Arnold Kling  

Economics Book Recommendations

Better than Health Insurance?... Systematically Biased Beliefs ...

from the B-school at Carnegie-Mellon. My top three from the list would be David D. Friedman's Hidden Order, for lively examples and breadth of coverage; Malkiel's A Random Walk Down Wall Street, for its explanation of how economic theory applies to investment; and Easterly's The Elusive Quest for Growth for an appreciation of the importance of entrepreneurship and the failure of central planning.

I would not be as quick as Tyler Cowen to scratch Heilbroner off the list. I think that the history of economic thought is difficult to do well, but worth the attempt. Jerry Muller's The Mind and the Market is my favorite in that genre, but it is much too dull for the average reader to slog through. Heilbroner is more entertaining, although apparently not to Tyler.

Books that I think might deserve to make it on the list (I'm thinking of business school students as the primary target audience): Shapiro and Varian's Information Rules; Amar Bhide's The Origin and Evolution of New Businesses; David Cutler's Your Money or Your Life.

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COMMENTS (5 to date)
Brian Ferguson writes:

Try replacing the Heilbroner with Roger Backhouse's "The Ordinary Business of Life".

Omer K writes:

For non-economist non-degree types, best 'bang for the buck' economics books Ive read are

1) Basic Economics: A Citizen's Guide to the Economy by Thomas Sowell


2) The Noblest Triumph: Property and Prosperity through the ages by Tom Bethell

drtaxsacto writes:

I am not sure why anyone would recommend anything by Galbriath in these days. But I would add something more about technology (for example The Long Tail by Chris Anderson) and perhaps about public choice economics (although Mancur Olson's book should make any list - but I would add either Public Choice - Dennis Mueller - which is a good collection on the field - or the Calculus of Consent - Tullock and Buchanan). I would also substitute Graham, Dodd and Cottle - Security Analysis instead of the Random Walk - there is plenty of evidence that some smart guys can indeed beat the "random walk." I am also pretty sure that I would not put the General Theory on the list - I would probably add in the Constitution of LIberty in its place.

Finally, Macromotives and Microbehavior is one of the sleepers on the list. It is a book that should go on every list.

ed johnson writes:

Is Friedman's "Hidden Order" really a good book? I skimmed it once in the bookstore and found him making the following absurd claim: that a homeowner is always better off if the price of houses goes up, and also better off if it goes down. He supports this claim using a standard static model of utility maximization under a budget constraint with an endowment, showing that the possibility of trade makes you better off.

Of course, this is not how markets for durable assets work; people buy houses with the knowledge that the prices might change, and with the expectation that they might eventually sell the house. Friedman presents this example in seeming seriousness as an example of the wonderful power of economic thinking. After that, I didn't think the rest of the book was worth reading or recommending. (The example can be found starting on page 35.)

If anyone thinks I'm wrong, and that I simply failed to understand the example, I challenge you to do the following: write down an intertemporal model of the decision to buy a quantity of housing, including expectations over future prices, that makes Friedman's claim true.

Phil writes:

Landsburg's "The Armchair Economist" was the first book I ever read on economics, and it got me hooked, to the point where I now read almost anything popular I can get my hands on.

But "Armchair" is still my favorite. I reread it every year or so ... it still blows me away, the way it conveys the elegance of the logic of economic first principles.

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