What is a good, short readable book on market economics?

by on May 4, 2011 at 3:40 pm in Books, Economics | Permalink

Boswell, a loyal MR reader, asks:

I’ve been asked to select a book that all incoming freshmen will (supposedly) read over the summer and then give a lecture on the topic in the fall.  The constraints are two-fold:  it should be a short, affordable paperback, and it should be an interesting read that will engage nearly everyone, especially those who have no interest in economics whatsoever.

There must be a good, short book out there on economics that illuminates the power of markets and the economic way of thinking.  Adam Smith and Friedrich Hayek are out – too heavy and dense for the average reader.  Milton Friedman’s “Free to Choose” was selected a few years earlier.  Henry Hazlett is out of date.  Any suggestions for possible books?  P.J. O’Rourke on Adam Smith?  Bastiat’s “The Law”?  Charles Wheelan’s “Naked Economics”?  Something by Tim Harford?  “Fooled by Randomness” by Taleb?  John McMillan’s “Reinventing the Bazaar”?

Ideas?  There is also Russ Roberts and early Paul Krugman, among others.

jdl May 4, 2011 at 3:46 pm

robert frank’s the economic naturalist?

Brian May 4, 2011 at 11:02 pm

I don’t like how Robert Frank positions himself as a “whistle blower” of sorts at the very beginning calling out economic educators across the country — and hence the need for his his book. at issue is the definition of Opportunity Cost, and he alludes to a survey done in college and basically “concludes” that everyone, including economics students and teachers, don’t even know what opportunity cost is. There was even a new york times editorial written about it, which i don’t have a link to at the moment. He then concludes that economic education is in dire straights. the irony is that HE is wrong. he was confusing the idea of economic profit with opportunity cost.
the rest of the book is only ok, and doesn’t so much deal with core economic concepts, and is rather a summary of his students’ investigations of every day life using economic reasoning –
i do like his recent podcast with russ roberts on income inequality though. it was a thought provoking conversation.

Hassan May 4, 2011 at 3:46 pm

Why not some of your own books?

Create Your Own Economy
Discover Your Inner Economist

Others I can think of include:

Nudge
Development As Freedom
The Undercover Economist

Maybe some Krugman, but I feel he’s too political

Britonomist May 4, 2011 at 3:47 pm

I would say Freakonomics. It does present well the economic way of thinking, and it does in a way look at markets, although not traditional markets.

WF May 4, 2011 at 3:48 pm
goblue May 4, 2011 at 3:56 pm

I read the one on Keynes. Terribly boring.

tomslee May 22, 2011 at 3:24 pm

I have read a few in the series (but not the Economics one). There is a wide range of quality and liveliness across the titles I have read. The one on Literature was great, the one on Choice was dishwater dull. So the Keynes book doesn’t say a lot about the Economics one.

LD May 4, 2011 at 3:49 pm

Thomas Sowell’s Basic Econ, 4th edition. No question.

Advocatus Diablo May 4, 2011 at 6:28 pm

^^ this

MC in Alaska May 4, 2011 at 7:43 pm

Ditto

Bill Logan May 5, 2011 at 9:43 pm

No. Perhaps you could suggest an alternative title that meets the requirement of being “a short, affordable paperback.”

Josh Hanson May 4, 2011 at 3:49 pm

I always liked “Not A Zero Sum Game” by Manuel Ayau.

JPCousteau May 4, 2011 at 3:49 pm

Roberts’ The Invisible Heart would be a solid pick because its light nature and the illustration of markets as only Russ can.

C May 5, 2011 at 10:01 am

I’ll second Russell Roberts.

Brandon Robison May 4, 2011 at 3:50 pm

Landsburg’s The Armchair Economist covers a lot of economic principles with interesting, real world examples, and I thought it seemed very accessible, even to the non-econ crowd.

CK May 4, 2011 at 4:18 pm

I’ll second this.

