Public Finance and Public Policy, the new textbook by Jonathan Gruber, is not only the best public finance textbooks I’ve ever read it is one of the best textbooks I’ve read in any field. Gruber and Worth Publishers have clearly put a huge amount of money and effort into this book – the content is superb and so is the presentation (graphs, organization, supplementary material – e.g. check out these cool powerpoint presentations.).
Gruber is especially good at discussing empirical research. What is the effect, for example, of social security on private savings, on the living standards of the elderly, on the incentive to retire? What do we learn from the international evidence?
(Quick answers: Social security crowds out about 35 cents of private savings for every social security dollar. As a result, social security has reduced the eldery poverty rate although not quite as much as naive trends would suggest. Social security does reduce the labor force participation rates of the elderly but less so in the United States than in most European countries where there are huge disincentives for working beyond the normal retirement age. (Get the book or this powerpoint presentation for more details – note you need to view the PP in SlideShow mode to get the full effect.)
Gruber covers all the major programs – education, social security, unemployment insurance, Medicaid and Medicare, the tax system etc. – and in each case he carefully explains the institutional details and then he evaulates the empirical evidence focusing on the most telling pieces of evidence (rather than trying to cover everything that has ever been written as in a review paper).
Gruber is so good on the empirical research that this book would be a useful supplement to an applied econometrics class. Just flipping through it and reading the boxed Empirical Evidence sections gives a good feel for what the cutting edge questions and techniques are in empirical research.
Congratulations to Gruber on a tour de force!