John Kay

Bookreview: Uncommon Sense: economic insights, from marriage to terrorism by Gary Becker and Richard Posner

The benefit of road improvements is principally the reduced time and strain on private motorists, not the economic advantages to road transport operators: that lesson should influence the way we plan our road networks. Fast roads for light traffic are much cheaper to build than superhighways.

If you want a book on economics to take to the beach, you are spoiled for choice at the airport bookstall. What you will find falls into three categories: Thump books, microeconomics books with little economics and the macroeconomic story-teller.

The Whiz Kids’ capacity for analysis far exceeded their knowledge of the world to which it was applied.

Three simple rules – pay less, diversify more, and be contrarian – will serve almost everyone well who invests.

To choose appropriate models you need to understand both the maths and the business environment. Media industries and financial institutions have both been unsuccessful in marrying these two skills.

The practical man must build out, step-by-step from the current situation – the science of muddling through.

Some economists believe there is a deep underlying structure from which laws of economic behaviour that are universal in time and space can be deduced. I think that search is a wild goose chase.

Economic crystal ball-gazing remains unscientific. We project current preoccupations with exaggerated speed and to an exaggerated degree and forget that our preoccupations change.

The blunt truth is that free markets are not a particularly efficient system for allocating resources. They are just – like democracy – more efficient than other systems and – unlike democracy – more innovative than other systems.