Nuntius May 4, 2011 at 7:37 pm

Thirded.

Also, Heilbroner’s Worldly Philosophers is great, although I admit it might be a stretch, as it’s more of a biography of economists (although some of them are fascinating indeed).

Rory Sutherland May 4, 2011 at 8:56 pm

Fourthed

joan May 4, 2011 at 10:18 pm

Heilbroner’s Worldly Philosophers is the book that made me interested in learning economics.

Keith May 4, 2011 at 9:08 pm

I agree. I just finished this book and it was excellent. Landsburg’s prose is crystal clear and free of jargon. His last chapter (on environmentalism) is a bit rantish, though. Freakonomics is good, but it’s more about statistics than economics generally.

Ben Hughes May 4, 2011 at 3:50 pm

I strongly second “Basic Economics” by Thomas Sowell. Simply outstanding.

John V May 4, 2011 at 5:26 pm

too long

LD May 4, 2011 at 3:52 pm

Yes, Ben Hughes is right. forgot the link before. http://www.amazon.com/Basic-Economics-4th-Ed-Economy/dp/0465022529

Bob Montgomery May 4, 2011 at 5:06 pm

it should be a short, affordable paperback

And you suggest a 786-page hardcover?

Pete May 4, 2011 at 3:53 pm

I wouldn’t be so quick to rule out Hayek. “The Use of Knowledge in Society” is short and available for free on Google Scholar.

You could also try Ridley’s newest book, the Rational Optimist. Very engaging but maybe a bit long. $10 paperback available from Amazon beginning in June. Surowiecki’s Wisdom of Crowds is also excellent. These two stray from market economics but are very engaging.

Alan Gunn May 4, 2011 at 5:13 pm

I second “The Use of Knowledge in Society.” A whole book, however good, is too much on which to base a single lecture.

RZ0 May 4, 2011 at 3:54 pm

Economics Explained was the everyman’s standard a few years ago. I wonder how well it has held up.
http://www.amazon.com/Economics-Explained-Everything-About-Economy/dp/0684846411

korbonits May 4, 2011 at 3:54 pm

Naked Economics for a first introduction is excellent. If there’s something comparable that includes recent reevaluations regarding the financial crisis and Great Recession, perhaps that would be best.

Fault Lines by Raghuram Rajan is relevant but perhaps too big-picture for those in need of basic theory.

Just read P.J. O’Rourke on Adam Smith and loved it but it is unabashedly libertarian. Great read for the older American, however, because it’s absolutely littered with brilliant quips and jokes ranging from pop culture to the downright pretentious.

Brian May 4, 2011 at 11:05 pm

Naked Economics has a NEW Edition. he adds a few pages to each chapter, and includes new ideas concerning the recent crisis. he even changes his mind about the effectiveness of different types of CEO compensation.

Naked Economics is by far the very best book out there. I teach AP Economics to High School students. it is not only the most readable, it includes the most interesting real life examples to illustrate core economic concepts.

Biomed Tim May 10, 2011 at 9:41 am

I agree with Naked Economics. It has the right mix of microeconomics and macroeconomics. The new edition covers the financial crisis, I believe. This would be appropriate for incoming freshmen.

Andy May 4, 2011 at 3:55 pm

I’d go with Russ Roberts or Tim Harford. Wheelan is also very good, but being a little longer and a more towards a standard treatment of economics (although very readable).

Matt May 4, 2011 at 4:52 pm

I’d second Harford. Very readable, but still much more grounded in traditional theory than a lot of other “popular” economics writers.

James SH May 4, 2011 at 4:01 pm

It’s not yet in paperback, but Greg Ip’s “Little Book of Economics” is cheap ($10 at Amazon).

