Hot Best Seller

Good Economics for Hard Times: Better Answers to Our Biggest Problems

Availability: Ready to download

Figuring out how to deal with today's critical economic problems is perhaps the great challenge of our time. Much greater than space travel or perhaps even the next revolutionary medical breakthrough, what is at stake is the whole idea of the good life as we have known it. Immigration and inequality, globalization and technological disruption, slowing growth and Figuring out how to deal with today's critical economic problems is perhaps the great challenge of our time. Much greater than space travel or perhaps even the next revolutionary medical breakthrough, what is at stake is the whole idea of the good life as we have known it. Immigration and inequality, globalization and technological disruption, slowing growth and accelerating climate change--these are sources of great anxiety across the world, from New Delhi and Dakar to Paris and Washington, DC. The resources to address these challenges are there--what we lack are ideas that will help us jump the wall of disagreement and distrust that divides us. If we succeed, history will remember our era with gratitude; if we fail, the potential losses are incalculable. In this revolutionary book, renowned MIT economists Abhijit V. Banerjee and Esther Duflo take on this challenge, building on cutting-edge research in economics explained with lucidity and grace. Original, provocative, and urgent, Good Economics for Hard Times makes a persuasive case for an intelligent interventionism and a society built on compassion and respect and show how economics, when done right, can help us solve the thorniest social and political problems of the day. It is an extraordinary achievement, one that shines a light to help us appreciate and understand our precariously balanced world.


Compare

Figuring out how to deal with today's critical economic problems is perhaps the great challenge of our time. Much greater than space travel or perhaps even the next revolutionary medical breakthrough, what is at stake is the whole idea of the good life as we have known it. Immigration and inequality, globalization and technological disruption, slowing growth and Figuring out how to deal with today's critical economic problems is perhaps the great challenge of our time. Much greater than space travel or perhaps even the next revolutionary medical breakthrough, what is at stake is the whole idea of the good life as we have known it. Immigration and inequality, globalization and technological disruption, slowing growth and accelerating climate change--these are sources of great anxiety across the world, from New Delhi and Dakar to Paris and Washington, DC. The resources to address these challenges are there--what we lack are ideas that will help us jump the wall of disagreement and distrust that divides us. If we succeed, history will remember our era with gratitude; if we fail, the potential losses are incalculable. In this revolutionary book, renowned MIT economists Abhijit V. Banerjee and Esther Duflo take on this challenge, building on cutting-edge research in economics explained with lucidity and grace. Original, provocative, and urgent, Good Economics for Hard Times makes a persuasive case for an intelligent interventionism and a society built on compassion and respect and show how economics, when done right, can help us solve the thorniest social and political problems of the day. It is an extraordinary achievement, one that shines a light to help us appreciate and understand our precariously balanced world.

30 review for Good Economics for Hard Times: Better Answers to Our Biggest Problems

  1. 5 out of 5

    Jason Furman

    This book has a huge amount of good economics. It surveys a wide range of areas: labor, tax, growth, politics, immigration, trade, and generally provides up-to-date discussions of some of the latest literature. The discussions of development--particularly India--are subtle, nuanced and thought provoking. A lot of the evidence is in the form of randomized control trials (RCTs), Abhijit Baanerjee and Esther Duflo are as committed to the method and process as they are to any particular conclusions. This book has a huge amount of good economics. It surveys a wide range of areas: labor, tax, growth, politics, immigration, trade, and generally provides up-to-date discussions of some of the latest literature. The discussions of development--particularly India--are subtle, nuanced and thought provoking. A lot of the evidence is in the form of randomized control trials (RCTs), Abhijit Baanerjee and Esther Duflo are as committed to the method and process as they are to any particular conclusions. They are also consistently skeptical of neoclassical theorizing on the basis of first principles, and particularly critical of the ideas of people's preferences as having special weight (a la Becker and Stigler) because they see these preferences as shaped by society and malleable. Banerjee and Duflo do not limit themselves to RCTs and attempt to discern what can be learned without them on a variety of topics, although they mostly throw their hands up at the impossibility of understanding some of the big questions in growth--like what other countries would need to do in order to achieve Chinese-levels of growth. The book also has an interesting shifting back and forth between the advanced economies and developing ones, drawing out similarities but also contrasts between them that help better understand each. Often this technique and presentation works, but sometimes it does not and creates a slightly disjointed feel. What was disappointing to me--and I say this relative to my high expectations based on the authors, their research, and also their previous book Poor Economics: A Radical Rethinking of the Way to Fight Global PovertyPoor Economics--was that when it came to the biggest contemporary hot button issues they left all nuance and care behind to present selective evidence for an overly simplistic narrative that would be comforting to typical progressive reader without challenging any of their preconceptions. Moreover, they framed their view too much in terms of "good economics vs. bad economics" and the "facts" when it was actually a very substantial dose of values that were in play (many of which I agree with) along with a subset of the facts that would be more suitable to a polemic than a self-styled balanced presentation. Four examples: 1. On immigration, they present a 100 percent positive picture while denying that there has been a very rapid and in many countries unprecedented change in the composition of the population. I happen to think this change is wonderful, but understand that many others do not--and their perception of the facts is not entirely wrong. Banerjee and Duflo, however, essentially deny these facts writing, "MIGRATION IS BIG NEWS, big enough to drive the politics of much of Europe and the United States. Between President Donald Trump’s imaginary but enormously consequential hordes of murderous Mexican migrants and the anti-foreigner rhetoric of the Alternative for Germany, the French Rassemblement National, and the Brexit crew, not to mention the ruling parties in Italy, Hungary, and Slovakia, it may be the single most influential political issue in the world’s richest countries… Why the panic? The fraction of international migrants in the world population in 2017 was roughly what it was in 1960 or in 1990: 3 percent…. Racist alarmism, driven by a fear of the intermingling of races and the myth of purity, doesn’t heed facts." The "facts," however, from the same source they cite for the 3 percent statistic is that the foreign-born share of high-income countries has risen from 7.6% in 1990 to 14.1% in 2017 with even faster rises in several of the countries they cite. "Facts" and "economics" do not settle the debate about whether this change is wonderful or threatening and demeaning the people who find it threatening as factually delusional does not help build understanding, change minds, or advance good economics. 2. The discussions of inequality have a similar feature. Words like "exploding inequality" and "hard times" overstate what the data say. A wide range of data show that a inequality is high and has increased, but Baanerjee and Duflo rely too uncritically on just one source and perspective on the data (Piketty, Saez and Zucman), missing out on the nuance they bring to other areas of discussion. In the process, they don't address the methodological choices made by these authors or present any facts that run counter to their narrative (e.g., CEO pay relative to median worker pay has been flat for two decades now, the very richest Americans are less likely to be inherited wealth than in the past, mobility is higher at the bottom of the income distribution than the top, income of the bottom quintile or the median is very highly correlated with average incomes across countries, the fiscal system has become more redistributive, etc.) Overall, the term "dark times" that a is the subtitle and leitmotif of their book seems somewhat off for the United States (when in the past would rather be alive than today?) and is particularly off for a book that devotes substantial fraction of its focus to India and other developing countries, places that are growing rapidly and have lifted massive numbers of people out of deep poverty (points they also make in the book). I have no dispute that we could and should do a lot better in the United States and around the world (inequality is too high, income growth and mobility too low, etc.), just wished the evidence was a presented with more nuance. 3. The discussion of taxes is a useful corrective to the wild-eyed claims of many conservatives about the huge growth potential of cutting taxes. But in the course of this corrective, the authors' almost appear to deny that incentives matter at all, that taxes can affect welfare and macroeconomic outcomes, and the like. Some of the evidence they present for these propositions is high quality, as in top journals. But others were observations like tax rates were high in the 1950s and growth was high, ergo taxes don't hurt growth, statements that do not meet the evidentiary standards they set elsewhere and that express more confidence in a precise estimate of zero on the impact of taxes as opposed to failing to reject. a null of zero or even the magnitude of uncertainty they appropriately express in the chapter that discusses growth. 4. My fourth example is much less clear cut, more of a disagreement than a clear cut issue. But I think Banerjee and Duflo overly caricature trade economics as an apologia for trade that has almost entirely ignored inequality, something I think is too simplistic a presentation of a field that has its modern theoretical origins in Heckscher-Ohlin and Stolper-Samuelson which are all about inequality (and discussed extensively in Good Economics). Moreover, I think the authors' place too much weight on the Autor, Dorn and Hansen China Shock literature which I view as largely about the gross costs of trade not the net costs of trade because they fail to capture the general equilibrium effects and the tremendous gains from exports. Moreover, it is not clear if the China Shock tells us about China's entry into the WTO or China's growth, likely it is more the later than the former--which matters because it is more about developments in China than policy changes in the West. I also think their discussion of the "dirty little secret" that the gains from further trade liberalization are small in advanced economies puts too little weight on the fact that standard static Ricardian models may miss gains that come from increased competition, a larger market for innovation, learning by exporting, increased specialization in innovation, supply chains, and regulatory reciprocity or even harmonization. I don't know how big the gains from all of these are, they do not lend themselves to precise modeling, but it is possible they are substantially larger than the Ricardian effects that do lend themselves to precise quantification. The above really emphasizes everything I disagreed with, but I want to reiterate what I began with--much of the book is a fabulous, sophisticated, exciting discussion of economics and what it can teach us about some of the most important issues in the world today. These criticisms are out of respect for the mission the authors accomplish in much of the book--to present a balanced picture of the facts, the good economics that interprets these facts, while also being honest about our uncertainty and the limits on our understanding.

  2. 4 out of 5

    Jean

    This book is written by a husband and wife team who just won the Nobel Prize in Economics. The book is well written and researched. In fact, it is surprisingly easy to read and understand for a lay person. The authors take a global approach to the subject. What impressed me was the fact they actually did research and analyzed data to find out what worked or not. They examined the most crucial issues the world faces such as migration, trade wars, inequality and climate change. They said “the book’ This book is written by a husband and wife team who just won the Nobel Prize in Economics. The book is well written and researched. In fact, it is surprisingly easy to read and understand for a lay person. The authors take a global approach to the subject. What impressed me was the fact they actually did research and analyzed data to find out what worked or not. They examined the most crucial issues the world faces such as migration, trade wars, inequality and climate change. They said “the book’s urgent task is to emphasize that there are no iron laws of economics keeping us from building a more humane world.” I was impressed with their methodical deconstruction of fake facts. I found this book most interesting and highly recommend it. I read this as an audiobook downloaded from Audible. I am going to buy a hardback copy to keep as a reference book. The book is fourteen hours and forty-five minutes. James Lurie does a good job narrating the book. Lurie is an actor, voice-over artist and a well-known audiobook narrator.

