Basic economics bleg

A literary (no graphs, no equations, but little blather, I think) intro text that is crisply written is Charles Wheelan’s ” _Naked Economics_ “:http://www.amazon.com/Naked-Economics-Undressing-Dismal-Science/dp/0393324869/sr=1-1/qid=1161007183/ref=sr_1_1/002-0044606-2123266?ie=UTF8&s=books

Online Economics Textbooks

I don’t know how good these are, but seem to range from easy introductions to graduate level.
Free, and I presume legal.

“What’s Wrong with Economics?” (ed. Edward Fullbrook) Anthem Press 2004.

Explains the basics of neoclassical economics while telling you, simultaneously, what is so mindnumbingly stupid about its pseudo-scientific obfuscations and absences.

It’s aimed at first year econ undergrads I think.

Contents see here http://www.paecon.net/guidecontents.htm

Greene’s Econometric Analysis was written by the devil, using Greene as a pen-name.

Krugman’s various 90s books are all good introductions to modern economics (though fairly opinionated), but they all run together in my mind. Maybe “Age of Diminished Expectations”? Alan Blinder’s “Hard Heads, Soft Hearts” (I could have reversed the order of the phrases) gives an interesting glimpse of how economists view the world.

There are books like the Nagel book, but they all are implicated in causing brain damage.

If your relative is more mathematics minded, probably the simplest thing is to just pick up an introductory textbook. They’re all sort-of interchangable (each one does have its own political slant, though).

If there is anything of that sort I’ve not come across it. It’s rather like the absence of any decent introductory books on logic. I think I’ve undersold the Pressman though; it’s readable, commendably fair between rival schools and gets the main ideas across without dumbing them down. Our Hibernian mates will also be pleased to know that it is one of the few economics books to give Sir William Petty a fair crack (Galbraith’s book recommended by samchevre above pays Ireland the entirely undeserved and untrue compliment that it has never contributed any prominent economists)

Eat the Rich, PJ O’Rourke. Fun, funny and informative.

Hey, it’s on Greg Mankiw’s reading list for the Harvard intro course.

Daniel won’t like it because it’s not very nice about Cuba though.

Peter Kennedy’s chatty econometrics book was very well written and while I’ve only flicked through his extension of the franchise into basic economics (written for a meeja audience), it looked quite good for the purpose.

If it’s a straightforward introduction to economic theory for someone with no background to speak of in economics and without much math, then I’d recommend Paul Heyne’s The Economic Way of Thinking. The most recent edition is about 4 years old, so the macro data are out of date, but that’s what the St. Louis Fed exists for (http://research.stlouisfed.org/fred2/). It’s neoclassical micro and mostly Keynesian macro, very mainstream. Also, and unfortunately, there won’t be a new edition of this book; Paul Heyne died a few years ago.

Introductory textbooks tend to be horrible. That includes most books mentoned so far.

There are nice books by Krugman, Blinder and Barro that give a general view of how economics works. A excellent introduction to game theory is given by Thinkig Strategically by Dixit and Nalebuff.

Those with some mathematical knowledge (calculus) can start with States and Markets by Adam Przeworski, a really good book.

“Debunking Economics”, Steven Keen. The dissidents are getting full play on this thread.

Big chunks of Krugman’s textbooks are available online, btw.

And if a basic discussion of game theory is in order I would suggest:

Thomas Schelling. 1960. The Strategy of Conflict.
Thomas Schelling. 1978. Micromotives & Macrobehavior.
David Kreps. 1990. Game Theory & Economic Modelling.

I believe that Krugman and Martha Olney of Berkeley are working on a new Principals textbook, which may actually be out now. Few Principals textbooks are good on both macro and micro, but this one should be; Olney (a former professor of mine) is an outstanding teacher of, among other things, introductory econ to undergrads.

Bowles & someone else: Understanding Capitalism. Excellent. I think.

For a literary type, triangulating between the more literary polemics is a good start, as suggested above. Friedman, Galbraith, etc. Heilbroner would be no harm, either.