Henry Farrell May 4, 2011 at 4:01 pm

Tom Slee’s No-one Makes You Shop at Wal-Mart is short, well written, surely illustrates the power of markets and economic thinking, and comes strongly recommended by an eminent economic commentator ;)

aje May 4, 2011 at 4:04 pm

Here’s what I deem to be the 6 best:
http://econ.anthonyjevans.com/2010/03/pop-economics/

Sebastian May 4, 2011 at 4:07 pm

Krugman’s Peddling Prosperity is quite centrist and very good on economics, maybe a little dated in parts, but really not very much.
If Krugman is too far on the left, surely Landsburg and Roberts should be out – their libertarianism is much further from the disciplinary mainstream than Krugman’s liberalism.

Please don’t use Freakonomics! I don’t think it teaches people anything about economics.

How about a more international perspective?
Easterly’s “Elusive Quest for Growth” is terrific and it gives you the same “incentives matter” line as Freakonomics, but integrated into a much more interesting argument about some of the biggest questions of economics.

Anotherphil May 4, 2011 at 4:21 pm

“Please don’t use Freakonomics! I don’t think it teaches people anything about economics.”

Yep, is to economics what Dominos is to Pizza.

Psychohistorian May 4, 2011 at 6:06 pm

Easily accessible, affordable, and perfectly satisfactory for the purposes of all but a narrow elite?

Gene Callahan May 5, 2011 at 11:25 am

Nobody I know in Brooklyn considers Dominos to be pizza, and this is hardly a bunch of elitists I’m talking about! Perhaps you are from a state like North Dakota where real pizza is not offered?

Dana May 5, 2011 at 12:13 pm

Nobody in Chicago considers anything in Brooklyn pizza (they’re wrong of course). But they’ll all give someone who knows nothing about the subject a general idea about the nature of pizza.

Slocum May 4, 2011 at 5:37 pm

Landsburg and Roberts should be out – their libertarianism is much further from the disciplinary mainstream than Krugman’s liberalism.

I don’t see Russ Roberts that way at all. His The Choice, for example, is certainly well within the mainstream (for economists) in its defense of free trade while treating opponents with understanding and respect. I’d say Russ Roberts is pretty much the opposite of strident — listen, for example, to his discussion with Robert Frank about The Economic Naturalist (which would also be a good choice):

http://www.econtalk.org/archives/2007/10/robert_frank_on.html

Brad May 4, 2011 at 4:07 pm

Common Sense Economics
Hidden Order
The Choice
Travels of a T-Shirt in the Global Economy

General Lee May 4, 2011 at 5:53 pm

+1 for The Choice

Michael May 4, 2011 at 4:10 pm

Andy Kessler – “How We Got Here”

Talks about markets from a very nuts-and-bolts perspective. Goes back to the industrial revolution, steam power, etc. to show how and why markets were created. One of my favorite books.

http://akessler.blogs.com/andy_kessler/2005/04/hwgh.html

John May 4, 2011 at 4:10 pm

I read Tim Harford’s ‘The Undercover Economist’ in my senior year of high school and enjoyed it immensely. I would recommend it above ‘Freakonomics’ for an illustration of “the economic way of thinking.” While I enjoyed ‘Freakonomics,’ I walked away from it understanding that incentives are everywhere, but not much more — in that sense, Harford might be a better pick.

Todd May 4, 2011 at 4:11 pm

How about a couple of books that approach some important economic issues from a non-traditional perspective:

1. Hernando De Soto: “The Mystery of Capital”

2. Armatya Sen: “On Ethics and Economics”

3. Stiglitz, Sen & Fitoussi: “Mismeasuring Our Lives: Why GDP Doesn’t Add Up”

4. Herbert Simon: “Reason in Human Affairs”

While these texts would expose students to some viewpoints they otherwise might not get in an Intro course, it might also make for more varied and lively “lectures” for the instructor. Imagine sitting through 50 lectures based on a Thomas Sowell book. I’d rather hear about Mao’s Little Red Book.

Sebastian May 4, 2011 at 4:31 pm

I actually thought about several of these – and they’re all great books – but I feel they’re all better when you’ve had at least some exposure to more mainstream economic thinking.