  3. 4 out of 5

    Thomas Rososchansky

    Uhhhh yeah good I guess

  4. 5 out of 5

    Ryan Boissonneault

    Aristotle warned us against expecting more precision from a subject than it allows. As Aristotle wrote, “for it is the mark of an educated mind to seek only so much exactness in each type of inquiry as may be allowed by the nature of the subject-matter.” The idea that economics commands the same level of precision as physics has led to the perpetuation of several misconceptions and dogmas. That the authors fully understand this is a testament to the book. The authors are not dogmatic, nor are Aristotle warned us against expecting more precision from a subject than it allows. As Aristotle wrote, “for it is the mark of an educated mind to seek only so much exactness in each type of inquiry as may be allowed by the nature of the subject-matter.” The idea that economics commands the same level of precision as physics has led to the perpetuation of several misconceptions and dogmas. That the authors fully understand this is a testament to the book. The authors are not dogmatic, nor are they apologists for any particular ideology; in each chapter, they summarize what the latest economic research tells us, and, more importantly, what it does not or cannot establish with any degree of certainty. Like any book with complex arguments and subtle distinctions, the criticism will come from all sides. While the authors undoubtedly lean left, there will be those who feel they don’t lean left far enough, while those on the right are destined to label the book as “socialist propaganda.” The truth, of course, is somewhere in between, as the authors summarize the latest economic research on each topic to arrive at intellectually honest interpretations of the data, making this book a model for how economics should be taught and studied. The authors don’t pretend to be all-knowing, but if you think that tax cuts for the wealthy stimulates growth, for example, you have more than 40 years of contradictory research and statistics to contend with. Likewise for immigration as the cause of depressed local wages or the reliance on the “free market” for efficient (or desirable) outcomes. The research just does not support these common beliefs or the simplistic theory that holds them up. The real world acts very differently than the economic models predict, so if you’re interested in actual results and statistics—rather than what economic theories tell us should happen—then this book is for you. So what is the way forward? No one knows for sure, but we do know that sacrificing the common good in the name of economic growth is almost always misguided. In addition to not knowing what stimulates growth in the first place, economic growth (as measured by GDP) means little to most of us if all the growth goes to the super-wealthy. Perhaps the job of the government is not to identify the factors of economic growth so much as to make the standard of living higher for the average person.

  5. 5 out of 5

    Veronica

    The old is dying and the new cannot be born; in this interregnum all manner of morbid symptoms appear. Gramsci - An influx of new workers will shift the demand curve right since the newcomers spend money and thus increase overall consumption. The influx increases the demand for labor and increases the supply of laborers. With the arrival of migrants, native low-skilled workers may engage in occupational upgrading: employers reorganize production to make effective use of the new workers. “There is The old is dying and the new cannot be born; in this interregnum all manner of morbid symptoms appear. Gramsci - An influx of new workers will shift the demand curve right since the newcomers spend money and thus increase overall consumption. The influx increases the demand for labor and increases the supply of laborers. With the arrival of migrants, native low-skilled workers may engage in occupational upgrading: employers reorganize production to make effective use of the new workers. “There is evidence that if the demand channel is shut down, migration may indeed have the ‘expected’ negative effect on native…the immigrants may not produce growth for their new communities unless they spend their earnings there; if the money is repatriated, the economic benefits of immigration are lost to the host community.” - Established workers are much more secure from competition from newcomers. Advantage of incumbency. - Efficiency wage: the wage the firm must pay to get workers to work has to be high enough that being fired actually hurts - Immigration of skilled workers helps low-skilled natives, who benefit from cheaper services at the cost of worsening labor prospects of domestic population with similar skills. - Stolper-Samuelson theorem: A country relatively abundant in labor will have comparative advantage in producing labor-intensive product. → labor rich country to specialize in labor-intensive products and move out of capital intensive ones → Raises the demand for labor compared to when there was no trade and therefore wages. In a relatively capital abundant country, the price of capital should go up (wages should go down) when it trades with more labor abundant countries. Labor abundant countries tend to be poor and laborers are usually poorer than their employers → freeing trade should help the poor in poor countries (inequality should fall) and should hurt US workers’ wages and benefit Chinese workers. But free trade raises GNP which means workers in the US can be made better off if society taxes the winners from free trade and distributes the money to the losers. - Free trade considerations: reverse causality, omitted causal factors (did liberalization really cause strong growth rates post-1991? or was it a result of attendant factors). Inequality has increased post trade-liberalization episodes in Latin America. - Labor markets tend to be sticky: people do not move even when labor market conditions would suggest it: wages are not automatically equalized. In some district (empirical study) the more exposed a particular was to trade, the slower poverty reduction was in that district. The negative effect of trade liberalization on poverty was exacerbated in states where strict labor laws made it difficult to fire workers and shrink unprofitable firms. Capital also tends to be sticky. - Since resources are sticky in developing countries, trade liberalization may cause wages to go down contra the theory above even in labor abundant developing countries. - The clustering of industries exacerbates the consequences of a trade shock. - The US import share is relatively low. The gains from international trade are small for a large economy like US. The redistribution of gains from trade is fraught. Protectionist tariffs will not help. - Large developing countries suffer from a lack of internal integration and connectivity. Poor internal integration hampers gains from international trade by making economies sticky. - A la Adam Smith (1776): “The division of labor is limited by the extent of the market," isolated communities cannot have productive firms. - Solutions to trade: expand a program like the Trade Adjustment Act to provide training to those most impacted by trade shocks. Encourage internal migration and seamless integration of movers to help adjustment to trade shocks by mitigating the immobility of people and resources. Subsidize firms adversely affected by trade as long as they keep employing older workers. - Beckler-Stigler construct of standard preferences assumes that preferences are coherent and stable. Herd behavior generates informational cascades: the information on which the first people base their decision will have an outsized influence on what all the others believe. Fads are not necessarily inconsistent with the paradigm of standard preferences. - Stereotype threat: self-discrimination is often self-reinforcing. People perform differently when they are reminded of their group identity, which makes them doubt themselves even more….white math male and engineering majors who received high scorers on the math portion of the SAT did worse on a math test when told the experiment was intended to investigate why Asians appear to outperform other students on tests of math ability.’ - Coherent arbitrariness. (Kahneman and Thaler) - “The crabbed language of internet communication encourages directness and abbreviation, contributing to the erosion of the norms of civic discourse.” - Contact hypothesis: under appropriate conditions, interpersonal contact is one of the most effective ways to reduce prejudice. (1954; Allport) But contact may not be sufficient; it may be necessary to have shared goals. - Capital scarce economies grow faster because new investment is highly productive. - Solow’s theory of convergence is fraught. Faster flow of ideas in rich economies compensates for the standard law of diminishing returns and helps explain why capital earns the same return in India as in the United States (contrary to our expectations) - The difference in GDP between wealthy and poor economies cannot be explained by the scarcity of capital alone. - Regional spillovers are real, but not potent enough to sustain national growth. - There is no evidence that tax cuts like the Reason tax cuts changed the long-run growth rate. One study showed that tax cuts benefitting the top 10 percent produced no significant growth in employment and income. Tax cuts for the bottom 90 percent did. - Cross-country growth regressions have been used to determine which policies drive or affect economic growth in a country. - In developing countries, re-allocating capital across firms would erase the TFP gap engendered by misallocation. Stringent labor market regulations prevent the efficient reallocation of resources. - Middle-income trap. - An additional robot in a commuting zone reduces employment by 6.2 workers and depresses wages. Pronounced employment effects in manufacturing. - Bias in US tax code taxing labor at higher rate than capital leads to the unproductive employment of automation. - Premiums paid to financial sector employees are rents which distort the functioning of the labor market. (Evidently. Does anyone truly believe financial analysts are that much more productive than other job holders requiring comparable education?)

  6. 5 out of 5

    Anandh Sundar

    The book gives anecdotes from RCT(randomized trials) and research papers, to provide their supposedly objective view on how to perceive economics's impact on those adversely impacted by globzliation. The book has some good insights as to why less people immigrate than expected, and if they do why the job market is slow to absorb them, the high government wage impact on the labour job market, the UBI(Universal basic income) story etc. This is an immensely readable one. The reason I docked a star The book gives anecdotes from RCT(randomized trials) and research papers, to provide their supposedly objective view on how to perceive economics's impact on those adversely impacted by globzliation. The book has some good insights as to why less people immigrate than expected, and if they do why the job market is slow to absorb them, the high government wage impact on the labour job market, the UBI(Universal basic income) story etc. This is an immensely readable one. The reason I docked a star is that it does not provide manifestos or solutions, and tries to import too many examples from Europe that may not apply here

  7. 5 out of 5

    Marks54

    This is a book by the two most recent winners of the Nobel Prize for economics. They are husband and wife and they have made their careers by studying economics largely among poor people (a southern rather than northern focus). They also coauthored “Poor Economics”, which also is well worth reading. They are highly unusual among the economists who gain the most traction in the US for multiple reasons: 1) they do experiments (RCTs), 2) they are interested in how theory and practice fit together, This is a book by the two most recent winners of the Nobel Prize for economics. They are husband and wife and they have made their careers by studying economics largely among poor people (a southern rather than northern focus). They also coauthored “Poor Economics”, which also is well worth reading. They are highly unusual among the economists who gain the most traction in the US for multiple reasons: 1) they do experiments (RCTs), 2) they are interested in how theory and practice fit together, especially in terms of empirical support; 3) they are wary of simple nostrums that have come to economic policies and writings and instead start from notions of dignity, even for poor people; 4) they do not believe that economics has all the answers - although economics does have something to add to current policy debates. And finally, they write very well and have produced a book which is relatively easy to read - an accomplishment for economics trade books. The book is very accessible, even to those wary of tables and regression charts. So what is the intuition here? The book is a collection of chapters devoted to different topical areas, all of which are widely discussed in current discourse on political economy. You can guess them - immigration, trade, economic growth (or the lack thereof), taxes, the role of government, and programs for the poor. In each one, the authors try to sort out what the current “best thinking” and research results suggest is the “state of the art”. This is compared with both economic orthodoxy and popular political notions about economic topics. They show that what economists claim about policies is often inconsistent with what the best thinking and research in the area shows. This in turn is often strongly out of line with popular thinking on the same topics. The punchline is that paying attention to economic research and current thinking is worthwhile and capable of improving policy making. ...but the individual is not excused from drawing their own judgments and being an informed consumer of economic research. One should never take what “TV economists” talk on about as the last word - or even a good word. For example, there appears to be no credible evidence that tax cuts contribute to sustained and meaningful growth. It is not clear that economists - or anyone else - have superior insights on what causes growth and what can be done to promote growth in a country. There is an entire literature emerging on the need for intelligent but skeptical treatment of what economics does or does not offer to public policy. This book is a fine addition to that literature and is well worth reading.

