larger scale. Harford uses this device often in The Undercover Economist, effectively demonstrating how economic concepts very often affect the individual and the collective in similar ways. These concepts, like scarcity power or inside information, can be difficult to see as factors in everyday life, but they do in fact dictate the everyday behavior of people. A good example of macro and micro settings in the book is in Chapter 5, when Harford discusses Akerlof’s theory of “peaches” and “lemons” in a used car lot. This setting is at first a micro one since it discusses a single customer attempting to buy a car from a single seller, and it elaborates on the issues that inside information causes in that particular transaction. Later in the chapter, the concept of “lemons” and “peaches” expands into the macro setting of global policies on healthcare, in which buyers and sellers face similar problems of how to compensate for the lopsided information present in those transactions. Those transactions affect the lives of entire populations, as shown in the example of the NHS’s NICE program deciding whether or not to fund a therapy that could reverse blindness. The same problem of inside information that affected a transaction in the micro setting of the used car lot is now present in the macro setting of the British healthcare system that affects the treatment of the entire population of a country. This enhances the author’s point that everyday economic transactions can reflect the principles that control the fates of entire populations.