Category: Books

Teaching students to *do* economics

Doing Economics, buy it here.  This book is based on the novel premise that undergraduate instruction should be based on teaching practical skills.  Imagine chapters like "Overview of the Research Process in Economics," "What is Research?", "Critical Reading or How to Make Sense of Published Research," and "Locating (and Collecting) Economic Data."  It is more mechanical and less incisive than I would like, but every serious undergraduate economics major should be familiar with this book.

By the way, here is what undergraduates actually do, courtesy of one anthropologist; thanks to the readers who sent in the link.

What I’ve been reading

Mutants: On Genetic Variety and the Human Body: The title says it all, this book is not for the squeamish.

Hunger’s Brides: A Novel of the Baroque, by Paul Anderson.  I’m a sucker for 1400-page Canadian novels about Mexican nun/poetesses who are learning to speak Nahuatl and are involved in murders.  The New York Times ran an article on how to deal with the book’s size and weight.

Chronicles, volume I, by Bob Dylan.  No, I don’t care about him anymore either, but  nonetheless this was one of the best books I read all summer.  A primer on what it means to be American and why low rents are good for artistic creativity.

Healthy Competition: What’s Holding Back Health Care and How to Free It, by Michael Cannon and Michael Tanner, published by the Cato Institute.

Sons of the Conquerors: The Rise of the Turkish World, by Hugh Pope.  A useful and entertaining book on modern Turkey and how it relates to Azerbaijan and the "stan" countries.  Short of actual travel, this is your best hope of gaining a knowledge foothold in these areas.

My favorite book this summer remains the accessible yet deeply philosophic The Time Traveler’s Wife.  More generally, Michael at offers a comprehensive set of links on what is new in the world of books.

Writing tips

Christopher Paolini (teen author of the fun Eragon and the just-published Eldest, now 21 years old) notes:

I tend [sic] to get up, grab breakfast, sit in front of my computer [and not] get up until about an hour before dinner.  I do this seven days a week, every week of the month, every month of the year.

That is from today’s Washington Post, Kids Section. 

I have a different idea, taking effort as a scarce variable.  Every day, stop writing just a short while before you really want to quit.  The next day you will be very keen to get going again.  For most mortals, your real enemy is the number of days when you get nothing written.  Getting "not enough" done each day is a lesser problem.

Addendum: Here are my previous writing tips. to sell its own literature

Digital copies, written exclusively for the website, are avavilable for 49 cents apiece.  These short pieces range from 2000 to 10,000 words.  About sixty authors have signed up, including Danielle Steel.  On Friday the bestselling title was Harry Dent’s "Bubble After Bubble in the Ongoing Bubble Boom: Oil Bursts, the Housing Bubble Fades and Now Stocks Emerge Into a Greater Bubble That Finally Ends in 2010."

Here is the story.  Will this practice render short story compilations, or perhaps magazines of fiction, obsolete?  As with iPod, won’t consumers prefer the unbundled units?  Or does fiction differ by giving the editors and compilers a greater role in producing excitement and cache? 

Addendum: Here is a good story on the marketing of ebooks, and one entrepreneurs who thinks the days of paper books are over.

Discard your books for love

Many of you wrote in to recommend for discarded books.  The system works as follows:

  1. Read a good book (you already know how to do that)
  2. Register it here (along with your journal comments), get a unique BCID (BookCrossing ID number), and label the book
  3. Release it for someone else to read (give it to a friend, leave it on a park bench, donate it to charity, "forget" it in a coffee shop, etc.), and get notified by email each time someone comes here and records journal entries for that book. And if you make Release Notes on the book, others can Go Hunting for it and try to find it.

Claudia Morgenstern directs me to the Wikipedia entry on BookCrossing.  Some readers report that coffee shops are especially popular places to leave books.  The "hunting" aspect may make this more efficient than simply leaving your book somewhere.  Furthermore BookCrossing seems like an alternative means of finding dates.  Here is a list of BookCrossing meet-up groups.

Where to leave your discarded books

When I finish a book, I dislike keeping it, unless I expect to read it again.  My Russian wife claims I throw things out for the sake of the action itself; she is right.  I also enjoy giving books away.  But when you are traveling, who should receive the book?

At times I engage in serendipitous fantasy, by leaving the book on a park bench and imagining what might happen to it, how seditious ideas might change lives around the globe.  But lately the practical economist in me has taken over.  How should I discard books so as to maximize social welfare?

In Singapore I tried leaving a book — a slightly salacious one at that — in the public library.  Surely it will be found there.  But will anyone be allowed to check it out?  Alternatively, you might think that the greatest number of people will see it in a crowded train or bus station.

One radical option is to leave the book, well…in a bookstore.  Most likely, the book will be sold.  If you bring it to the counter they will be puzzled but I suspect will be willing to ring it up and punch in a code.