Steve H May 4, 2011 at 4:11 pm

Thomas Sowell
Basic Economics: A Common Sense Guide to the Economy

Noah Yetter May 4, 2011 at 4:14 pm

Eat the Rich by PJ O’Rourke (this was actually assigned to me in college)

AnotherTom May 4, 2011 at 4:46 pm

This was going to be my recommendation as well. I find O’Rourke just as funny, and less ideologically contentious, when he writes about foreign affairs.

Ben May 4, 2011 at 4:14 pm

Worldly Philosophers. It was required reading for my MBA econ class. Doesn’t get too deep much theory, but gives a good overview of the major economists starting with Adam Smith.

Nobody May 4, 2011 at 4:19 pm

How an economy grows and why it crashes. – Peter Schiff
Economics in One Lesson – Henry Hazlitt

Brad S May 7, 2011 at 11:37 am

Economics in One Lesson!!!!

Quick, easy, and cheap!

I would also recommend “That Which is Seen and That Which is Not Seen” by Bastiat. I don’t know if it can be found alone or if you would have to buy a collection of his writings, but this work more than any other explains how to look at the world through the lens economics.

Jenny Davidson May 4, 2011 at 4:20 pm

It is not exactly what is being asked, but A O Hirschmann’s “The Passions and the Interests” seems to me a classic for all time. My preference for this sort of thing is really to go to absolute classics – so that it makes more sense, say, to assign a really important essay by Thomas Nagel as opposed to some recent popularization that doesn’t give direct access to a major intervention in the field itself.

Ano May 4, 2011 at 4:21 pm

Charles Wheelan’s “Naked Economics” is awesome.

Scott Koser, CFA May 4, 2011 at 4:21 pm

I second Economics in one lesson, Hazlitt

angus May 4, 2011 at 4:26 pm

I’d go with “Travels of a T-shirt” by a wide margin. It’s excellent and in my experience using it in class, non-econ students love it. Very few non-econ students are going to sit still for “Economics in one Lesson”, or Sen or DeSoto.

Robbie May 4, 2011 at 4:28 pm

The Undercover Economist by Tim Harford.

Easy reading yet informative and counter intuitive enough to get people hooked. Also essentially apolitical in contrast the Free to Choose and some of the other suggestions here.

JohnP May 4, 2011 at 4:29 pm

Here’s another vote for Sowell. But there’s no way he’ll ever be assigned, sad to say.

Of books that have a chance of actually being chosen, I’d vote for The Invisible Heart.

Michael F. Martin May 4, 2011 at 4:29 pm

Heinlein’s *The Moon is a Harsh Mistress*

Rich Berger May 4, 2011 at 4:30 pm

“There must be a good, short book out there on economics that illuminates the power of markets and the economic way of thinking.” In light of this requirement, I don’t understand why Hazlitt would be considered out of date.

Smith May 4, 2011 at 4:34 pm

“Saving Capitalism from the Capitalists”

Rajan & Zingales

Steve Reilly May 4, 2011 at 4:38 pm

What about Steven Landsburg’s Armchair Economist?

John May 4, 2011 at 4:41 pm

Naked Economics, easily.

TD May 4, 2011 at 4:42 pm

Macroeconomics Demystified by August Swanenberg

It’ll satisfy …

“a book that all incoming freshmen will (supposedly) read over the summer and then give a lecture on the topic in the fall.”

but probably not …

“will engage nearly everyone, especially those who have no interest in economics whatsoever”

JasonL May 4, 2011 at 4:45 pm

How about just the lyrics to the rap battle?

Leigh Caldwell May 4, 2011 at 4:49 pm

Another vote for Tim Harford, “The Undercover Economist”. It revived my interest in mainstream economics and is full of great examples and very readable. I seem to recall a few UK-based examples and anecdotes but I think there may be a US edition. Pretty much mainstream economics and politically neutral (though bearing in mind that he is British, which may mean he’s more left than the US median – or in the unoccupied centre between left and right-wing partisans).