  8. 4 out of 5

    Saffron

    Tackles all the big issues of our time (inequality, immigration, globalisation, automation, economic growth, poverty, discrimination, trade). Debunks a substantial number of myths and provides evidence for what is actually going on. Key takeaways include: labour markets are STICKY, cutting taxes on the wealthy does not improve income or employment (but cutting taxes on the bottom 90% does) even though the top tax rate in the US has gone down from >90% to 37% since 1950s, the Stolper Samuelson Tackles all the big issues of our time (inequality, immigration, globalisation, automation, economic growth, poverty, discrimination, trade). Debunks a substantial number of myths and provides evidence for what is actually going on. Key takeaways include: labour markets are STICKY, cutting taxes on the wealthy does not improve income or employment (but cutting taxes on the bottom 90% does) even though the top tax rate in the US has gone down from >90% to 37% since 1950s, the Stolper Samuelson theorem is pretty shaky and trade creates losers in ways not predicted by it, immigration has been found to produce no significant decrease in natives' wages, no one really knows how to make economic growth happen in developing countries, why finance culture sucks and has been insidious for e.g. pay structures in other industries, why inequality in the US (and countries governed similarly) has shot up in the last 35 years but not in a bunch of European countries. There's a lot of analysis condensed in these pages, and lots to digest - Duflo and Banerjee go some way to suggest solutions, but I think the meat of (and the value of) the book comprises the dissection of the difficult problems the world faces.

  9. 4 out of 5

    Ietrio

    How Evolution has generated Intelligent Design from the religious crowd, this is the apologetics of the Big Brother. Of course everyone will be better, in Heavens of course.

  10. 4 out of 5

    Rahul Adusumilli

    Couple of chapters, like the one on growth, are really really good. Rest are merely good. For a book whose motto is “Mostly, what is clear is that we don’t know and have no way to find out other than by waiting,” it is quite exhaustive. Kai Fu-Lee's AI Superpowers has a better last chapter on a similar topic than this book's last chapter. So mix and match?

  11. 5 out of 5

    Ben Gigone

    Interesting take on a variety of global subjects. Lots of good (backed-up) information to give insight into how our world has evolved.

  12. 4 out of 5

    Binit Agrawal

    A must read for our times. It deals with most of the problems our politics, society, environment and economy (across the world) are facing. It discusses the problems and proposes reasoned solutions for each. It raises some of the most important questions on the decisions being made today.

  13. 4 out of 5

    Ankit

    Abhijit Bannerjee and Esther Duflo open their book with an admission: It is “a book about where economic policy has failed, where ideology has blinded us, where we have missed the obvious”. However, they also hold out a lamp by writing “about where and why good economics is useful, especially in today’s world”. The book trails the most fraught economic issues - immigration, trade, growth, inequality, environment. Authors present the common ideological claims we’ve internalized and show how we Abhijit Bannerjee and Esther Duflo open their book with an admission: It is “a book about where economic policy has failed, where ideology has blinded us, where we have missed the obvious”. However, they also hold out a lamp by writing “about where and why good economics is useful, especially in today’s world”. The book trails the most fraught economic issues - immigration, trade, growth, inequality, environment. Authors present the common ideological claims we’ve internalized and show how we could be wrong. Sometimes terribly so. One may find the arguments presented to be too left leaning - development economists are often perceived that way - but are almost always cited with solid data. They are also presented with honesty - for example authors admit that they and economists in general have no idea about what causes economic growth.  Authors are known for their Nobel winning work on poverty alleviation. They advocate the need to care for people whom growth has left behind. Caring is not an option, but a moral responsibility. What would make the care successful is not the money but cultivating some understanding. The understanding that behind the economics of subsidies and aids is a human. And to that human, more than the money, he/she values their dignity, relationships and identity. The way governments pursue most aid programs - strips individuals of these very things they hold valuable. We don’t trust aid recipients to know what is good for them. It is this impression the authors try to chip away at. Good Economics for Hard times covers a panoramic view of the greatest economic challenges we are facing and attempts to plaster the fractured communication around it. We are asked to embrace complexity and accept that no easy answers exist. Markets are not the answer everyone hoped they would be. Past decades have shown a socialist state is not the answer either. It’s likely somewhere in between. And to guide through those answers are people - not statistics - to whom we owe a life of fulfilment and dignity.

  14. 5 out of 5

    sarah

    like most all books written for the general public by academics, this book definitely oversimplifies many of the realities and presents the world through a biased lens for the sake of a clean, easy-to-understand narrative. however much of what I feel like this book argues for is pretty much common sense: people want to be treated with respect and they want some purpose in life and they want to maintain social connections (no one wants to be obscenely rich in a relative vacuum), so almost the like most all books written for the general public by academics, this book definitely oversimplifies many of the realities and presents the world through a biased lens for the sake of a clean, easy-to-understand narrative. however much of what I feel like this book argues for is pretty much common sense: people want to be treated with respect and they want some purpose in life and they want to maintain social connections (no one wants to be obscenely rich in a relative vacuum), so almost the entirety of traditional economics logic based upon assuming people aren't like this pretty much breaks down when examined closely. of course, some of the research presented in this book isn't a whole lot more clear cut than previous economics research, since the kind of case studies these developmental economics people conduct are subject to the deep philosophical issues associated with scientific controlled experiments and data collection; namely, causation vs correlation, what "significant" data even means, whether an experiment can truly be impartial to bias, etc etc. however, the principles behind their conclusions are so simple (human respect) that it all sounds pretty legit. the distinction they draw between their economics research and actual policy implementation is pretty crucial and notable - yes, we should be helping poor people (because we live in society), but how to go about implementing policies is a whole complicated issue that requires more thought, time, and people that are not me who are willing to fight in the political realm of things.

  15. 5 out of 5

    Rachel

    This is a really well-organised (I was about to say 'well-plotted) book. Each section is coherent and follows logically from the last. The 'better answers' promised are a paragraph at the end of each chapter and are necessarily vague. The whole point of the book is that the problems we constantly hear about are more complicated than they seem, so naturally the solutions will be also. I particularly liked the chapter on immigration, aka why it doesn't happen remotely as much as people worry that This is a really well-organised (I was about to say 'well-plotted) book. Each section is coherent and follows logically from the last. The 'better answers' promised are a paragraph at the end of each chapter and are necessarily vague. The whole point of the book is that the problems we constantly hear about are more complicated than they seem, so naturally the solutions will be also. I particularly liked the chapter on immigration, aka why it doesn't happen remotely as much as people worry that it does (or that it should). "First, established workers are much more secure from competition from newcomers than a pure supply-demand model would have us believe. Their current employer knows them and trusts them; incumbency is a huge advantage." "The playing field is level if there are no connections. Once some people have connections, the market can unravel, with the consequence that most people become unemployable." "those who stopped using Facebook were happier across a range of self-reported measures of happiness and well-being and, interestingly, no more bored" Ha! There were two gaffes in that the writers talked about female homemakers 'not working' (I think you mean, doing a shit-ton of unpaid labour?) and that people with disabilities 'lost their dignity'. Still, I think their motives are good and this was carelessness rather than true sexism/ableism. "There are no iron laws of economics keeping us from building a more humane world" EXACTLY.

  16. 4 out of 5

    Tomasz Piotrowski

    Very interesting, mind-blowing information and theories. Worth reading.

