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Econ books  Get inspiration about brilliant popular science books! New posts every week 📚

This week it was announced that Paul M. Romer and William D. Nordhaus are the winners of the Sveriges Riksbanks prize in economics in memory of Alfred Nobel.

I've had the fortune to have met and listened to professor Romer so these news made my very glad indeed. Big congrats to them both!

#williamnordhaus #paulromer #nobelprize
first picture from @nobelprize_org

DYSTOPIA AND ECONOMICS - edited by Charity-Joy Revere Acchiardo and Michelle Albert Vachris

I absolutely love these kinds of books, where the tools of economics are used in non-traditional contexts. In this short book, the contributing authors draw form fictional works to explain economic principles in 6 separate chapters. Each of them focus on a different dystopian societies in popular culture: The walking dead, Mad max: fury road, The hunger games, Divergent, A clockwork orange and Last man on earth. My favourites are chapters 2,3,4 and 6.

It's a perfect way to illustrate economic principles. By for example thinking about how life would be like in a zombie apocalypse, we realise how important it is with trust and protection of property right in order for a society to prosper.

#dystopiaandeconomics #economics #popularculture #economicsandpopularculture

Establishing norms is a very efficient way to surpress competive behaviour that would otherwise be very wasteful form the perspective of the whole society.

The individual is perhaps tempted to cut the line, this would of course save him time. But if everyone did so, there would be a lot of unnecessary fighting in supermarkets. By collectively punishing those who don't follow the norms, for example by giving stern looks, gossiping or confrontation, a lot of things are run much more smoothly.

It turns out, as Robin Hanson and Kevin Simler explain in #theelephantinthebrain, that the function of norms in society play a big part in why humans aren't fully conscious about the motives behind their actions. The reason is that we then can cheat (on norms) more effectively.

For example: Occasionally it is acceptable to brag or to show off, but not too much or those in our surrounding will bring us down a peg or two. Though we all want people to notice our good qualities, skills and achievements. For this reason we need to be more subtle about how we brag. We still do it (cheat on the norm of being humble), but we want to do it in a way that those around us think it was unintentional. In many occasions we don't even understand what we are doing ourselves.

THE ELEPHANT IN THE BRAIN - Kevin Simler and Robin Hanson

This is a book about how we as humans aren't fully conscious about the motives behind our actions. In particular, this applies more so to ugly, selfish motives. We pretend to have noble and altruistic motives but we don't just fool others, out brains are designed to also deceive ourselves.

This book not only explain why evolution produced such an outcome in humans, it also use this knowledge to explain how our self-deception affect the social, economic and political institutions in our societies.
Why do we laugh? Why are we so obsessed with news? Why do we give to charity? Why do religions exist? Why do we brag about travel? Why do people vote? And many more interesting questions can be answered with this knowledge.

I absolutely love this book, while many people have written on similar subject of human irrationality and peculiarities in society, this book really put these snippets of knowledge in a bigger perspective. A book I highly recommend reading!

#theelephantinthebrain #robinhanson #kevinsimler

Here are two examples of what “a field guide to lies and statistics” by Daniel Levitin is about.
GIGO: garbage in garbage out. When the data is flawed, the conclusions drawn are not much worth.

When someone makes a claim about for example the rate of suicides among gay teenagers, we should not accept it without hesitation but ask: how can someone know this? It’s not like it’s possible to determine the sexuality via a autopsy. This doesn’t mean we always should reject claims on matters of this kind, but that we should at least think critically.

The second example concerns the way a lack of understanding of probability can be disastrous in some situations, such as the legal world and that an expert in paediatrics isn’t necessarily an expert in epidemiology or statistics.

#afieldguidetolies #afieldguidetoliesandstatistics #daniellevitin #statistics #datascience #probability #economics #thinkingfastandslow #danielkhaneman #mathematics #bayesianstatistics #bayesrule


Some time ago I wrote about “How to lie with statistics”, by Darrell Huff. It’s a nice short book on some of the basics in statistics and the traps and tricks to be vary about. I would say that this book by Levetin is pretty much an upgraded version of that book!
While “how to lie with statistics” only discuss the ways statistics and graphs can deceive and mislead, this book goes deeper on that subject, but it also explains how the phrasing of words can deceive and why. In the third section, Levetin goes into the basics of the scientific method as well.
One shouldn’t expect to become an expert on the subjects in this book, but it’s a good introduction and include a lot of references for further reading for the interested. It is after all a popular science book - not a text book, and it’s full of interesting and enlightening stories which makes it easy to read.
(My favourite part is the one of probabilities where he explain bayes’ theorem 💛)
. .
#afieldguidetoliesandstatistics #daniellevitin #statistics @daniellevitinofficial

Here are some statistics I found interesting: while conventional wisdom tell us that with the internet (and in particular social media) have segregated us politically, by making it possible for us to filter out people with differing views from our feeds. It might be true, though the data can’t confirm this, instead, we are more likely to meet someone with opposite views online than offline. (pages 140, 141, 142 and 144)

Having more data isn’t always better. The usefulness of big data isn’t that it necessarily will provide better answers to the same questions.