The early Krugman book I liked was “The Accidental Theorist”. I don’t remember him being as leftish then as he is now, but do check.

And I think Tyler’s “Discover Your Inner Economist” looks good – though embarrassingly for an MR commenter, I haven’t read the whole thing.

But were you actually looking for a general introduction to economics as a whole (any of the above), or something illustrating a specific single idea from a market/economic point of view? If the latter, then maybe something like Sudhir Venkatesh’s “Gang Leader For A Day” would make for an interesting lecture.

Matt May 4, 2011 at 4:51 pm

The History of Money by anthropologist Jack Weatherford

Rahul May 4, 2011 at 4:52 pm

A very good way to really see how markets work is to read the Wall Street Journal. The student subscription is pretty reasonably priced too. The articles are more interestingly written than most books. The examples seem real, because they are! And you don’t run the risk of viewing the world through one man’s goggles; a major risk in economics I fear. If you skip the editorials the WSJ is pretty well balanced usually.

I vote for the WSJ over most books.

Ted Craig May 5, 2011 at 7:53 am

I know at econ prof at Richmond who gives the same recommendation.

Neil May 4, 2011 at 4:59 pm

Another vote for The Undercover Economist by Tim Harford.

It easily fits the brief of being a cheap, readable paperback but it also does a great job of illustrating how the forces of economics are at work under our very noses. One of the cover quotes on my copy said something like “It’s like being given a pair of x-ray specs, revealing the hidden side of everyday life” and as someone not previously exposed to much economics, that’s exactly how it felt.

I’m now in my first year of a BSc in Economics & Maths. It was The Undercover Economist that initially piqued my interest and made me want to understand more which led me to this point! That seems like exactly the scenario here.

I’d also vote against Freakonomics – it’s a great book, but it seems to be more “Here’s how the principles of economics can be applied to other areas” which might logically come after a book explaining what those principles are in their normal setting.

1st year May 4, 2011 at 5:00 pm

Equality & Efficiency or Capitalism & Freedom

JFA May 4, 2011 at 5:05 pm

“Marketplace of the Gods”" by Witham. Looks at a specific topic but succinctly applies the economic way of thinking to religion, and an added bonus is that it has the best popular discussion of rationality in economics that I have read.

Anand May 4, 2011 at 5:05 pm

My amateur vote goes to Schelling’s Micromotives and Macrobehavior.

Erik Brynjolfsson May 4, 2011 at 8:27 pm

Great book.

PM May 4, 2011 at 5:06 pm

The Wordly Philosophers. I read it in high school and is the reason why I ended up with a degree in economics.
$10 on Amazon (new), probably a few bucks used anywhere.

Erik Brynjolfsson May 4, 2011 at 8:29 pm

I had a similar positive experience in high school, although when I went back and re-read it recently, I was less impressed. Nonetheless, maybe the high school reader criterion is the better one for this purpose.

CFM May 5, 2011 at 9:48 pm

Totally. Best survey on possibilities in political economy.

Zac Gochenour May 4, 2011 at 5:07 pm

Hidden Order

dirk May 4, 2011 at 5:13 pm

Jim Rogers’ Investment Biker

dirk May 4, 2011 at 7:22 pm

The key insight of this book for me was that market economics is a reality which exists even in places where it doesn’t officially exist. All the better that the book is dated to just after the fall of communism since now is a perfect time for a resurgence of anti-statist lessons and that boring Ayn Rand shit just ain’t cutting it. The travelogue style and bite-sized history lessons fulfills the requirement of “engaging read for those who have no interest in economics”.

MrP May 4, 2011 at 5:15 pm

I am a non-economist, found “Economics in one Lesson” by chance, and couldn’t stop reading until I was done.

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