  17. 4 out of 5

    Amanda Williamson

    Engaging, brilliant, and valuable for understanding the current state of the world and what does and does not work for policy. I was surprised to see that the authors strayed from evidence sometimes and offered their opinions but equally valued that they highlighted when this was the case and provided a very good rationale for the approach taken. The book covers an astounding array of topics, providing up to date insights on such things as open trade, migration, education, racism, and Stolper Engaging, brilliant, and valuable for understanding the current state of the world and what does and does not work for policy. I was surprised to see that the authors strayed from evidence sometimes and offered their opinions but equally valued that they highlighted when this was the case and provided a very good rationale for the approach taken. The book covers an astounding array of topics, providing up to date insights on such things as open trade, migration, education, racism, and Stolper Samuelson theorem... Absolutely worth a read. Both the book and the audiobook are fantastic. Adverse selection ”The problem is the less they want to pay, the more the owners of good used cars will want to hold on to them (or sell their cars to friends who know and trust them). Only those who know their car is about to collapse will want to sell on the open market. This process by which only the worst cars or the worst employees end up on the market is called adverse selection.” Why people don’t follow opportunities ”… the average American is not moving to where the growth is happening. If a worker loses his job because his region is hit by an economic downturn, and he contemplates moving to get a job elsewhere, the real estate question gets even more complicated. As long as he has his house, even if its resale value may be very low, at least he can live in it. If he doesn’t own the house, it is still true that he will benefit more from the fall in rents resulting from the meltdown in the local economy than a high-skilled worker, since housing is a larger part of his budget... the local housing market that typically accompanies a downturn therefore tends to, perversely, keep the poor from going other places. There are other reasons to stay put even if opportunities are scarce at home and better elsewhere; childcare...” Safety regulations are used to protect local goods ”during the 2008 crisis in the United States, the Food and Drug Administration suddenly became more likely to refuse, on food-safety grounds, shipments of imported foods coming from developing countries; for exporters from developing countries, the cost associated with shipments being refused quadrupled during the period! Obviously, the quality of shipments from Mexico could not have changed because of the subprime crisis in the United States, but because demand for avocados went down, it became all the more valuable to keep them out to protect local growers. Domestic pressures for protection mount during bad times and safety regulations are often used as an excuse to protect the domestic producers.” Doubting gains from trade ”First, the gains of international trade are fairly small for a large economy like that of the United States. Second, while the gains are potentially much larger for smaller and poorer countries, there is no magic bullet. Just as we saw in the chapter on migration that opening a border widely would not be enough to get everyone to move, removing trade barriers is not enough to ensure new countries can join the party. Declaring trade is free is not the magic bullet for development (or even for trade). Third, the redistribution of gains from trade has proven extremely tricky, and people negatively affected by trade have suffered, and are still suffering, a great deal.” Overcoming racism and prejudice: contact hypothesis ”Gordon Allport, a professor of psychology at Harvard, formulated what he called the contact hypothesis in 1954. This is the idea that under appropriate conditions, interpersonal contact is one of the most effective ways to reduce prejudice. By spending time with others, we learn to understand and appreciate them, and as a result of this new appreciation and understanding, prejudice should diminish. The contact hypothesis has been intensively studied. A recent review identifies twenty-seven randomized controlled trials (RCTs) investigating Allport’s idea. Overall, these studies find that contact reduces prejudice...” Competition is good for innovation: monopolies stifle innovation ”the problem with the increased concentration at the national level is that to the extent it reflects a decline in the competition faced by these behemoths, it may actually lead to reduced innovation because it creates higher barriers for new entrants to disrupt an industry. In the logic of Aghion and Howitt, the promise of (temporary) monopoly power, through a patent, spurs innovation, and this innovation in turn results in the new technologies everyone will eventually be able to use. This is what causes growth. But if monopoly is guaranteed forever anyway, innovation and growth may slow down; a monopolist can sit on their hands and never invent anything new. Some evidence suggests something like this is happening now. In particular, a study found that when a large planned merger and acquisition in a sector narrowly fails to happen for some unpredictable reason (the judge was not lenient enough or the deal fell through), the sector remains more competitive for several years afterward. These sectors with “near misses” see the entry of more new firms, more investment, and more innovation. This result does suggest that the relatively low growth in TFP may in part be explained by the increase in concentration... it would be unreasonable to conclude that breaking up monopolies will single-handedly restore fast growth. After all, growth has also been sluggish in Europe, and European regulators have been much more aggressive against monopolies. This illustrates, once again, the only clear lesson of the last few decades. We don’t understand very well what can deliver permanently faster growth. It just happens (or not).” Reverse causality “efforts to discover what predicts growth make very little sense. Almost everything at the country level is partly a product of something else. Take education, for example, one factor emphasized in the early cross-country growth literature. Clearly education is in part a product of the effectiveness of the government in running schools and funding education. A government good at delivering education is probably good at other things as well; maybe the roads are better in the same countries where teachers show up to work. If we find growth is faster where education is higher, it could be due to these other policies it tends to be bundled with. And of course it is likely that people feel more committed to educating their children when the economy is doing well, so perhaps growth causes education, and not just the other way around. More generally, both countries and country policies differ in so many different ways that in effect we are trying to explain growth with more factors than the number of countries, including many we may not have thought of or cannot measure.” Settler mortality as a predictor of growth ”Daron Acemoglu, Simon Johnson, and Jim Robinson (affectionately known as “AJR”) contains the most striking of these. They showed that countries where, in the initial years of European colonization, mortality among the early settlers was high still tend to do badly today. AJR argue that is because Europeans preferred not to settle there; instead they set up exploitative colonies where the institutions were designed to allow a small number of Europeans to lord it over vast numbers of natives who labored to grow sugarcane or cotton or to mine diamonds that the Europeans would then sell. By contrast, the places that were relatively empty to start with (think of New Zealand and Australia, for example) and where settler mortality from malaria and other such diseases was low, were the places where Europeans settled in large numbers. As a result, these places got the institutions the Europeans were then developing and that would eventually provide the basis of modern capitalism. AJR show that settler mortality several hundred years ago is an excellent predictor of, say, how business friendly contemporary institutions are in a particular country. And the countries that had low settler mortality once upon a time and are business friendly today tend to be substantially richer.” Carbon emissions ~ the rich consumers are to blame... ”China is the single largest emitter of carbon. This is, carbon. This is, however, largely due to goods produced in China but consumed elsewhere in the world. If we attribute the emissions to where the consumption takes place, North Americans consume 22.5 tons of CO2e per year per person, Western Europeans 13.1, Chinese 6, and South Asians just 2.2. Within developing countries, richer people also consume a lot more CO2 than the poor. The richest people in India and China belong to the select group of the top 10 percent of the most polluting people in the world (and contribute respectively 1 percent and 10 percent to the emissions of this group, or 0.45 percent and 4.5 percent of world emissions). In contrast, the poorest 7 percent of the population in India emit just 0.15 tons of CO2 per year per person. Overall, we get the 50-10 rule: 10 percent of the world’s population (the highest polluters) contribute roughly 50 percent of CO2 emissions, while the 50 percent who pollute the least contribute just over 10 percent. The citizens of rich countries and, more generally, the rich worldwide bear an overwhelming responsibility for any future climate change.” Wealth share due to tax ”The top 1 percent wealth share in the United States rose from 22 percent in 1980 to 39 percent in 2014. The story for the UK is very similar.” Backlash ”the explosion of inequality in an economy no longer growing has the risk of being very bad news for growth, because the political backlash leads to the election of populist leaders touting miracle solutions that rarely work and often lead to Venezuela-style disasters.... To some extent, the recent populist uprising in the United States is the beginning of this backlash. Behind it is a profound sense of disempowerment, a feeling, right or wrong, that the elites always decide, and in any case what they decide makes no difference for the average Joe or Jean. ...The rich may eventually see that it is in their self-interest to argue for a radical shift toward real sharing of prosperity, or it may end up being imposed on them in even less favorable ways. The reason is that the increase in inequality has been at the root of a deep increase in social anxiety and unhappiness.” Inequality and backlash in France ”In France, getting rid of the wealth tax was one of the first actions of the centrist Macron government after his election in 2017. As we saw, this was a very dangerous political move; the abolition of the wealth tax and the attempt to put in place a surcharge on fuel was the original motivation for the Yellow Vest protest movement. In an attempt to quell it, Macron promised a number of giveaways, but did not reinstate the wealth tax... But it seems unlikely that this state of affairs can continue unfettered without generating a massive backlash... inequality has also increased in France. Between 1983 and 2014, the average income of the richest 1 percent has risen by 100 percent and that of the richest 0.1 percent by 150 percent. Since GDP growth has been slow, standards of living for most people except the rich have tended to stagnate: over the same period, income increased only by 25 percent (less than 1 percent per year) for the remaining 99 percent. This has fueled growing mistrust of the elite and the rise of the xenophobic Rassemblement National. The recent round of tax reforms undertaken by the centrist Macron government has made tax less progressive: the flat tax was raised, the wealth tax is gone, and taxes on capital have been pared back. The official justification is that this is necessary to make France able to attract capital away from other countries. It may well be true, but it runs the risk of forcing other countries in Europe to cut taxes as well, prompting a race to the bottom. The American experience warns us this may be very hard to reverse. European countries need to cooperate to hold the line on their taxes.” Paradox: Ideology of self sufficiency ”In the United States, there is clearly an ideology of self-reliance, even though for many years it has been based, to a significant extent, on a fantasy—the states in the US where people take the most pride in their autonomy are also the ones most dependent on federal subsidies (Mississippi, Louisiana, Tennessee, and Montana top the list by federal aid as fraction of revenue).” Government does things no other institution will do ”The problem is that there is no substitute for a lot of things the government does (although of course many governments do more things than they should, like running an airline in India or a cement plant in China). When a tornado strikes, when an indigent needs healthcare, or when an industry shuts down, there is usually no “market solution.” The government exists in part to solve problems no other institution can realistically tackle. To demonstrate waste in government, one needs to show there is an alternative way of organizing the same activity that works better.... It is often precisely because governments do things the market will not touch that they become susceptible to corruption. Take the example of a fine for polluting. The polluter would gladly pay someone in the pollution control office a portion of the fine to make the evidence go away. But would things improve if a profit-maximizing private firm was collecting fines? Probably not, since they like money at least as much. Moreover, as the history of private tax collection (“tax farming”) tells us, incentivizing private agents to collect taxes (or fines) runs the risk they will extort those who are not liable as well.” Regulation may minimize corruption, but it also minimizes creative problem solving- something we need ”if it is assumed most people in government are either venal or lazy (or both), it makes sense to try to remove all decision-making power from them (and thereby banish all creativity and all creative people). This has a direct impact on what government officials can do. In a recent experiment in Pakistan, providing a bit more flexibility to the procurement officers of hospitals and schools by giving them some free cash to spend on basic supplies greatly improved their ability to negotiate low prices, leading to big savings for the government. Putting too many constraints on government officials and government contracts can discourage talent when it is the most needed.” Mistrust ”Forty years of promising that good things are just around the corner have created an environment where too many people trust no one, least of all the government.”

