A tough recession, record unemployment, growing inequality, relentless global warming and stagnating standards of living: the world needs savvy economists. Solving the greatest problems we face is no easy task, but it can be fun and rewarding, especially to policymakers. There are countless diverse bestsellers that explain how to run society, so which ones are the best?
Freakonomics by Steven Levitt and Stephen Dubner
This book will pique your curiosity by demonstrating that it is fun to reach solid, but bizarre, conclusions with the economic method. Combining data analysis with simple questioning, the authors challenge assumptions and conventional knowledge to explain why sumo wrestlers cheat, drug dealers live with their mothers, lazy parents cannot teach their kids to study and more.
Freakonomics is a pleasure to read because its entertaining stories shed light on trends and basic concepts for those with no prior economic knowledge. Two key lessons are that incentives matter and the data doesn’t lie. (Also, take a look at my exclusive online interview with Levitt about the latest addition to the series, Think Like a Freak.)
Poor Economics by Abhijit Banerjee and Esther Duflo
Once that engages you with economics, Poor Economics is the next step. The authors use the same clever methods to solve a larger problem: poverty.
Drawing on some psychology, they analyze the counterintuitive lives of the poor, who, for example, skip free immunizations to buy unnecessary drugs. They also criticise the formulaic master plans of a decade long aid debate and introduce small steps that are more effective in nudging the poor to make better decisions. This book will show you how to approach a mammoth topic by breaking it down and testing your hunches.
The Worldly Philosophers by Robert Heilbroner
Although economics is a relatively new subject, there are centuries of thinkers who developed the philosophy behind today’s headlines about confusing things like quantitative easing. Read The Worldly Philosophers by Robert Heilbroner instead of outdated, lengthy classics to understand these ideas.
Heilbroner throws in a few facts about the quirky lives of economists (with one a madman and one a tramp) to break up the heavy theory. He covers economists from Adam Smith, the father of the subject, and Karl Marx, the communist revolutionary, to John Keynes, a recent master. Only a compulsory textbook has sold more copies.
How Markets Fail by John Cassidy
These broad theories may appear disjointed from the turbulent, risky markets of today. How Markets Fail, which sounds like a textbook chapter but is only similar is the breadth of information covered, bridges this gap.
Cassidy explains the logic behind free markets and debunks the myth that humans are perfectly rational (only a surprise to economists). Then, he links these findings to the long and tragic story of the misguided bankers and politicians behind the recent global financial crisis.
Cassidy does a brilliant job of untangling the mess of the past decade’s policies. Knowing the dangerous implications of today’s policies is essential to shaping the future of finance and the world.
The Ascent of Money by Niall Ferguson
This book also combines economic history with smooth storytelling to interpret modern politics. Ferguson argues that financial actions shape human history by following the journey of money from ancient Mesopotamia. Using examples to illustrate, he explains how powerful families such as the Rothschilds used finance to win wars, London became the world’s financial center, trade reduced the risk of war, and China and America obtained the power to lead the world.
Although economics has been criticized for being narrow-minded, rigid, overly mathematical and impractical, these books show that the subject can solve global problems.