Instead, big data enables us to ask new kinds of questions. For example, when we have a lot of data, it’s possible to compare very narrowly specified groups based on demographics, preferences or perhaps geography. There are also completely new types of data that can be used such as google search data, which again allows us to answer completely new question.

#economics #everybodylies #sethstephensdavidowitz #datascience #bigdata

EVERYBODY LIES - Seth Stephens-Davidowitz

This book is very similar to ‘freakonomics’ by Levitt and Dubner, which show how creative researchers can provide interesting answers to quirky questions by thinking out of the box. This book does very much the same thing with the message that big data will revolutionize social science research in the years ahead.

One source of data that Seth especially points to is Google search data. While surveys are unreliable because people don’t tell the truth (why would they, there’s no incentive to do so), the traces left behind from their online activities can tell us what they really think and feel. With the tools of data science, that kind of data can tell us how racism can be combated, how many people are gay, what makes a story go viral and so so much more.

The research described in this book is clever, interesting and it has me excited for what research will be done in the future! My favourite chapter is the sixth, where Seth describes how big data will allow us to conduct new types of experiments, and he goes onto explain how controlled trial experiments work and why it is the golden standard of research design. Great stuff!

#statistics #datascience #economics #research #economics #socialscience #bigdata #econometrics #everybodylies #sethstephensdavidowitz

If the market mechanism is efficient in allocating resources in the economy, then why do firms exist? Inside firms, there’s no trade, instead they are mini command economies.

David Friedman explains in “hidden order” that firms exist because of transaction costs. An economy without firms - where every individual only exchanged with other individuals for what they could produce and what they wanted to consume - wouldn’t be very efficient.

Competition between firms ensure that efficient companies thrive and inefficient firms die, so that in the end the whole economy os efficient.

Excerpts from hidden order, by David Friedman, pages 111, 113 and 114 #hiddenorder #davidfriedman #economics #economy #marketeconomy #transactioncosts

Compared to other popular economics books, this one stands out in a couple of ways. Friedman starts with the basics on how the price is set for a single good and slowly builds the whole economy where many consumers and producers interact. Eventually he adds on complexities such as why firms exist, and how evolving technology and the uncertainty of the world changes the economic analysis in interesting ways. It really is a great way to get the big picture on the economy.
Friedman don’t refrain from using some mathematics when explaining economic concepts, for this reason I wouldn’t recommend this to someone who haven’t read any economics books before. But math is a really important part when economists create models of human behaviour, so for this reason I’d say it’s a great book for someone who is interested in learning more than just the most basics. I wish I’d read this back when I was studying the introductory economics course, as it pretty much cover all of that stuff, but in a more pedagogical way.
Lastly, I want to say that Friedman is very good at acknowledging not only how and why the market is imperfect but also when, why and how politics can fail to correct the flaws of the market. There are also a tonne of great references for further reading for the curious one.
#hiddenorder #davidfriedman #economics

Excerpts from ”The social order of the underworld: How prison gangs govern the American penal system” by David Skarbek

This is a book taking a look at the prison system in America with the economists glasses. It provides answers to questions such as why prison gangs started to develop inside correctional facilities in the USA in the 1950s. What was it that made “the (convict) code”(norm based governance) disappear and be replaced by prison gangs?

Skarbek explain that prison gangs supply “governance institutions”, for example by providing protection for its members and facilitate trade between inmates.

It’s a clever book, highly recommended for the interested in areas of political economy or political science.

The prison system, at least in the US, is pretty much its own separate society. Even though prisoners can’t rely on the formal legal and social institutions of the outside world to promote social order and economic activity. They have their own set of governance institutions that prevent chaos.
Before the 1950s, “The convict code” served this purpose. But as the number of incarcerated people rose, it broke down and instead prison gangs emerged in its place.
If you are curious in political economy, studying politics with the use of the economic science, then this is an awesome book for you.
It’s more academic than some other books I’ve recommended that deal with similar subjects such as “Narconomics” (about politics and economics of drug cartels) and “The invisible hook” (about politics and economics of pirate societies). If you are looking for some light reading in the sun, perhaps those are easier to start with.
#thesocialorderoftheunderworld #davidskarbek #economics #politicalscience #governance #politicaleconomy

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