In the news

  • New United Nations world population projections based on UW research; see also World Population Prospects, the 2010 Revision and the amazing graph that’s part of U.N. Forecasts 10.1 Billion People by Century’s End.
  • The 20th Century Transformation of U.S. Agriculture and Farm Policy includes these amazing stats: farming
  • Getting Smart on Aid by Nicholas Kristof
  • In China, Fear of Fake Eggs and ‘Recycled’ Buns
  • Is It Better to Buy or Rent?
  • Economics haikus
  • Secretary of Energy Steven Chu has appointed a panel of seven scientific and environmental worthies to study the rapidly growing method of natural gas extraction known as hydraulic fracturing and to make recommendations about how it can be done more cleanly and more safely. (One is Susan Tierney of Analysis Group; she’s also with Energy Foundation, I met her briefly in 2009 or 2010.)
  • Tim Harford loves my book! (Scroll down until you see the cartoon book cover.) Here’s the dialog:

    Next on your list is a book that certainly is an economics lesson, but takes the form of a cartoon.

    This is by Yoram Bauman, who is perhaps better known as the stand-up economist. He sprang to fame because of this lecture – you can see it on YouTube – which was a stand-up comedy routine, based on a parody of one of the most famous economics textbooks, Greg Mankiw’s Principles of Economics. Bauman has a PhD in economics, so he knows a lot of economics, and there’s actually quite a lot of wisdom woven into the comedy routine, but he just lays into economics.

    Then he decided that the next thing he wanted to do was write this cartoon introduction to economics. And, just to be clear, this is a textbook. It’s not a comic book with some economic messages, it’s a textbook in the form of a cartoon. But it’s quite sophisticated and it’s very nicely done. So far the only edition to be out is the microeconomics version, but the macroeconomics is coming soon. For anybody who is genuinely interested in economics, who really wants to learn the jargon, or anyone who is starting out studying an economics course, this is just a brilliant source. It really is rigorous, but it’s also a lot of fun to read.

    Is he laying into economics again or is he playing it straight?

    He basically plays it straight, but he’s not averse to poking a little fun when it’s deserved, so there’s this subversive undercurrent. One of my favourite running jokes is every time an economist wins a Nobel Prize, the King of Sweden pops up and says, “Congratulations! You’ve won the Nobel Prize!” Of course, every time it seems to be for an incredibly banal insight, so it’s quite a nice running gag – these people making really obvious points and then suddenly the King of Sweden pops up.

    Can’t the Nobel Prize for economics almost always be summed up with a banal catchphrase, like “you shouldn’t put all your eggs in one basket”?

    It’s true. But I suppose you could say the same thing for the winners of the Nobel Prize for literature.

    I think this textbook might be useful to a lot of people. You read so much about economics in the media these days – how it needs to change in the wake of the financial crisis, that it should take on board the insights of behavioural economics et cetera. But when you say the word economics, people start talking about completely different things – to some it means dealing with inequality, others equate it with lack of regulation on Wall Street. I’ve got to the stage where I don’t even know what economics is any more, it seems to mean completely different things to different people.

    Economics studies the human economic system, which is a tremendously broad and deep field of study. In any modern economy, like London or New York, there are probably about 10 billion different types of products in service – not numbers of products, but separatetypes of thing that a stock-keeping system would give a different code number to. These products are often incredibly complicated, like the telephone I am talking to you on. It’s an incredibly sophisticated piece of kit. But even the notebook I’ve got in front of me, I couldn’t make that. I couldn’t twist the wire and produce the paper. These are terribly, terribly complex systems and they can be understood at the really macro level – booms and busts – and they can be understood in terms of human behaviour inside these systems, how we respond to prices, and the decisions that we make. It’s a fascinating, rich subject, so it’s not surprising it means different things to different people.

    In terms of how economics needs to change in light of the crisis, where I would put my emphasis is not so much in behavioural economics, though I have no problem with it – it’s a very interesting area and it’s producing really important insights – but I think it’s more about engaging with the world, and the institutions of the world as it is. Economists got too used to reasoning in fairly abstract ways, without looking at the details of what was actually going on.If, as an economist, you’d looked at the way sub-prime loans were being sold, and the kinds of contracts that were being written and the financial instruments that were being created, you don’t need any mysterious appeal to psychology to explain the disaster. You just need to have been paying attention. That’s not to write off behavioural economics – but it’s just not true that behavioural economics was the single thing that was missing, that if only we’d had it, there would have been no crisis.

    If you look at some of the behavioural economics books that were published before the crisis, they’re very good, but there’s nothing in them that successfully warns of the crisis to come. They’re focused on things like consumer protection and writing better credit card contracts. They’re not saying, “Look, there’s this huge systemic problem that’s about to blow up in our faces…”

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