8 Feb 2018

Review: The Cartoon Introduction to Microeconomics

I am a fan of this format for helping people understand economic ideas, and I bought this book (and its successor on macroeconomics) to see how well they convey important or complex ideas. (Here's my review of their book on climate change.) My overall comment is that the authors (Bauman on text, Klein on illustrations) do a great job, which means that I will recommend this book to students who are (justifiably) turned off by over-formal mathematical explanations of economic ideas.

The most important decision of the authors is their choice of which microeconomic topics to cover. They present the material in three parts, each with 5-6 chapters, i.e.,

I. The optimizing individual
  1. Individual v group outcomes
  2. Decision trees ("opportunity costs")
  3. Time
  4. Risk
  5. From one to some (next part)
II. Strategic interactions
  1. Cake cutting (equity or fairness)
  2. Pareto efficiency
  3. Simultaneous move games (prisoner's dilemma)
  4. Auctions
  5. From some to many (next part)
III. Market interactions
  1. Supply and demand
  2. Taxes
  3. Margins (marginal thinking)
  4. Elasticity
  5. The big picture (lots of exceptions to the ideas above)
  6. Conclusion
My only comments on the text are slightly nit-picky, but I think relevant:
  • It's important to remember that individual "discount rates" are not the same as interest rates when it comes to making decisions about costs now for future benefits. Many students confuse the two, and this book does as well.
  • Neanderthals are presented as rather dumb compared to homo sapiens when they were actually smarter as individuals. Homo Sapiens had the advantages of language and thus group cooperation, which is why we took over from neanderthals.
  • Far more should have been said about various impediments to efficient markets, as most readers have experience with imperfect markets.
  • The authors should have clarified that market economics provides limited insights that political economy can better explain, i.e., how communities can provide "goods," the source and need to regulate negative externalities, etc. (read more here).
Bottom line: I give this book FIVE STARS for being entertaining at the same time as it makes it easier to understand important economic ideas.

For all my reviews, go here.

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