The Writing That Shaped Economic Thinking in 2016
The past year was dominated by the bitter presidential election. But during the precious, brief moments when I was able to unplug from the madness and read about economics, I found a lot of great material. Here’s a list of 10 excellent economics books and papers I read in 2016 that should be accessible to the general public.
1. “Concrete Economics: The Hamilton Approach to Economic Growth and Policy,” by Stephen S. Cohen and J. Bradford DeLong
This slim, readable book could change the way you think about economic policy in a single plane ride. Cohen and DeLong take the reader on a whirlwind tour of U.S. economic history, showing that in each era, the U.S. government had a very specific plan for the economy. It was only after 1980, the authors claim, that the government quit having big bold visions, and let the economy go wherever the whims of the market took it. As a result, they say, finance took over. Cohen and DeLong call for a return to the days of big, bold development policy.
2. “The Wealth of Humans: Work, Power and Status in the Twenty-first Century,” by Ryan Avent
The “rise of the robots” scenario is on everyone’s mind. Will technologies like machine learning make most human workers obsolete, leaving us to rely on government largesse? Or will we find new ways to complement the machines, as we did in the Industrial Revolution? Avent isn’t the first writer to struggle with this question, but this book is the best so far when it comes to the economics of the issue. The short and frustrating answer: We just don’t know yet whether humans will go the way of horses.
3. “The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade,” by David Autor, David Dorn and Gordon Hanson
This is the paper that shook the world of economics. Looking at local data, Autor et al. found that import competition from China was devastating for American manufacturing workers. People who lost their jobs to the China Shock mostly didn’t find new good jobs -- instead they took big permanent pay cuts or went on welfare. The authors also claim that the China Shock was so big that it reduced overall U.S. employment. This paper has thrown a huge wrench into the free-trade consensus among economists. It also might help explain the election results. Expect to hear it cited again and again.
4. “Rising morbidity and mortality in midlife among white non-Hispanic Americans in the 21st century,” by Anne Case and Angus Deaton
This is the other must-read econ paper of the year. Case and Deaton find that very bad things have been happening to non-college-educated white Americans -- drug abuse, alcoholism and suicide are way up. The problem is so bad that death rates are actually rising for this group, even as they fall for everyone else. These social problems might also have something to do with the election -- people in the places hit hardest by drug abuse tended to shift toward Trump.
5. “Phishing for Phools: The Economics of Manipulation and Deception,” by George Akerlof and Robert Shiller
This is another book intended to make us reconsider the entire way we think about the economy. Instead of a world of rational actors who are mostly successful in using their resources to fulfill their desires, Akerlof and Shiller suggest we think of the economy as a jungle full of trickery, mistakes and confusion. They provide a number of everyday examples of exploitation, deceit and cognitive bias.
6. “Economics Rules: The Rights and Wrongs of the Dismal Science,” by Dani Rodrik
This one is for economics nerds. Rodrik, an accomplished but often rebellious economist, waxes philosophical on the uses and abuses of economic modeling. He points out a lot of very real failings of economic modeling, and takes some famous people to task, but also defends the profession against many of its harsher critics. In the end, Rodrik believes that good economics comes down to good judgment.
This paper is the definitive summary of what economists have learned about education methods. Fryer has collected a huge number of real-world trials of things like school vouchers, charter schools and intensive tutoring. Unfortunately, tutoring was the only thing that really worked.
8. “The Trouble with Macroeconomics,” by Paul Romer
Many people have criticized macroeconomics over the years, especially since the financial crisis. But perhaps none have done so as forcefully as Paul Romer, the new chief economist of the World Bank. Romer takes his fellow macroeconomists to task for failing to reconcile their theories with reality, and accuses them of acting more like a religion than a science.
One of econ’s biggest, boldest policy experiments was undertaken in Seattle by the University of Washington two years ago -- a steady rise in the minimum wage, which will eventually reach $15. Now some preliminary results are in. The rise in the minimum wage isn’t holding back employment very much, but it has resulted in some workers getting their hours cut.
10. “The Nobel Factor: The Prize in Economics, Social Democracy, and the Market Turn,” by Avner Offer and Gabriel Soderberg
This is the one I haven’t read yet, but I’m excited to do so. I’ve always suspected that the Economics Nobel -- actually a prize awarded by the Bank of Sweden, named after the famous Nobel Prizes -- exercises an undue influence on the field. It will be nice to read the work of people who have actually researched the prize’s history.
To see Bloomberg View columnist Barry Ritholtz’s reading recommendations, click here.
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