  18. 4 out of 5

    Ben

    Okay, but a lot of this book is fairly standard, mainstream economics, of the sort that you would find on an NY Times editorial page (minus the heavy politics). There's much less novelty than in "Poor Economics." In particular, what I liked best about that book was how much I learned about interesting randomized controlled trials (RCTs) in economics research. This book also mentions RCTs through most of it, but not all of it (!) and many of them only provide very weak evidence for the authors' Okay, but a lot of this book is fairly standard, mainstream economics, of the sort that you would find on an NY Times editorial page (minus the heavy politics). There's much less novelty than in "Poor Economics." In particular, what I liked best about that book was how much I learned about interesting randomized controlled trials (RCTs) in economics research. This book also mentions RCTs through most of it, but not all of it (!) and many of them only provide very weak evidence for the authors' arguments. (For example, that "only a social policy founded on respect for the dignity of the individual can help make the average citizen more open to ideas of toleration.") The more persuasive RCTs I often had already known about. It is also strange that the examples are almost all from the US and India. The idea is to give advice that covers both developed and developing nations, but this might be too ambitious. > Researchers decided to try out different ways of encouraging migration during monga in Rangpur in the north of Bangladesh. Some villagers were randomly selected by a local nongovernmental organization (NGO) to either receive information about the benefits of migration (basically what the wages were like in the cities), or the same information plus $11.50 in cash or credit (this amount was roughly the cost of travel to the city and a couple of days of food), but only if they migrated. The offer encouraged about a quarter (22 percent) of all households who would not have otherwise done so to send out a migrant. … When the NGO provided a randomly chosen group of people with information about the availability of jobs (but no incentive), the information alone had absolutely no effect. Moreover, among the people given the financial support who chose to make the trip, only around half went back during the next monga season, despite their personal experience of finding a job and making money. > For girls, the parental response to the advertising campaigns was unambiguously beneficial; compared to girls in villages that did not get the information campaign, girls in campaign villages were better educated, married later, and perhaps, more remarkably, were better fed and taller. For boys, however, there was no increase in education on average; boys expected to leave the village to earn money benefitted from the intervention, much like the girls, but boys whose parents wanted them to stay home and take care of them ended up getting less education. The parents, in effect, chose to handicap their sons to keep them at home. > Costinot and Rodríguez-Clare’s preferred estimate is that the gains from trade [for the United States] are about 2.5 percent of GDP. This is really not a lot. > Ethnic or bigotted voting is often just an expression of indifference. But that means it is surprisingly easy to make them change their minds by highlighting what is at stake in an election. In 2007, in Uttar Pradesh, an Indian state famous for its caste-based politics, Abhijit and his colleagues managed to make 10 percent of voters move their vote away from their own caste-party using only a combination of songs, a puppet show, and some street theater—all carrying the simple message "Vote on development issues, not on caste." Which leads us to our final and perhaps most important point. The most effective way to combat prejudice may not be to directly engage with people’s views, natural as that might seem. Instead, it may be to convince citizens it is worth their while to engage with other policy issues. > it is not true that poor countries as a rule grow faster than richer ones . The correlation between GDP per capita in 1960 and subsequent growth is very close to zero … Lucas computed that if the difference in GDP between the United States and India was to be explained by the scarcity of capital in India and nothing else, capital would have to be so scarce that its price (what is paid to the owner of the resources that finance the machines in the economy) would have to be fifty-eight times higher in India than it was in the United States … even though poor countries are indeed desperately short of skills and capital, their GDP per capita is even lower than this lack of resources would predict > their study compared the winners of bidding wars to attract companies to the first runners-up. They find that TFP of the plants already present in the winning county surged, consistent with there being large spillovers—TFP five years after the plants were set up was on average 12 percent higher in places that received the plant than the ones that just missed out > Companies that innovate need access to markets to sell their products. And some evidence suggests this is becoming increasingly difficult for new entrants. … growth has also been sluggish in Europe, and European regulators have been much more aggressive against monopolies. > for all the excitement generated by the Chinese miracle these days, very few economists in 1980 or even 1990 predicted it. Often, at the end of one of our talks someone rises and asks why whatever country we are talking about doesn't just emulate China. Except it is never clear what part of the Chinese experience we are supposed to emulate. > Indian firms grow much more slowly than US firms, but are also much less likely to shut down. In other words, the United States is an "up or out" economy, where people try something new and either succeed and make it big or fail after a few years. By contrast, the Indian economy is exceedingly sticky: good firms do not grow and bad firms do not die. … By the norms of what the United States calls good management, firms in developing countries are terribly managed. One might dismiss this as prejudice against other ways of managing. Indians in particular are very proud of their way of doing business on a shoestring, what they call jugaad > In the poorest countries, public-sector workers earn more than double the average wage in the private sector. And this is not counting generous health and pension benefits. This kind of difference can throw the entire labor market into a tailspin. If government-sector jobs are so much more valuable than private-sector jobs, but also very scarce, it is worthwhile for everybody to wait around and queue for those jobs. > If a country starts by using its resources very badly, like China did under communism or India did in its days of extreme dirigisme, then the first benefits of reform may come from moving resources to their best uses. Perhaps the reason why some countries, like China, can grow so fast for so long is that they start with a lot of poorly used talent and resources that can then be harnessed. This is neither Solow's nor Romer's world, in which a country would need either new resources or new ideas to grow. It might also suggest the growth could slow down rapidly, once those wasted resources have all been put to good use, and growth becomes dependent on additional resources > the Chinese authorities may also want to relax and accept the writ of Solow. Growth will slow. They are aware of it, and have made a conscious attempt to alert the Chinese people to this fact, but the growth targets they have set may still be too high. The danger is that it could put the leadership in a bind and lead them to make bad decisions in an effort to make growth come back, as Japan did before them > The magazine Nature concluded that insecticide-treated net distributions averted 450 million malaria deaths between 2000 and 2015. > there is also a lack of awareness that air pollution is a health issue. A recent Lancet study found that a large part of the deaths due to outdoor air pollution can be attributed to the burning of biomass (leaves, wood, etc.). But a significant part of this biomass is burnt on indoor stoves, which also generate a tremendous amount of indoor air pollution > Real blue-collar wages in Britain were almost halved between 1755 and 1802. Although 1802 was a particularly low year, they were on a declining trend between 1755 and the turn of the century, and it is only at the turn of the century that they started increasing again. They would recover their 1755 level only in 1820, sixty-five years later > This is the famous trickle-down theory, never better described than by Harvard professor John Kenneth Galbraith, who claimed this was what used to be called the "horse and sparrow" theory in the 1890s: "If you feed the horse enough oats, some will pass through to the road for the sparrows." > Before 1920, the top income share in France or Germany, Switzerland or Sweden, the Netherlands or Denmark was not too different from that in the US or UK. But sometime after 1920, inequality crashed in all of these countries, like in the United States, and stayed down, unlike in the United States. … in the United States, the increase in inequality between the average salaries at different companies can explain two-thirds of the overall rise in inequality (increase in inequality between workers within the same company explains the rest) > the very high top tax rates of the 1950s and 1960s, which applied only to extremely high incomes, was not so much to "soak the rich" as to eliminate them. Almost nobody ended up paying the top rates, because those very high incomes had all but disappeared. When the top tax rates went down to 30 percent, ultra-high salaries became attractive again. … Germany, Sweden, Spain, Denmark, and Switzerland, where top marginal tax rates stayed high, did not experience sharp increases in top income shares. In contrast, the United States, Ireland, Canada, the UK, Norway, and Portugal cut the top tax rates significantly and experienced large increases in top income shares. > Interestingly, the one argument no one makes is that players would play harder if only they were paid a little (or a lot) more. … The authoritative review of the literature by Emmanuel Saez and his colleagues concludes that real work effort does not respond to top tax rates, although effort to evade or avoid taxes does. For example, the Reagan tax cut of 1986 led to a large onetime increase in personal taxable income, which faded quickly. This suggests the increase in taxable income was mainly people bringing their previously hidden incomes into the (now friendlier) tax net rather than an increase in earnings and hence effort. > India kept raising the threshold above which people had to pay income taxes—on budget day, when new tax rates are announced, the raised threshold is often headline news. As a result, the share of the population that paid any income tax remained stable around 2–3 percent. In China, where the thresholds were not adjusted, the fraction of the population subject to the income tax went up from less than 0.1 percent in 1986 to about 20 percent in 2008. > In the 2019 elections in India, both major parties, for the first time, made a cash transfer to the poor a central element of their platform. Second, as countries started to experiment with the model and try out variants of it, it became clear the poor don’t need as much handholding as the design of the original CCTs implied. There has been a complete turnaround in the public conversation on redistribution, and the Progresa experiment and its successors contributed a lot to it. > It seems they did not want the shame of being excluded for poor performance and preferred to exclude themselves instead. As a result, a nonconditional transfer presented as a way to help families educate their children, rather than a condition, was more effective in increasing education for those fragile families (and just as effective for everyone else) > In the largest experiment (SIME/DIME), husbands who received the NIT reduced their hours of work by only 9 percent compared to those who did not, although wives who received the NIT reduced their hours by 20 percent. > While we are in favor of a UUBI based on what we know so far, there is no data yet on its long-term impact. Most of our evidence is from relatively short-lived interventions. We cannot be sure how people will react to being assured a basic income forever. When the novelty of the extra income wears off, will they go back to being discouraged and work less, or aspire higher and try harder? What will be the long-term impact on their families of being assured an income? > workers displaced in middle age lost between one and one and a half years of life expectancy. > among leisure activities, watching TV, using the computer, and napping gave the least immediate pleasure and the least sense of achievement. Socializing is one of the most pleasurable activities. It seems that it is very hard for people to individually figure out how to build meaning into their lives. Most of us need the discipline provided by a structured work environment, to which we then add significance or meaning … people who have more time on their hands (retirees, the unemployed, those outside the labor force) are if anything less likely to volunteer than those employed full time > In other words, if we are right that the real crisis in rich countries is that many people who used to think of themselves as the middle class have lost the sense of self-worth they used to derive from their jobs, UBI is not the answer. The reason we have different answers to the question in rich and poor countries is twofold. First, UBI is easy, and many poor countries lack the governance capacity to run more complicated programs. > Economists and many policy makers like the Danish model of "flexicurity." It allows for full labor market flexibility, meaning people can be laid off quite easily whenever they aren’t needed anymore, but the laid off are subsidized so they do not suffer much of an economic loss, and there is a concerted effort by the government to get the worker back into employment (perhaps after meaningful retraining). … we proposed the somewhat radical idea that some workers should be subsidized to stay in place. When a whole sector is disrupted by trade or by technology, the wages of the older workers could be partly or fully subsidized. Such a policy should only be triggered when a particular industry in an area is in decline, and reserved for older employees (above fifty or fifty-five) with at least ten (or eight or twelve) years of experience in a comparable position. > Young adults whose parents won the vouchers earned $1,624 more per year than those whose parents did not. They were more likely to have gone to college, they lived in better neighborhoods, and the girls were less likely to be single mothers. Some of these effects will therefore likely transmit to the next generation as well. What explains why some neighborhoods are "better" than others for mobility? > Students assigned to small classes had better lives later on, as measured by home ownership, their savings, their marital status, and the neighborhood they lived in > Two larger RCTs evaluat

  19. 5 out of 5

    Karla

    I had thought there would be more economic theory in this book; given the authors are famous economists (and the title), but it ended up being partly about economics and partly about politics. They tend to go together – as our main political parties believe in different economic theories. The book looks at history with a somewhat ‘who was in charge’ position to try to predict what we should do in the present and future. Sadly, the main theme of this book was ‘economists never get it right’. Much I had thought there would be more economic theory in this book; given the authors are famous economists (and the title), but it ended up being partly about economics and partly about politics. They tend to go together – as our main political parties believe in different economic theories. The book looks at history with a somewhat ‘who was in charge’ position to try to predict what we should do in the present and future. Sadly, the main theme of this book was ‘economists never get it right’. Much of the data presented is interesting and the point that we shouldn’t always assume we are due a growth economy is important. Unfortunately, those who likely should heed the few lessons the book outlines are not likely to read this book. Overall it was a bit depressing without enough guidance to a happy future – though they do warn nothing is easy and happy doesn’t necessarily mean strong growth.