An alternative approach, focused a bit more on the models, would be to read any standard intro text (like Dornbusch et al) and then read Yanis Varoufakis’ Foundations of Economics: A Beginner’s Companion, which I recommend as a fair-minded critical introduction to what would be taught during a first economics course. It’s also very lively and readable. Actually, if you only want one book then just read Varoufakis, because his approach is to lay out each bit as standardly taught and then critique it afterwards.

“Debunking Economics”, Steven Keen. The dissidents are getting full play on this thread.

From memory, what this book demonstrated mostly was that Keen didn’t understand the economics he was presuming to debunk very well. I’m pretty sure CT’s John Quiggin has reviewed Keen’s book elsewhere, and pointed out its various errors. I also seem to recall David Stern taking him to task for lecturing economists on getting the maths wrong while not actually understanding marginal conditions.

Greg Mankiw is a brilliant writer. His principle text are good for 1st time learners.

Krugman and Well’s intro text – Economics, Microeconomics, or Macroeconomics are good as well. see here

I’m surprised that nobody has mentioned _Human Action_ by von Mises. It’s hard reading, yes, but only because you have to stop every ten sentences and go “Oh! So that explains …..”

For an intro to microeconomics I recommend McCloskey. It is the only textbook that has caused me to break out laughing.

Not sure if it is still in print.

The book by Keen is wrong on many levels. He confuses the SMD result with Gorman’s theorem on representation by a single individual. He also seems ignorant of the (very easy) proof of the first theorem of welfare economics.

A good traditional introduction to micro is Jeffrey Perloff’s “Microeconomics”, though most textbooks in microeconomics are pretty interchangeable. A more non-standard one that that has been recommended to me is Robert H Franks “Microeconomics and behavior”. It discusses not only traditional neoclassical but also more modern behavioral economics.

Most macro textbooks are in my opinion dreadful. I recommend that you go directly to “Advanced macroeconomics” by David Roemer if you are not very mathematically challenged. Roemer is a graduate textbook that presumes you know microeconomics and some math, but not really any macroeconomics.

Krugman and Obstfield’s “International economics” is a very good and non-math heavy introduction to the field. Pepall’s, Richards’ and Norman’s IO book is also good. It is good at demonstrating the relevance of the theory to phenomena in real life. Robert Gibbons’ “Game theory for applied economists” is a good introduction to game thoery.

You should also read some classic like Keynes or Adam Smith. In my experience you will be thankful that modern economics use math arfterwards. Also reading Marx and identifying which assumptions he makes that differs from neoclassical economics is a fun excercise. (Marx is closer to neoclassical economics than you might think.)

Coming in late, I don’t have much to add

I really liked McCloskey’s book, but it’s v idiosyncratic in style. Krugman’s various books are a good introduction to how economists think. Sowell gives a good free-market perspective, maybe a bit more up-to-date than Friedman. Heilbroner is also good.

My understanding is that few economics textbooks actually talk about the day-to-day stuff of finance capital which makes up much of the evening financial news. For a clear introduction to this subject, along with a healthy dose of critique, I highly recommend Doug Henwood’s “Wall Street: How it works and for whom.” It is out of print, but available now online as a free download from Henwood’s website:

http://tinyurl.com/ybdymg

I also recommend subscribing to his electronic newsletter, the Left Business Observer. In a similar vein, the journal Dollars and Sense is also quite good:

http://www.dollarsandsense.org/

The problem with Keen’s book was not that it was wrong, but that he was debunking a dated version of economics.

Is he really? It may be that cutting-edge economics has gone beyond what Keen debunks, but I’m not sure the standard-average economist teaching ion the standard-average school has. New ideas filter down very slowly, and often seem to be relegated to the back of a book devoted to the old ideas.

If someone mentiones some esoteric writing that has little to do with mainstream economics, it would be fair to point that out. Fullbrook, Hazlitt, Hodgson, Keen, Mises and Ormerod are not representative of economics.