Of course now the book has a price, which can restrict the chance it is ever read.  But the chance of it getting into the right hands — the high-valuing user — has gone way up.  This is a testament to the role of middlemen in a capitalist economy.  The book is probably worth more to the world at full price, in a bookstore, than lying on a bench for free.

So now you know where to leave your discarded books.

The Complete Works of David Ricardo

They are now published by Liberty Fund, that is the Sraffa edition, order them here, all for a mere $106.  Or download here.  Here is a searchable on-line edition of his Principles.  I’ve loved Ricardo since I first read him; no economist more tightly mixed superb common sense and counterintuitive absurdities (theory of rent and implicit notion of opportunity cost), but there is more of the former.  He is an excellent writer as well, and a classical liberal thinker of importance.

The used book market can boost the demand for new books

Professors Ghose, Smith and Telang chose a random sample of books in print and studied how often used copies were available on Amazon. In their sample, they found, on average, more than 22 competitive offers to sell used books, with a striking 241 competitive offers for used best sellers. The prices of the secondhand books were substantially cheaper than the new, but of course the quality of the used books (in terms of wear and tear) varied considerably.

According to the researchers’ calculations, Amazon earns, on average, $5.29 for a new book and about $2.94 on a used book. If each used sale displaced one new sale, this would be a less profitable proposition for Amazon.

But Mr. Bezos is not foolish. Used books, the economists found, are not strong substitutes for new books. An increase of 10 percent in new book prices would raise used sales by less than 1 percent. In economics jargon, the cross-price elasticity of demand is small.

One plausible explanation of this finding is that there are two distinct types of buyers: some purchase only new books, while others are quite happy to buy used books. As a result, the used market does not have a big impact in terms of lost sales in the new market.

Moreover, the presence of lower-priced books on the Amazon Web site, Mr. Bezos has noted, may lead customers to "visit our site more frequently, which in turn leads to higher sales of new books." The data appear to support Mr. Bezos on this point.

Applying the authors’ estimate of the displaced sales effect to Amazon’s sales, it appears that only about 16 percent of the used book sales directly cannibalized new book sales, suggesting that Amazon’s used-book market added $63.2 million to its profits.

Furthermore, consumers greatly benefit from this market: the study’s authors estimate that consumers gain about $67.6 million. Adding in Amazon’s profits and subtracting out the $45.3 million of losses to authors and publishers leaves a net gain of $85.5 million.

A critic on Critical Mass

I recently finished Philip Ball’s Critical Mass.
The bad news: it’s twice as long as it needs to be and his criticisms
of economics are rather odd (no, ability to forecast share prices is not the
test of the subject’s validity). The good news: it’s packed full of fun
stuff about the relevance of various physical and agent-based modelling
techniques to the social sciences. Even better, you can read Ball’s own
summary and find out whether you like it.

Thomas Schelling was there first again with
his chessboard model of racial segregation. The bottom line: racial
preferences which would seem to accommodate mixed neighbourhoods turn
out to lead to extreme segregation, as shown in (b) below.


Robert Axtell, one of the founders of the Sugarscape agent-based modelling system, predicts that within a few years we will be able to run models with billions of agents, rather than Schelling’s 50 or so. Artificial worlds beckon.

Advertising and the English

…advertising in essentially un-English…Advertising, and by extension all forms of marketing and selling, is by definition boastful – and therefore fundamentally at odds with one of the guiding principles of English culture.

For once, however, our self-imposed constraints have had a positive effect: advertising does not fit our system of values, so, rather than abandon our unwritten rules, we have twisted and changed the rules of advertising, and developed a form of advertising that allows us to comply with the modesty rule.  The witty, innovative advertising for which the English are, I am told by people in the trade, internationally renowned and much admired, is really just our way of trying to preserve our modesty.

That is from Kate Fox’s excellent Watching the English: The Hidden Rules of English Behaviour.  If you enjoy the blogging of Grant McCracken, or simply wish to understand the English better, this book is for you.

Kierkegaard and Dubai

One is weary of living in the country and moves to the city; one is weary of one’s native land and goes abroad; one is europemuede [weary of Europe] and goes to America etc.; one indulges in the fanatical hope of an endless journey from star to star.  Or there is another direction, but still extensive.  One is weary of eating on porcelain and eats on silver; wearying of that, one eats on gold; one burns down half of Rome in order to visualize the Trojan conflagration.  This method cancels itself and is the spurious infinity…

The method I propose…consists in changing the method of cultivation and the kinds of crops.  Here at once is the principle of limitation, the sole saving principle in the world.  The more a person limits himself, the more resourceful he becomes.  A solitary prisoner for life is extremely resourceful; to him a spider can be a source of great amusement.

Two points: a) mid-19th century Denmark cannot have been so much fun, and b) it is time to move on to Singapore…

By the way, that quotation is from "Rotation of Crops," in Either/Or.