29 Oct 2014

The Armchair Economist -- the review

I assigned Steven Landsburg's book to students in my Principles of Economics class (their first economics class) because I wanted them to read a "popsci" book that would help them see "the economics of everyday life" (the book's subtitle). I'm glad I did, but I had to make a few corrections of Landsburg's perspectives in class. I don't think that's a problem -- economics is not always a "science" -- but it's worth remembering that some of his assumptions and/or logic may not survive scrutiny. That's probably no great shock to Landsburg, who's presenting an "armchair view" of numerous complex issues.

More important for some of you: I decided against Freakonomics (too pop), The Economic Naturalist (too many just so stories) and Economics in One Lesson (too dated) when choosing this book, although all these books have something to recommend them.

So here are a few comments on Armchair Economist*
  1. Overall, I found the book to be breezy, but sometimes too breezy. I recommend readers pursue their favorite topics on blogs, which are now far more dynamic, detailed and accessible

  2. Landsburg gives lots of great, common sense explanations for everyday phenomena, e.g., the role of asymmetric information with insurance, why weird people are the best ones to trade with, who really earns monopoly rents (the owner of scarcity), that BOTH sides -- exporters and importers -- benefit from trade, and so on

  3. He also spends some well-deserved pages explaining how economists are far more interested in happiness than wealth (something that regular folks should also consider more often), how a good policy may not be a great policy compared to alternatives (opportunity cost), and the most important policy question: you enact a policy that changes rules "...and then what happens?" I try very hard to impress these ideas on my students as they are perhaps the most useful economics can give

  4. Landsburg covers Rawlsian justice, the opportunity cost of the draft ("free" labor isn't free), and the useful tool of redistributing wealth among citizens rather than (inefficiently) redistributing opportunities. These discussions -- and others -- should help readers see the "fair" side of a discipline which is often (ignorantly) characterized as a "neoliberal justification for exploitation"

  5. I enjoyed his (macroeconomic) discussions of taxes, spending and debt as well as his simple but powerful defense of free trade (and attack on special interests)

  6. Landsburg sometimes misses critical elements, e.g., the importance of work per se over the wages that work deliver, the positive externalities of literacy (educated citizens), and/or the "irreversability problem" that makes it much harder to return a parking lot to rain forest. His last chapter -- "Why I am not a [ideological] environmentalist" -- is useful for its analogy to religious zealotry, but a failure when we compare the impact of religious people (reading old fiction) to the impact of "earth killers." Overall, Landsburg should spend a little more time on negative externalties that cannot be addressed by simple Coasian (common law) methods, due to their large scale (transaction costs)

  7. Most readers will be interested in some of these issues. Landsburg's contribution is to present a different -- often original -- perspective on their incentives and impacts, which will keep curious readers engaged and biased readers enraged.
Bottom Line: I give this book FOUR STARS for its engaging and provocative discussion of many important areas of our everyday life.

* I realize that my reviews tend to be "note heavy" and structure light, but this is easier for me. Look up the table of contents (or wikipedia for well-known books) if you want more on the structure.

1 comment:

NM said...

Have you read the "one star" reviews on Amazon of Landsburg’s book. They are quite interesting, given many of them appear to have spent some time composing them for a book they didn’t like.

Without having read Landsburg’s book, the apparently consistent concern about Landsburg’s attitude towards the environment would probably be enough to put me off buying the book.

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