Essential Economics (Economist Essentials)

Rating:
Summary: Handy, accessible, readable
Review: Economics is not an exact science. Neither is it the "dismal science" that Thomas Carlyle claimed it was back in the days when Britannica still ruled the waves. Economics is a social science, a "historical" science, a science that can seldom rely on experiment to test its theories but must make do with observation. We do not know whether a tax cut for the rich, for example, will be good for the economy as a whole. It can be tried and when the results are in some years or decades down the road, we may come to some conclusion; but because we could not also see what would have happened had there been no tax cut or a different sort of tax cut, we really cannot be sure that it was the tax cut for the rich that led to economic growth or (as the case may be) revolution.

Nonetheless, while the knowledge we receive from a rigorous and disciplined observation of facts and events gives us nothing like certainty, it does lead us to know how to place our bets. And in an uncertain world that is really all we can expect. Even in closed systems like mathematics there are things unknown and not fully understood; and even in the most rigorous of the sciences such as physics, there is no presumption to absolute knowledge.

This attractive pint-sized publication from The Economist includes an opening essay entitled "The Joy of Economics" by Matthew Bishop that summarizes the current thinking of economists and presents a report on the state of the art. Unlike many essays written by economists, it is easy to read and directed at a general (but, of course, educated) readership. It serves admirably not only as an introduction to this volume but to current economic thought as well. I especially like his point that "better measures of economic success or failure" than "a purely monetary measure" such as GDP are needed, most clearly some measure that takes "environmental and other non-monetary factors into account." (pp. 8-9) Also good is his question about what effect the information explosion will have on economic thought and practice.

After Bishop's essay there follows hundreds of mini-essays and definitions arranged alphabetically on matters economic. If one compares these entries to those in the similar, but larger Dictionary of Economics also put out by The Economist, one quickly sees that there are fewer entries here but they are presented in a more readable fashion. This is then a less technical publication and not as inclusive; yet for most readers I would say it makes the ideas of economics more accessible.

Furthermore, Matthew Bishop, who wrote the entries has a slightly different slant on some economic ideas than those of the editors of the Dictionary of Economics. For example, on "adverse selection" Bishop concentrates on the market failure likely to be experienced by insurance companies selling insurance to, e.g., "55-year-old male smokers" while the Dictionary of Economics zeroes in on what it calls "the lemon problem." In both cases the problem is that one side of the transaction has an advantage that results in an adverse selection for the other side. In the former case, the insurance company that sells insurance to someone who is in poor health is at a disadvantage; and in the latter case the buyer of the poorly-made or maintained car is at a disadvantage.

In another example, the "prisoner's dilemma" of game theory is explained and related to the problem experienced by oligopoly (that of setting prices) in perhaps two hundred words. In the Dictionary of Economics twice as many words are used and a table is included. How to choose between the two explanations? The answer is the same for choosing between the two books: simply how technical do you want your explanations, and how readable?

Clearly this is the handier book. The type is a little larger. It takes up less space, and it does not cover the more esoteric ideas of economics that the non-specialists may profitably skip over. Furthermore, this quality paperback book has built-in front and end flaps that work as book marks for keeping your place. Cross references are in capital letters, which I think is the most straightforward way of pointing to them.

Bottom line: handy, accessible and just right for those of us who have degrees in something other than economics.

Rating:
Summary: Handy, accessible, readable
Review: Economics is not an exact science. Neither is it the "dismal science" that Thomas Carlyle claimed it was back in the days when Britannica still ruled the waves. Economics is a social science, a "historical" science, a science that can seldom rely on experiment to test its theories but must make do with observation. We do not know whether a tax cut for the rich, for example, will be good for the economy as a whole. It can be tried and when the results are in some years or decades down the road, we may come to some conclusion; but because we could not also see what would have happened had there been no tax cut or a different sort of tax cut, we really cannot be sure that it was the tax cut for the rich that led to economic growth or (as the case may be) revolution.

Nonetheless, while the knowledge we receive from a rigorous and disciplined observation of facts and events gives us nothing like certainty, it does lead us to know how to place our bets. And in an uncertain world that is really all we can expect. Even in closed systems like mathematics there are things unknown and not fully understood; and even in the most rigorous of the sciences such as physics, there is no presumption to absolute knowledge.

This attractive pint-sized publication from The Economist includes an opening essay entitled "The Joy of Economics" by Matthew Bishop that summarizes the current thinking of economists and presents a report on the state of the art. Unlike many essays written by economists, it is easy to read and directed at a general (but, of course, educated) readership. It serves admirably not only as an introduction to this volume but to current economic thought as well. I especially like his point that "better measures of economic success or failure" than "a purely monetary measure" such as GDP are needed, most clearly some measure that takes "environmental and other non-monetary factors into account." (pp. 8-9) Also good is his question about what effect the information explosion will have on economic thought and practice.

After Bishop's essay there follows hundreds of mini-essays and definitions arranged alphabetically on matters economic. If one compares these entries to those in the similar, but larger Dictionary of Economics also put out by The Economist, one quickly sees that there are fewer entries here but they are presented in a more readable fashion. This is then a less technical publication and not as inclusive; yet for most readers I would say it makes the ideas of economics more accessible.

Furthermore, Matthew Bishop, who wrote the entries has a slightly different slant on some economic ideas than those of the editors of the Dictionary of Economics. For example, on "adverse selection" Bishop concentrates on the market failure likely to be experienced by insurance companies selling insurance to, e.g., "55-year-old male smokers" while the Dictionary of Economics zeroes in on what it calls "the lemon problem." In both cases the problem is that one side of the transaction has an advantage that results in an adverse selection for the other side. In the former case, the insurance company that sells insurance to someone who is in poor health is at a disadvantage; and in the latter case the buyer of the poorly-made or maintained car is at a disadvantage.

In another example, the "prisoner's dilemma" of game theory is explained and related to the problem experienced by oligopoly (that of setting prices) in perhaps two hundred words. In the Dictionary of Economics twice as many words are used and a table is included. How to choose between the two explanations? The answer is the same for choosing between the two books: simply how technical do you want your explanations, and how readable?

Clearly this is the handier book. The type is a little larger. It takes up less space, and it does not cover the more esoteric ideas of economics that the non-specialists may profitably skip over. Furthermore, this quality paperback book has built-in front and end flaps that work as book marks for keeping your place. Cross references are in capital letters, which I think is the most straightforward way of pointing to them.

Bottom line: handy, accessible and just right for those of us who have degrees in something other than economics.

Rating:
Summary: A good dictionary of economic terms.
Review: This is a good book if you are someone like myself who listens to economic news and often doesn't fully understand the terms being used. The author uses very plain language to explain complex economic ideas, and his definitions always refer you to other terms or ideas relating to the subject. This is not something you would want to sit down and read, it is a dictionary of terms.