  20. 5 out of 5

    Caitlin French

    Written by the 2019 Economics Nobel Prize winners, Good Economics for Hard Times uses the views of research economists (like the IGM Booth panel) and experimental evidence in a data-driven approach, to comment on: 1. Immigration - Dispelling false beliefs about immigration, and showing why the classic supply-demand theory doesn’t apply to immigration 2. Trade & Tariffs - Explaining how trade works, and how comparative advantage means countries should do what they are relatively best at doing - Written by the 2019 Economics Nobel Prize winners, Good Economics for Hard Times uses the views of research economists (like the IGM Booth panel) and experimental evidence in a data-driven approach, to comment on: 1. Immigration - Dispelling false beliefs about immigration, and showing why the classic supply-demand theory doesn’t apply to immigration 2. Trade & Tariffs - Explaining how trade works, and how comparative advantage means countries should do what they are relatively best at doing - Explaining how international trade actually hurts the poor in rich countries - Discussing the mostly negative effects of the 2018 Trump tariffs on steel and aluminium - Discussing China’s ‘export promotion policies’ which have helped it to grow “We would therefore expect a labour-rich country to specialize in labour-intensive products and move out of capital-intensive ones. This should raise the demand for labour compared to when there was no trade (or more restricted trade), and therefore wages. And, conversely, in a relatively capital-abundant country, we should expect instead that the price of capital goes up (and wages go down) when it trades with a more labour-abundant partner. Since labour-abundant countries tend to be poor, and laborers are usually poorer than their employers, this implies freeing trade should help the poor in the poorer countries, and inequality should fall. The opposite would be true in rich countries.” 3. Preferences vs Beliefs - Discussion on prejudice and how to encourage understanding and cooperation 4. The End of Growth? - The Solow Growth Model: an exogenous model driven by outside effects o TFP: Total Factor Productivity, ‘a measure of our ignorance’ o The idea of diminishing returns: when capital accumulates, productivity of capital decreases as there are not enough workers to work with it - Romer Model – *ideas* don’t run into diminishing returns - The idea of a sticky economy, resistant to change “Perhaps the reason why some countries, like China, can grow so fast for so long is that they start with a lot of poorly used talent and resources that can then be harnessed. This is neither Solow’s nor Romer’s world, in which a country would need either new resources or new ideas to grow. It might also suggest the growth could slow down rapidly, once those wasted resources have all been put to good use, and growth becomes dependent on additional resources.” “The most important question we can usefully answer in rich countries is not how to make them grow even richer, but how to improve the quality of life of their average citizen.” 5. Climate Change - China is the single largest emitter of carbon, but this is due to goods produced in China but consumed elsewhere in the world. If we attribute emissions to where consumption takes place, North Americans consume the most tons of CO2 per year per person - The authors support a carbon tax, where the revenues from these taxes could pay for environmentally-friendly technologies. This was the key work of William Nordhaus, who received the Nobel Prize in 2018 6. Taxes - The displacement effect of automation “One reason is the bias in the US tax code, which taxes labour at a higher rate than capital. Employers have to pay payroll taxes (used to finance social security and Medicare) on labour, but not on robots. They get an immediate tax rebate when they invest in the robot, since they can often claim “accelerated depreciation” for a capital expenditure, and if they finance it with a loan they also get to deduct the interest from their earnings. This tax advantage gives employers an incentive to automate, even if it would otherwise cost less to keep the workers.” - Thatcher & Raegan: the reduction of the highest tax rate and public spending on the grounds of increasing the size of the economic pie, along with ‘trickle-down theory’ “If there had been any trickle-down effect of lower taxes, as its advocates claimed, one would expect wage growth to have accelerated in the Reagan-Bush years. But the opposite happened. The labour share (the share of revenues used to pay wages) has continuously declined since the 1980s.” - Network effects, monopolies, globalisation - Tax evasion & the Panama papers “The authoritative review of the literature by Emmanuel Saez and his colleagues concludes that real work effort does not respond to top tax rates, although effort to evade or avoid taxes does.” - The suggestion of wealth tax: in 2019, Elizabeth Warren proposed a 2% wealth tax on Americans with assets above $50 million , and a 3% wealth tax on those who have more than $1 billion “Someone whose $50 million in wealth makes at least $2.5 million in investment income in the average year. A 2 percent tax on wealth ($1 million ) amounts to a 40 percent tax on this income, which is not outrageous.” - In 2017, the centrist Macron government got rid of the wealth tax, claiming it necessary to make France able to attract capital away from other countries – it was however a motivator for the Yellow Vest protest movement - The difficulty of wealth taxes: lobbying and tax-avoidance - Gabriel Zucman’s arguments for o a global financial registry to keep track of wealth no matter where it is o to reform the corporate tax system such that the global profits of multinational firms are apportioned to where they make their sales o to more strongly regulate banks and law firms that help people evade taxes through tax havens 7. Legitimacy of the state - The problem of eroding trust in the state 8. Universal Basic Income (UBI) - The cost of screening for and monitoring benefits payments - The example of India’s National Rural Employment Guarantee Act (NREGA) where each rural family is entitled to 100 days of work per year at minimum wage “Benoit Hamon, the socialist candidate to replace François Hollande as the president of France , tried to use it to revive his doomed campaign; Hillary Clinton mentioned it occasionally (she lost too); there was a referendum about it in Switzerland (but only a quarter of the voters voted for it); in India, it recently showed up in an official finance ministry document, and both parties competing in the election had some version of an unconditional cash transfer in their platforms, although in neither case was it universal.”

  21. 5 out of 5

    Sanket Barhate

    The book provides counter-intuitive perspectives on several burning issues such as trade, migration, discrimination, and welfare programs. The writer has done excellent job of convincing the reader to adopt new perspectives by supporting them with research. The book will also increase your awareness of increasing income inequality, its causes, and counter measures.

  22. 5 out of 5

    Anlam Kuyusu

    The book revolves around issues having to do with poverty and poverty relief. One of the key theses the authors argue for is that people don't move very much (if they can stay where they are) even if it is in their economic interest to do so. A lot go into settling in another city and unless people are absolutely forced due to war, violence or other such extreme conditions, people just don't migrate a lot. For instance, the authors write: " It is not only in developing countries that people do not The book revolves around issues having to do with poverty and poverty relief. One of the key theses the authors argue for is that people don't move very much (if they can stay where they are) even if it is in their economic interest to do so. A lot go into settling in another city and unless people are absolutely forced due to war, violence or other such extreme conditions, people just don't migrate a lot. For instance, the authors write: " It is not only in developing countries that people do not move to take advantage of better economic conditions. Fewer than 350,000 Greeks are estimated to have emigrated between 2010 and 2015, at the height of the economic crisis that shook their country.12 This represents at most 3 percent of Greece’s population, despite the fact that the unemployment rate was 27 percent in 2013 and 2014, and Greeks, as members of the EU, are able to work and move freely within Europe. " This may surprise those of us that who think that for example, if the US were to open its borders, the entire Mexican population would move to the US. The authors also document the many enriching effects of immigration in general. When immigrants move to a region, they increase the demand of goods and services in that region. Thus even if the new region has more labor supply (exerting downward pressure on the wages), it also has more demands for its goods and services (thus exerting upward pressure on the wages of the populace). These two forces tend to balance each other out. The authors cite the following elegant example in illustrating their point: " In fact, there is evidence that if the demand channel is shut down, migration may indeed have the “expected” negative effect on natives. For a short period of time, Czech workers were allowed to work across the border in Germany. At its peak, in the border towns of Germany, up to 10 percent of the workforce was commuting from the Czech Republic. There was very little change in wages for natives when this happened, but there was a large drop in native employment because, unlike all the other episodes we discussed above, the Czechs went back home to spend their earnings. Therefore, the knock-on effects on labor demand in Germany did not happen. The immigrants may not produce growth for their new communities unless they spend their earnings there; if the money is repatriated, the economic benefits of immigration are lost to the host community.29 We will then find ourselves back in the case of figure 2.1, where we are traveling the downward-sloping labor demand curve without a shift in labor demand to compensate. " The book is chock full of details like this. And it does a good job when it sticks to strictly the economics of poverty. One gripe I had was that in a lot of the places, the authors seem to show that democracy just doesn't work - poor people don't or can't vote in their own self-interest. An example: " More international trade, as we saw in chapter 3, hurts the poor in rich countries. This has provoked a backlash not only against trade, but also against the existing “system” and the elites. Autor, Dorn, and Hanson found that in US electoral districts more affected by the China shock, moderate politicians were replaced by more extreme ones. In counties originally leaning Democratic, centrist Democrats were replaced by more liberal ones. In counties originally leaning Republican, moderate Republicans were replaced by conservative Republicans. Counties highly affected by trade tended to be in traditionally Republican states, and therefore the overall effect of this was to push many districts toward more conservative candidates. This trend started well before the 2016 elections.87 The problem of course is that since conservative candidates tend to be against any form of government intervention (and redistribution in particular), they then exacerbated the problem that little was done to compensate those hurt by trade. For example, many trade-affected states governed by conservative Republicans refused federal funds to expand Medicare expansion. And this in turn fueled the resentment against trade. " I was frustrated by the fact that the authors would not endorse an anti-democracy stance, something which I do. The closest they come is this sentence here: "As we lose the ability to listen to each other, democracy becomes less meaningful and closer to a census of the various tribes, who each vote based more on tribal loyalties than on a judicious balancing of priorities" Another point of contention for me was in some chapters the authors rely too much on social psych studies, without giving any critical consideration to these studies. For example, the authors cite studies for the Pygmalion effect (if you tell a teacher that a random kid is bright, the kid will end up doing better due to expectation) but there are major problems with the original study. And no one's been able to replicate this celebrated study. So I had the feeling that the authors were not that as knowledgeable in social psychology as they were in economics. All of the social psych studies being cited in this book should be viewed with suspicion. The authors should have been more aware of the issues in replication crisis in psychology. Overall, I liked the book but I thought that it was too long - I admit to skipping the chapter on global warming because I just couldn't get interested in it. And I was also suspicious that the authors would make unsubstantiated proclamations outside their field of expertise. The book is so long that it sometimes feels a hodgepodge of topics the authors felt like writing about without the requisite focus. The authors should have at least halved the contents. I would advise any interested party to read only a few of the chapters - 2, 3 and 5 strike me as the high points of the book.

