Economics for Adults

The vogue for economics primers that is best exemplified by Freakonomics caught everybody by surprise. (Well, nearly everybody: Tim Harford’s The Undercover Economist already was in press; and Naked Economics, by Chris Wheelan, and Reinventing the Bazaar, by John McMillan, were only a  couple of years old.) Many other near-substitutes have appeared since. What most people don’t realize is that each new reader-friendly guide communicates an institutional view of the world — in Freakonomics’ case, as seen from the corner of Eighth Avenue and West Fortieth Street in Manhattan — the gleaming new headquarters of The New York Times, and, in paricular, the offices of its Sunday magazine. .

In similar fashion, Harford represents the vantage point of the Financial Times, in London, at least of the younger generation there. Tyler Cowen’s Discover Your Inner Economist: Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist showcases the inventive approach to markets characteristic of George Mason University. The Economic Naturalist: In Search of Explanations for Everyday Enigmas, by Robert Frank, illustrates the teaching methods he uses with his students at Cornell University and in his popular introductory text. Steven Landsburg’s More Sex Is Safer Sex: The Unconventional Wisdom of Economics imparts, at least in some degree, the flavor of the speculations for which the University of Rochester is celebrated. And Julie A. Nelson, in Economics for Humans, communicates the wholistic approach of the Global Environment and Development Institute at Tufts University, where she is a senior research associate.

I read through each of these books as they come in and find much in each to like. Harford radiates youth exuberance, especially in the “Dear Economist” feature he writes for his newspaper’s Life & Arts Section (“I am a woman in my early 30s. I am also a virgin.  Should I be?”). Cowen, who has written several lively books and maintains a serious blog as well, should slow down; he is too smart to spread himself so thin. Frank is a splendid teacher, and this book of conjectures, interspersing (until they are difficult to tell apart) student essays, summaries of famous papers by distinguished economists, and Frank’s own hypotheses, illustrates both his strengths and weaknesses: he loves economic explanations, and he loves cartoons; but he sometimes has a hard time telling the difference between the two.

Landsburg virtually invented the contemporary form of economics-in-everyday-life primer in 1993, with The Armchair Economist; but then, as now, his parables often illustrate the tendency of enthusiasts of economics, well known since the time of David Ricardo, To Go Too Far. In a letter to the Times last summer objecting to a criticism of his book, he wrote:  “My book explains (quite clearly I think!) why achieving that goal [maximizing the benefit surplus] requires chaste people to have more sex [because when everyone is on the lookout for sexually-transmitted disease, carriers will be more quickly identified and treated or isolated].  The whole point of the book is that pure economic reasoning — and nothing else — can reveal such truths.”  Nelson, on the other hand, ranges far and wide in order to make her argument — that the economy is better understood as a body than as a machine.  But the metaphor of “the economy as a beating heart” does little to advance the cause of analysis. (“Just as the heart of a bird differs from the heart of a mammal, there is no one-size-fits-all economy.”)

Each book targets a different audience. Often there are advertisers lurking in the background. The primer I have enjoyed most, the one I would recommend to a friend who wanted to learn how economists think about the world right now, is one that passed almost completely unnoticed into the stream, perhaps because it is so slight. But then, that is the point of Economics: A Very Short Introduction, by Partha Dasgupta, the Frank Ramsey Professor of Economics at Cambridge University.  He boils down everything that’s ordinarily included in a thousand-page introductory text, and more, to 160 graceful but undersized pages. (The book is one of an interminable list of Very Short Introductions — to everything from Anarchy, Anglicanism and Animal Rights to Schizophrenia, the World Trade Organization and, coming soon, Chaos — from Oxford University Press.)

Dasgupta, 65, is one of those figures, well-known to insiders but virtually invisible to those outside the field, until they pop up some year as an October surprise. (Queen Elizabeth knighted him in 2002 “for services to economics.”) He has done deep work on issues the length and breadth of economics — he taught game theory to Joseph Stiglitz and learned the economic history of science from Paul David. But the contribution for which he is best known is a skein of work with Geoffrey Heal, then also of Cambridge University, on the economics of natural resources, begun in 1972, in the context of the then-best-selling The Limits to Growth, and finished with a prescient 1979 monograph, Economics Theory and Exhaustible Resources. That led Dasgupta to an engagement with the United Nations, and a long collaboration with Karl-Gšran Mþler, another environmental economics pioneer. Both are still at it; in 2001 Dasgupta published Human Well-Being and the Natural Environment, and expanded it in 2004. But also in 1972, he read John Rawls’ A Theory of Justice, and that led to a second leg of work on social choice, on mechanism design and, ultimately, on the nature of wealth and destitution.

Thus Dasgupta is supremely well qualified to write an overview of economics for the layman.  Originally, he says, he had it in mind to lay out what he understood to be the research frontier. “But even though the analytical and empirical core of economics had growth from strength to strength over the decades,” he writes, “I haven’t been at ease with the selection of topics that textbooks offer for discussion (rural life in poor regions — that is the economic life of some 2.5 billion people — doesn’t get mentioned at all, nor with the subjects that are emphasized in leading economic journals (Nature rarely appears there as an active player).” The result is a serious textbook treatment shaped around the lives of two ten-year-old “literary grandchildren,” Becky in a small Midwestern suburb where her father works for a firm specializing in property law, Desta in a village in southwestern Ethiopia, where her father farms half a hectare of land.

Photographs depicting the wealth of a typical European or American family, laid out in the driveway of a two-car garage, contrasted with the meager personal belongings of a family arrayed before their thatch-roofed hut, have become common enough in introductory texts in recent years, but Dagupta follows his conceit throughout his book, demonstrating with particular force the extent to which institutional arrangements are at the heart of the differences between both places.

He concludes, “Perhaps the best that Becky’s world can do for Desta’s is to offer financial and technical assistance so as to promote and support local enterprises — including those involving education and primary health care — that people there are all too keen to create even as they see from a distance how people elsewhere have been able to improve their conditions of living. And perhaps the best that Desta’s world can do for Becky’s is to alert it to the enormous stresses economic growth there has put on Nature.  There is, alas, no magic potion for bringing about economic progress in either world.”

It’s good that people are reading economics primers, good too that a genre now exists apart from those lugubrious (but necessary) texts. Yet economics is so obviously incomplete, even in its own terms, as a way of understanding the world, that the less cocksure are its expositors in their pronouncements, the better. I wish more people would read Dasgupta’s book, and I wish that more economists would write variations on its theme. It is a model specimen.