People who recommended dissident economists did so in the belief that standard economics is flawed. Is economics “what you need to know to understand the economy”? Or is it “What you need to know to get accredited as an economists”? The assumption is that these are two different things, and that the first is more important.

Mirowski’s “The Effortless Economy of Science” is also good.

It would have to be someone who went to grad school a long time ago, though, and does no research, to be that out-of-touch with the point of view of current research

Or someone whose research interests aren’t relevant to the undergraduate course he’s teaching, which IIRC is Keen’s main target (also, lots of the aggregative assumptions he criticises do in fact get smuggled into models in all sorts of areas).

The fact that Fullbrook, Keen, and Ormerod are not mainstream economists has little to do with whether they are or are not writing about mainstream economics. In fact, Keen and Ormerod and the authors Fullbrook edits are writing about mainstream economics, or at least what they take mainstream economics to be. And their books make clear the controversial nature of the writing contained within.

It is true that insofar as they are writing about mainstream economics, they are not writing about the economy.

I expect that I can continue to find plenty of errors in both mainstream textbooks and journal articles.

Michael Greinecker: I expected to see the creationism analogy before this. If mainstream economics has the validity and power of evolutionary biology, you’re right of course. If mainstream economics is less well-established than that, and the critical economists have some good points, you’re wrong and demagogic.

I do have an anthology edited by Collander, Rosser, and one other which seems to be trying to split the difference between orthodoxy and heterodoxy by admitting a few previously-heterodox economists (Gintis) into the inner circle. But I also read stuff by mainstream economists which sails serenely on, unaware that there’s any problem.

When Becker got that Nobel Prize, in large part because of that horrible book, economics took a big bite. The rest of us began to wonder what other vermin were hiding in that particular hole.

If I understand correctly, it is being said that none of Keen’s criticisms have any validity with regard to any important economist active today. Is that a fair summary?

Michael, your initial statement about Keen was unreservedly negative. I understand that economists prefer internal criticisms to external criticisms, every monopoly does, but to the extent that criticisms are valid the source should be indifferent.

I have the feeling that external critics of mainstream economics will be dismissed as long as there’s a single orthodox economist of which the criticism is not true, even though that one economist’s views are not generally accepted. I also suspect that if someone makes criticisms 1….10, each of the ten criticisms will have an ad hoc response from within the profession, but that the response to each problem will be incompatible to the responses to some of the others.

In general I think that economists’ contributions to environmental economics, to the understanding of family and community, and to labor economics have been more harmful than helpful over the last 50-60 years. And it seems that economists played a harmful role advocating Russian shock therapy, and the jury is still out whether that wasn’t true of globalization generally.

Michael, your initial statement about Keen was unreservedly negative. I understand that economists prefer internal criticisms to external criticisms, every monopoly does, but to the extent that criticisms are valid the source should be indifferent.

Economics is complicated. It´s not easy to understand the theory so well as to competently attack it (that includes many economist). I don´t have a problem with able mathematicians such as Don Saari or Stephen Smale criticising economics. Or psychologists like Robert Luce or Kahnemann and Tversky. Or political scientists such as Jon Elster. There are many competent outsiders raising concerns. They are good. But that´s also why open minded mainstream economists take them seriously.

I have the feeling that external critics of mainstream economics will be dismissed as long as there’s a single orthodox economist of which the criticism is not true, even though that one economist’s views are not generally accepted. I also suspect that if someone makes criticisms 1….10, each of the ten criticisms will have an ad hoc response from within the profession, but that the response to each problem will be incompatible to the responses to some of the others.

There is some truth to that. But many economists are plain bad. And the heterodox economic schools haven´t provided any viable alternatives yet. It´s easy to give the final stroke to neoclassical economics: find a better theory.

In general I think that economists’ contributions to environmental economics, to the understanding of family and community, and to labor economics have been more harmful than helpful over the last 50-60 years. And it seems that economists played a harmful role advocating Russian shock therapy, and the jury is still out whether that wasn’t true of globalization generally.

These things weren´t the work of highbrow theorists. I agree that one has to see this things with a critical eye. But mainstream economics offer all the tools to do so.

Actually, some of the most radical criticisms of mainstream economics come from mainstrem theorists. I´ve made a short reading list here.

As mentioned, I reviewed Keen’s book a while back. Shorter Quiggin on Keen: good in parts. Opening para

As Steve Keen observes, this is far from the first book to attack the validity of economics, and it is unlikely to be the last. Similarly, this is not the first review of such a book, and surely not the last. Some points are more or less inevitable in such a review, so I will make them as briefly as possible before moving on. First, critiques are, by nature, stronger in attacking existing orthodoxy than in presenting alternatives. Secondly, most criticisms are not entirely new, and the proponents of orthodoxy usually have some sort of response. Third, the version of orthodoxy presented in a critique will almost always be a little out-of-date and something of a caricature. Keen’s book will no doubt generate all of these responses, but it is, nonetheless, well worth reading.

Michael, I have bookmarked your link.

I don”t think that you have to give a viable alternative to bad theories. This seems to be the fall-back position in defense of economics. I rally have no alternative solution to the problems raised by alchemy or astrology, for example.

My entire interest in economics is in the way economics relates to what else we know about things from other points of view, and in the effects that economics as a profession has on the world. I’m not a competing economist, but an outside observer of economics.

I’ve spent some time recently looking at what economists say about rationality. Roughly speaking, Sen and Gintis seem to come up with definitions of rationality which are not totally ridiculous and unreal, but I wonder whether they could ever function the way the simpler definitions do for economists trying to describe the economy systematically. They, especially Sen’s version, seem too messy to plug into a system. So the gain in realism and in ethical plausibility comes at the cost of depriving systematic economists of a neat little tool.

Walt: Here is a excerpt from a review of Keens book by Miroslav Misina:

It is well known that only under certain conditions the market demand will possess the properties of individual demand. The main condition is that the utility functions have Gorman form, which author correctly identifies4.

4 This turns out to be the key condition only if we limit ourselves to the consideration of aggregate demand as a function of the mean level of wealth. Weaker conditions can be imposed if aggregate demand is allowed to depend on some other aggregates. None of these issues are mentioned by the author. See MWG, Proposition 4.B.1 and the discussion that follows it. Incidentally, the author mislabels the aggregation conditions as Sonnenschein-Mantel-Debreu conditions. This is rather curious, given that the author provides Shafer and Sonnenschein (1982) as a reference. For a discussion of Sonnenschein-Mantel-Debreu theorem, see MWG,
Sec. 17.E.

This is IMO a svery trong indication of Keen writing about something without understanding it. You simply don´t get Gormans stuff from reading a paper on excess demand functions (the paper in question is the entry on excess demand functions in the Handbook of Mathematical Economics).

John Emerson:

I agree that using the more sophisticated models, not every economic theory can be replicated. But I don´t think one should look for a economic “theory of everything”. What one should hope for is illumination of some problems. And I definitely think economics can help clarify many issues.

Sen’s model of rationality isn’t sophisticated. It’s commonsensical, and it’s ill-suited to formalization since it’s open-ended.

“Economics is to the economy as physics is to baseball (maybe football for nonAmericans)” — Discuss.

Whoa! Ormerod is clearly a maverick, but Hodgson? (Whose critique is actually far more radical than Ormerod’s). Well according to his website: ‘Listed in Who’s Who in Economics (4th edn., Edward Elgar, 2003) as one of the foremost 1,168 living economists in the world – and one of the foremost 64 living economists residing in the UK – based on citation analysis of journal articles published in 1990-2000.’.

You may disagree with him, but comparing him, not just to an IDer but to a creationist would seem to be going just a little far.

Man, I go away for the weekend and I miss an opportunity to kick Keen around. And yes he thoroughly deserves the kickin’.