  23. 5 out of 5

    Chuck Kollars

    Overview of intersection of current "development economics" with "national politics". Much about India (one author is from India); quite a bit about the U.S. (both authors are Nobel-winning professors at MIT in Cambridge MA) and other English-speaking parts the former British Empire; and some about various European countries (one author is from Denmark). Very much directed at the lay reader: no footnotes (notes are collected in the back), no bibliography, no mathematical formulas or graphs, no Overview of intersection of current "development economics" with "national politics". Much about India (one author is from India); quite a bit about the U.S. (both authors are Nobel-winning professors at MIT in Cambridge MA) and other English-speaking parts the former British Empire; and some about various European countries (one author is from Denmark). Very much directed at the lay reader: no footnotes (notes are collected in the back), no bibliography, no mathematical formulas or graphs, no convoluted outrageously long sentences, no academic pretensions, style about the same as reading the Economist magazine or the NYTimes newspaper. Much emphasis is placed on actually running experiments ("random controlled trials" or RCTs), not theorizing or analyzing mathematically. (My understanding is this new approach to economics is what won the Nobels.) Finds that virtually all theories about economic behavior (starting with the infamous "personal responsibility") don't at all match what people actually do. Even in one case shows that peoples' predictions -in in-depth interviews- of _their _own future economic behavior don't match what they actually do in the next few years. (Also reports that the actual economic behavior of groups of people sometimes depends on what country they're from; with the most frequent and important differences being between 1st-world and 3rd-world countries.) Points out there are two different "economist" worlds. One is the academic world, people who teach and do research. They typically have advanced degrees. They are so wary of being misinterpreted by being oversimplified that they're reluctant to make any public statements at all. The other is the media world, people who advise corporations and investors. They are chosen mainly for their speaking skill, not their academic credentials. They get all the public attention, often by being a "talking head". There's very little interaction between the two groups; to have people form their opinion of "economists" from those in the media world, then apply that opinion to those in the academic world, is like expecting to have the same opinion of "apples" and "bananas" because they're both fruits. The general tone of the book is upbeat (despite describing a lot of not-so-upbeat experiences). Ends with a quote that skips back over several generations of development economists to John Maynard Keynes: "Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist." Doesn't at all talk about either intellectual trends or political track records of previous generations of development economists (probably a good thing, as otherwise the book might have been one long "I told you so".) One of the most surprising things is discussed explicitly only in the short second-to-last chapter (although in retrospect it's implied in several earlier discussions of various experiences): addressing only the aiding and supporting of someone's "dignity" is _more effective than aiding and supporting their "physical/economic needs". The book spends considerable time and effort convincing the reader that nobody has any real idea what causes economic growth. The prime example is the Japanese MITI organization, associated with Japan being an economic powerhouse in the late 60s/early 70s. Other countries were both frightened and jealous. Some tried to establish similar organizations, but it didn't work for anybody else. Then the Japanese economy crashed badly in 1980 for no apparent reason, conspicuously wandered for the next couple decades, then stabilized but never really recovered. Economic growth not really being understood by anybody leaves a lot of room for politicians to spout a convincing narrative, then say "to grow economically we need to XXX" an airy-fairy statement that sounds good but that never pans out. One thing not analyzed or discussed at all is an eventual economic steady state for the whole world. Is it possible for a whole world of people to all live well after they've all finished their "development"? What is the limit on the population of such a world? What will the average household income be? Will capitalism have to fundamentally change to enter its steady state after finishing its growth? Can we continue to grow economically without splitting into permanent "have" and "have not" sub-societies? The authors don't go down this road, not even just a little bit; it would take completely different authors writing a completely different book. My big take-home (which was _not discussed explicitly anywhere in the book) is this: Most national politics (especially in the countries most similar to the U.S. culturally and economically) is _completely disconnected from what development economics has to say about providing the good life to citizens. The book describes example after example of governments doing the wrong thing, dilly-dallying until it's too late, or accidentally stumbling into the right thing while pursuing something else. The authors manage to retain their upbeat attitude while breezing over this; I however found it extremely discouraging. Here are a few particularly pithy or meaningful quotations from the book: "[A]round 1980, wages stopped increasing, at least for the least educated." "After the cohort that entered the labor market in the late 1970s, each subsequent cohort ... was more likely to have difficulty socializing, to be overweight, to experience mental distress and symptoms of depression, and to have chronic pain. ... It is the accumulated weight of these deprivations that eventually led to the increase in mortality." "More international trade ... hurts the poor in rich countries. This has provoked a backlash not only against trade, but also against the existing 'system' and the elites." "Counties highly affected by trade tended to be in traditionally Republican states, and therefore the overall effect of [the China shock] was to push many districts toward more conservative candidates. ... The problem of course is that since conservative candidates tend to be against any form of government intervention (and redistribution in particular), they then exacerbated the problem that little was done to compensate those hurt by trade." "[M]ention a government intervention in a roomful of economists and you will hear an unmistakable snicker. Many ... economists believe incentives in government are always ... ham-handed or corrupt. But bad relative to what?" "[W]e should be wary of any policy sold in the name of growth because it is likely to be bogus." "[T]he obsession with growth at the root of the Reagan-Thatcher revolution ... has caused lasting damage. When the benefits of economic growth are largely captured by a small elite, growth can be a recipe for a social disaster (like the one we are currently experiencing)."

  24. 4 out of 5

    Miebara Jato

    Esther and Abhijit are couples. They are also the 2019 winners of the Nobel Prize in Economics. In their previous book, Poor Economics, the duo set new outlines for fighting global poverty and help developing countries improve everything from school enrollment to immunisation rates. This current book examines the current global challenges with a broad analysis of available economic research. The authors methodically proffered humane and unambiguous solutions to these crucial problems humanity Esther and Abhijit are couples. They are also the 2019 winners of the Nobel Prize in Economics. In their previous book, Poor Economics, the duo set new outlines for fighting global poverty and help developing countries improve everything from school enrollment to immunisation rates. This current book examines the current global challenges with a broad analysis of available economic research. The authors methodically proffered humane and unambiguous solutions to these crucial problems humanity presently faces. But Esther and Abhijit didn't pretend their recommendations are the absolute or magic wand. Economists sometimes carried themselves as the reservoirs of answers to humanity's problems. The economics profession has literally ventured into all aspects of man's socio-economic being (e.g., computer economics, healthcare economics, agriculture economics, family economics, to mention a few). Maynard Keynes proposed an economist must be at once, "mathematician, historian, statements, philosopher… Contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought." But Aristotle had this to say about experts and their education: “For it is the mark of an educated mind to seek only so much exactness in each type of inquiry as may be allowed by the nature of the subject-matter.” Unfortunately, economists are more or less trained to think along with the admonition of Keynes than with Aristotle. But while economists pride themselves the torchbearers for humanity's crucial problems, their reputation dwindles in the publics' eye. A 2017 YouGov poll in the UK confirmed economists are the least trusted professionals. In a similar poll conducted in the U.S. a year later, Esther and Abhijit asked ten thousand people; again, just 25 per cent of people trusted economists. Only politicians ranked lower. How did the opinion of economists, especially on global issues, become least respected by the general public? In part, as the authors argue, the opinion of economists are too detached from those of the public. "This trust deficit is mirrored by the fact that the professional consensus of economists (when it exists) is often systematically different from the views of ordinary citizens." But more than having answers to issues that are mostly at odds with ordinary citizens, economists are failing to play their role. After the 2008 crash, the Queen queried the Royal Economic Society in a conference: "Why did no one see it coming?" Perhaps, economists are not empowered to make those predictions. However, because economists fail to raise the alarm for impending economic doom or their predictions not always turns out accurate does not mean economics do not have answers to the crucial global challenges. Economics and economic policy are central to the present global crisis (income inequality, migration, trade wars, climate change, the threat of artificial intelligence (AI) to jobs), This book is an attempt to redefine the role of economists and economic policy as a panacea to the worlds critical problems. One of the good things about Good Economics in Bad Time is that the arguments are lucid and down to earth. The clarity of the authors' thoughts is exceptional. It's rare to read superbly intelligent economists confessing they don't have answers to, for example, "what causes economic growth". A must-read for policymakers.

  25. 5 out of 5

    Qinfeng Chen

    This is a thought provoking and informative book written by two Nobel laureates, Abhijit Banerjee and Ester Duflo. This book centers around hotly debated policies on the national stage over the concerns of losing jobs to automation and internal trades, increasing inequality, looming threats of climate change, and slow economic growth. For anyone who wants to have a better understanding of social policies, such as Green New Deal, Universal Basic Income, wealth tax and etc. proposed by the This is a thought provoking and informative book written by two Nobel laureates, Abhijit Banerjee and Ester Duflo. This book centers around hotly debated policies on the national stage over the concerns of losing jobs to automation and internal trades, increasing inequality, looming threats of climate change, and slow economic growth. For anyone who wants to have a better understanding of social policies, such as Green New Deal, Universal Basic Income, wealth tax and etc. proposed by the presidential candidates, and their merits, this book is a must. It helps demystify some of the most polarizing issues we face today and provides brilliant insights of mainstream economics that deal with these issues as well as their limits. There are so many interesting concepts and studies included in this book that I think are worth highlighting: Controlled randomized trials (CRT) are methods borrowed from medicine used to measure the effectiveness of policies Misallocation of Resources - One of the biggest factors that contribute to the slow growth of GDP in developing countries. Market stickiness - free market assumes free mobility of labor. However, labor does not move fluidly and people are likely to stay where they live even if they are at risk of losing jobs than moving to new regions with new opportunities. Total Factor Productivity (TFP) - “measurement of our ignorance”. It is a measurement of productivity using the ratio of aggregate output over aggregate input Gross Domestic Product (GDP) values only those things priced and marketed. It doesn’t reflect the values of abstract things, such happiness. Human preferences can be arbitrary as shown by experiments in which acts as random as people assigning the last few digits of their social security numbers to an object drastically influence how much they value the object. Natural experiments, such as volcanic eruption off the coast of iceland, are great examples to study the effects of migration. A simple dice game in which bankers are more likely to cheap if they were being reminded of their jobs than bankers who didn't get reminded to show the effect of self reinforcing stereotype Same experiment as 6 but with government workers from India and Denmark (i think) as test subjects to show the difference in venality of government officials in different countries. The famous Robbers Cave experiment to highlight the fact that intergroup conflicts are often the results of groups competing for limited resources. It is interesting to note that economists are among one of the least trusted professionals in the current political climate. The concept of “creative destruction” popularized by Shumpeter that as the market continues to innovate, reform, and grow, old industries that cannot catch up will be left behind, replaced, and destroyed. The term “Death of Despairs” highlights the relationship between mortality and deprivation that the weight of deprivation will eventually lead to an increase in mortality. The dignity of the poor and underprivileged must be taken into consideration for social policies to be effective. Some of my favorite quotes: “Extreme poverty is not the result of inferiority or inadequacy of a group of people, but of systematic exclusion.”- Joseph Wreinski “The problem is this: How to love people who have no use?”- Kurt Vonnegut “Ethnic or bigotted voting is often just an expression of indifference.” “To demonstrate waste in government, one needs to show there is an alternative way of organizing the same activity that works better.” “The fuzziness of the notion of merit was the bone for contention.”

