Techdirt Reading List: Economics Rules: The Rights And Wrongs Of The Dismal Science
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This week, we have Harvard Professor Dani Rodrik's excellent new book Economics Rules: The Rights and Wrongs of the Dismal Science. We write and talk a lot about economics around here, and we've recommended a number of economics or economics-related books. I've also argued in the past that economics should be a key subject taught in schools, if only because so many people (especially policy makers) seem to have trouble understanding the concept of tradeoffs, which are so key to understanding economics.
Of course, economics is also somewhat controversial. Sometimes it's described more like a science, and other times as a more wishy-washy "social" science, and then, to many, it's nothing but a scam. The fact that economists rarely agree on things certainly doesn't help matters. Add to that fact the various disciplines within economics, which sometimes appear to be contradictory (even if they're often not), and many outside of the field like to dismiss the concept of economics entirely, even when it actually is incredibly valuable in understanding the world around us and the options around various policy choices. And that's where Economics Rules is such a valuable addition to the thinking about economics.
Rodrik does a really great job laying out where much of the confusion and misunderstanding comes from, highlighting how economics is -- very much purposely -- about building models. But models, by their very nature, are not the complete picture of everything. They are limited models, which are very, very useful... in specific circumstances. When you need a map telling you how to drive to the doctor, you don't need a map that shows you changes in elevation. That information may be more accurate, but isn't very useful. So the crux of Rodrik's argument is that different economic models are useful in different situations, and if we just spent more time focusing on making sure people were using the right model in the right situation -- rather than looking for the grand unified perfect model that explains everything, economics would be a lot more useful in general.
The book is great in that it's useful both for people who aren't that familiar with economics -- to help them understand why it's useful and when it's not so useful -- as well as those who are deeply familiar with economics. For the latter, it's really useful for getting people to step away from steadfast devotion to certain models in areas where they might not really apply, where assumptions may not line up and where the key variables may actually be different. Personally, I found it quite useful in shaping my own thinking about economics and economic issues.
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