Popular Economics - Mini Book Reviews Part II: The Undercover Economist

In The Undercover Economist, Tim Harford offers pellucid discussions of many important concepts. The style is lively and engaging, but he does not shy away from tackling some of the big problems facing society (and its economists), and I saw little evidence of an ideological ax to grind. That is, while he might be a bit (or a lot) more taken with the power of markets as a force for good than your average leftist, this is to be expected from most modern economists, and he also takes an honest, thoughtful look at the places where markets break down.

In a chapter ("Crosstown Traffic") dealing with externalities, when he snarkily tells an earnest young environmentalist (could easily have been someone like me, once upon a time) that he traveled to the meeting by anthracite-powered steamship from Australia, I'm sure I chuckled aloud. Admittedly, it was a snotty way to make a point, but a point well worth making: moral posturing has very little to do with actually solving problems. And although the case has been made many times, by many eloquent spokespersons, that economic development and environmental progress are not contradictory but complementary, we can always use another voice making the case intelligently. Because, unfortunately, too many partisans of the left and the right still haven't gotten the message--or won't acknowledge it, for political purposes.

I would heartily recommend this book as an introduction to economics. While it actually deals with a wide-ranging array of topics including environmental issues, income inequality, trade, and macroeconomic growth, Harford manages to make even the mundane microeconomic discussions (he opens with purchasing a cup of coffee) lively and engaging, as opposed to the deathly dry nature of most economics textbooks I have picked up. It's probably as good as you can get without getting significantly into the math. (Math is good! I'm all in favor of it, but perhaps the average reader, even an intelligent one, doesn't pick up a book expecting to manipulate variables for entertainment...)

Popular Economics - Mini Book Reviews Part I: Freakonomics

I've read three economics books for the general reader in the past year and a half or so. While I've enjoyed all three, I thought I'd pass on slightly more specific thoughts and recommendations. The three titles are Freakonomics, The Undercover Economist, and The Origin of Wealth. I'll give my mini-reviews in (at least) three installments, in ascending order of my ranking/relative enjoyment.

Freakonomics, I believe, sold the most copies and received the most buzz by a wide margin. Enjoyable, but still my least favorite of the three. At least a couple of people close to me were decidedly unimpressed with the methodology used to make some of the more controversial claims. In particular, the result linking legalized abortion to the drop in crime seems to set a lot of folks' teeth on edge. I cannot speak with much authority on the methodology, perhaps my anonymous economist buddy will chime in sometime. It does seem like multivariate regression analysis is tricky business. On the one hand, these economists (Levitt, et al.) do seem to do their homework. They go out of their way to acknowledge that correlation does not prove causation, but then attempt to show that other plausible explanations don't show the same correlations. After a while the case seems to build and at least approach convincing, at least to a layman such as myself.

I guess the main caveat I'd throw out is that I am still dubious about much (most) of the methodology of the social and behavioral sciences. Proving things about human behavior still seems like an immensely daunting and complicated task, and I'm not convinced that any manageable set of data points is up to it, at least yet. In the specific example, sure they weave an impressive tale about how all the other variables they can think of (and have data for!) do not account for (all of) the drop in the crime rate. But what about something they haven't thought of or do not have data for? There are so many possible variables--human brains and social constructs are just so vastly complex! I suppose in some scenarios, you can try to account for this sort of thing with an "everything else" bucket, which would include all the things currently unspecified, but that seems like a dubious technique. Reminds me of the unrealistic assumptions about perfect information and perfect "rationality" in classical economic theory (but more on that when we get to The Origin of Wealth) . My two bit, armchair amateur critique.