  26. 4 out of 5

    Brice Karickhoff

    If you like studies and data, you might like this book. All I do in school is read journal articles and analyze data, but this book still made me feel like I was drinking out of a firehose. I really liked it along some dimensions and really disliked it along others. So I guess it’s 3 star through and through. Duflo and Banerjee were lucky enough to release this book right as they won the 2019 Nobel prize for economics, which they are well deserving of because they are brilliant. I’ve read many If you like studies and data, you might like this book. All I do in school is read journal articles and analyze data, but this book still made me feel like I was drinking out of a firehose. I really liked it along some dimensions and really disliked it along others. So I guess it’s 3 star through and through. Duflo and Banerjee were lucky enough to release this book right as they won the 2019 Nobel prize for economics, which they are well deserving of because they are brilliant. I’ve read many of their papers, and these two are, from my perspective, about as analytically gifted as anyone alive. In this book they branch out of their field (development econ) to discuss issues such as trade deals, immigration, climate change, wealth inequality and even UBI. And, as geniuses tend to do, they blast you with a very thorough smattering of facts about each issue that, if you have the focus to put together, can be very helpful to understanding the issues. Simply put, the best thing about this book was that the authors are very very very smart economists. The biggest problem with this book is also that the authors are very very very smart economists. The book was not digestible or enjoyable (which is possible for academics to do, though they usually don’t). They describe interesting studies and mechanisms, but they rarely step back and say “here’s what we’re getting at, let’s put it all together”. I think they forget that their typical reader is not one of their coworkers, which is about the worst thing successful academics can do when trying to reach a general audience. Each individual subsection was interesting, but trying to string a coherent narrative across a chapter or the whole book was not easy. Another slight problem I had with this book (which I basically have with every book) was the surety with which the authors speak about their opinions. It turns me off to even the opinions I agree with (which was most of them). And it doesn’t help to contradict oneself when doing that. They begin the book by speaking of the importance of differing opinions only to offer their own as a matter of indisputable fact. They spend the book slandering politicians for being corrupt only to write a section in a later chapter about how we shouldn’t slander the government or call it corrupt. And they use surveys with panels of economists as an argument for their case when the panel agrees with them, yet they refute the panel at other times. There’s something inconsistent about both using and refuting the same source. Ive got mad respect for Duflo and Banerjee. They’ve broken down walls (shouts of to a female economist for winning a Nobel prize), and they’ve certainly improved the lives of the global poor drastically. But at the end of the day, I can’t just like a book because of who wrote it. If their names weren’t on the spine, I might not have finished it. That’s not to say that it’s useless or incorrect. I simple didn’t really enjoy reading it.

  27. 4 out of 5

    Harsha Varma

    Economics plays an extremely important role in designing public policy and thus has an outsized impact on how it affects all our lives. As the authors put it, "Economics is too important to be left to economists." The book covers a lot of interesting topics: immigration, trade, universal basic income, inequality, corporate taxation and explains the authors' framework on understanding them in simple economic terms. It goes into the empirical research conducted and with the help of effective Economics plays an extremely important role in designing public policy and thus has an outsized impact on how it affects all our lives. As the authors put it, "Economics is too important to be left to economists." The book covers a lot of interesting topics: immigration, trade, universal basic income, inequality, corporate taxation and explains the authors' framework on understanding them in simple economic terms. It goes into the empirical research conducted and with the help of effective arguments, quickly makes the reader sympathetic to the authors' viewpoints. The book then broadly discusses what needs to be done, but in my view, it falls short as it doesn't delve deeper into them. Take migration for example, which is a very contentious issue in my country due to a bill called the Citizenship Amendment Act. Most people, in general, are in favour of high skilled immigration but not low-skilled immigration because of the downward pressure on wages. But, all extant research shows that migration's effect on wages is very small over a reasonable period of time (say 10 years). People often forget that while the labour supply does increase, it also shifts the demand curve to the right which acts as kind of a balancing force. Moreover, low-skilled immigrants also take up jobs that the natives might be reluctant to take. I've always looked at migration as a net positive for the world. When people move from a less efficient region to a more efficient one, it improves their productivity, which then improves the welfare of the world as a whole. People often complain about the constraint on resources but do not take into account that people/ human capital is often the most ingenious resource. So, it is important that cities provide the platform for unleashing these bouts of productivity through proper infrastructure and rule of law. Unfortunately, third-world (is there a better term?) cities in which most of the migration currently takes place, lack the infrastructure they need to serve their population. The book broadly touches upon what needs to be done: cities need to grow vertically instead of horizontally by having lesser height restrictions etc. It would've been really worthwhile if the book delved a bit deeper into the solutions that could've been pursued. Overall, it's a fairly quick read and it is quite informative to understand how such eminent economists approach these pressing problems. It helps in making these topics more accessible and in starting a dialogue/ discussion towards finding solutions.

  28. 4 out of 5

    Guillaume Kosmala

    A copernican revolution in Economics. Fueled by the logic of Randomized Control Trials, Banerjee and Duflo have collected a series of irrevocable scientific evidence contradicting the vast majority of the accepted truths of current political discourse, picking apart the nuances of the ACTUAL truths and prescribing feasible policy to rectify our must burning issues. Here are just a few of the cornerstone of common sense economic thought taught in most Econ 101 classes that they debunk: 1. A copernican revolution in Economics. Fueled by the logic of Randomized Control Trials, Banerjee and Duflo have collected a series of irrevocable scientific evidence contradicting the vast majority of the accepted truths of current political discourse, picking apart the nuances of the ACTUAL truths and prescribing feasible policy to rectify our must burning issues. Here are just a few of the cornerstone of common sense economic thought taught in most Econ 101 classes that they debunk: 1. low-skilled migration lowers wages 2. low-skilled migrants would flood us if we opened our borders 3. people are highly sensitive to financial incentive. 4. We know what increases growth rate. 5. That tax cuts for the rich helps everybody else. 6. That a higher growth rate is a good thing. 7. Trade without redistributive policy is a good thing. 8. If you tax people they work less. There are so many more that I haven’t listed. I’ll probably skim through it again sometime soon and write a list of the key points because there’s just so much here! Some of it may seem long-overdue to left-leaning people but that’s the point the authors make! This new, radically different consensus in Economics has been slowly building for decades now and is only now finally seeing the light. All that’s left is to hope colleges take note of this year’s nobel prize and update their curriculums.

  29. 5 out of 5

    Brennan Shearer

    Good Economics for Bad Times is a book written by a pair of the most esteemed economists in the world, in a topic that is squarely in the middle of what they do best: applied microeconomics. I think that I think where Duflo and Banerjee rise above the rest is their ability to provide that vocabulary for the most discussed issues of our time, but to also thoughtfully weigh and reflect the human lives impacted in a way that’s often missed by traditional economics. Things such as happiness, Good Economics for Bad Times is a book written by a pair of the most esteemed economists in the world, in a topic that is squarely in the middle of what they do best: applied microeconomics. I think that I think where Duflo and Banerjee rise above the rest is their ability to provide that vocabulary for the most discussed issues of our time, but to also thoughtfully weigh and reflect the human lives impacted in a way that’s often missed by traditional economics. Things such as happiness, community, and the dignity of the people involved. What did I love about it? The work is at once a collection of the latest evidence on a number of important topics, such as inequality, trade, and climate change, and an extended rebuke on where the economics profession has gotten things wrong. After all, how could the entire field have failed to predict the greatest recession in a hundred years? The field of economics has lost society’s trust -- and that loss of trust plays a large part in the structure of the author’s arguments. Good economics is needed now more than ever before, and I think the authors do a spectacular job of earning that trust back by bringing the unaccountable back into economic decision making. Things such as happiness, community, and dignity that are counted with less importance in economic decisionmaking than things like GDP growth. Where could they have done better? This is a strong book, and added a lot of color to my view on topics like trade, migration, and inequality. That being said, the book slumps half way through in a chapter about preferences, before picking up again. It was clear that the authors had an axe to grind about the racial and political division in the united states, and its’ causes. Although the topic is important, I could have easily done without the lesson on why Facebook divides us and skipped to the less intuitive conclusions that these authors are so known for providing. I think the authors would have been better served by carving that part out and writing a book devoted solely to the topic. Still, it’s a small price to pay for the comprehensive research the authors have compiled in these topics.

  30. 4 out of 5

    Don

    Banerjee and Duflo do an exemplary job explaining the importance of randomized control trials in setting policy. Their examples show why the 'conventional wisdom' is often wrong, and how data from experiments will lead to better outcomes for people. They take on the big issues - trade, immigration, poverty - and come to conclusions based on the available data that often contradict conventional wisdom. As an example, they highlight why trade has both winners and losers, and while in aggregate the Banerjee and Duflo do an exemplary job explaining the importance of randomized control trials in setting policy. Their examples show why the 'conventional wisdom' is often wrong, and how data from experiments will lead to better outcomes for people. They take on the big issues - trade, immigration, poverty - and come to conclusions based on the available data that often contradict conventional wisdom. As an example, they highlight why trade has both winners and losers, and while in aggregate the world may be better off, significant segments of society and geographies may be forever changed for the worse through trade. I also appreciated how they had a wide-ranging set of examples from around the world, and then discussed how specific examples my play in other contexts. When they don't have data from experiments available, they take a balanced view of what possible outcomes could be from applying policies in different contexts. To steal from the book jacket, if you only read one policy book this decade, this should be the one.

Add a review

Your email address will not be published. Required fields are marked *

Loading...
We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy.