On amateur economics

Economics and economists have had a hard time since the financial crisis in 2008. Critics seem to simultaneously think that economists are “gods” or at least “priests”, and at the same hold economists responsible for the financial crisis, even while the ‘all-powerful’ economists seem incapable of stopping Brexit, despite the (almost) unanimous opinion among economists that it’s a silly idea.

My purpose here is not to defend or attack economics or economists, though it’s worth pointing out two things: first, I’m not sure it’s possible to generalise about what economists think, as there seems to be plenty of disagreement within the profession; and second, because economists can disagree, the rest of us can’t be let off the hook for deciding which economic advice to follow. This applies most keenly to policy makers and leaders in business and charity. But in a democracy, I think we all need to take a bit more of an interest in economics. Otherwise, public debate about how the economy is run has to be conducted by analogy, and this might be misleading, such as the idea that running a country is like running a household.

There are probably lots of reasons why the study of economics isn’t a national pastime. For one thing, it’s not generally taught in school, at least in a compulsory way. A friend and I were recently moaning about the big ideas that we weren’t taught in school, and the idea of the opportunity cost featured high on our list of stuff that everyone should know. Another challenge is the technical nature of the discipline: economists do love their formulas. There also doesn’t seem to be quite the same effort goes into promoting the public understanding of economics as goes into the public understanding of science (despite valiant efforts from people like Tim Harford).

As a non-economist, but denizen of the hazy world of public policy, I’ve tried to teach myself a bit of economics over the years. I’ve seen how a lot of public policy boils down to how to choose what to do when you can’t do everything, which some people would say is a definition of economics. I’ve found economics to be a useful, if incomplete, set of tools for thinking about a wide range of problems. I’ve also found that a little bit of basic knowledge helps to make economic advice and forecasts seem more like guidelines and best guesses than hard rules and certain predictions. Ultimately, the decisions that economics informs are too widespread and too important to leave to one profession alone.

I’d second Ha Joon Chang’s suggestion that it would be good if people felt as comfortable arguing about economics as they do about foreign policy, education, health and the rest. But this means people need to engage a bit with the discipline, its theories and the evidence base, and that means we need non-technical resources for training amateur economists.

Below is a list of things that I’ve found helpful in trying to learn a bit of basic economics. It’s not complete — there have probably been lots of blogs and newspaper article that have taught me things that I’ve forgotten about. I’ve left out things that I feel are too technical, too niche, or focussed on specific problems or policy areas. I’ll update it if I find other stuff or remember things. I’ll also see if I can get some suggestions from proper economists.

  • Economics: A User’s Guide by Ha Joon Chang. A wonderful book, full of humour and humility. A good place to get a sense of the breadth of economic thought. A summary is in this great video.
  • The Power of Macroeconomics / The Power of Microeconomics by Peter Navarro: Two free online courses in introductory economics. A bit technical (there are graphs and some simple math) but well explained. Seemed to me to be a reasonably conventional (in a good way) introduction to neoclassical economics (including all the ways that markets can fail).
  • Capital in the 21st Century by Thomas Piketty: I know, I know: it’s massive. But the reason that it’s so massive is because Piketty explains a lot of macroeconomics ideas. It could have been a pamphlet if he’s aimed it at his professional peers. And it’s clearly written and well translated. I know Piketty is controversial, so there may be some bias here (but where isn’t there?), but I found the criticisms generally didn’t invalidate the basic ideas.
  • Misbehaving by Richard Thaler: An engaging summary of behavioural economics — the ways that people actually behave when they make economic decisions. Useful as an immunisation against economic theory based on idealised assumptions about individual behaviour. See also Behavioural Economics: A Very Short Introduction by Michelle Baddeley.
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