The winners of the Nobel Prize show how economics, when done right, can help us solve the thorniest social and political problems of our day.
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. It is an extraordinary achievement, one that shines a light to help us appreciate and understand our precariously balanced world.
"Excellent...Few have grappled as energetically with the complexity of real life as Esther Duflo and Abhijit Banerjee, or got their boots as dirty in the process...A treasure trove of insight...[Readers] will be captivated by the authors' curiosity, ferocious intellects and attractive modesty."―The Economist
A Wall Street Journal Bestseller
"Carefully argued and backed with research...Good Economics is an effective response to Banerjee and Duflo's more thoughtful critics, some of whom argued that devotion to randomised trials had led to a narrowing of economics, in which complex questions that could not be scientifically tested should simply be set aside. The authors make a convincing case that empirical economics contains answers to many vexing problems, from populism to identity politics, especially when economists are willing to range outside their discipline's confines."―Financial Times
"'Good Economics for Hard Times' lives up to its authors' reputations, giving a masterly tour of the current evidence on critical policy questions facing less-than-perfect markets in both developed and developing countries, from migration to trade to postindustrial blight."―Wall Street Journal
"Their goal is to ground both sides of our national debate in hard evidence, and the process of coming up with ways to do that is pretty interesting in itself... Eager to distance themselves from the previous generation of economists who argued from first principles, Banerjee and Duflo say nothing that smells like special pleading. It would be hard to take umbrage with such studied humility. The authors admit, 'We clearly don't have all the solutions, and suspect no one else does either.' Even so, the prospect of a path towards consensus solutions through iterated experiments is enough to make for a compelling read."―National Review
"The studies they cite probe hot topics such as climate change, immigration and the viability of continued economic growth. Banerjee and Duflo synthesize the literature on what is agreed and what is controversial in an accessible, often entertaining way."―Nature
"Good Economics for Hard Times makes important policy connections and suggestions... Banerjee and Duflo explore traditional remedies (tariffs sure aren't the answer, they find, and job retraining and other trade adjustment tools are too narrow and take too long) and suggest some novel ideas... In crafting their carefully reasoned arguments, they marshal evidence assembled over decades from all sorts of areas-the fight against malaria, past efforts at tax reform, previous waves of migration-and propose commonsense solutions."―Foreign Policy
"Lucid and frequently surprising... Banerjee and Duflo's arguments are original and open-minded and their evidence is clearly presented. Policy makers and lay readers looking for fresh insights into contemporary economic matters will savor this illuminating book."―Publishers Weekly, Starred Review
"A canard-slaying, unconventional take on economics...This might look like yet another conventional state-of-the-world economics book, but it is anything but. It is an invigorating ride through 21st-century economics and a treasure trove of facts and findings."―The Times (UK)
"Good Economics for Hard Times lives up to its authors' reputations, giving a masterly tour of the current evidence on critical policy questions facing less-than-perfect markets in both developed and developing countries, from migration to trade to postindustrial blight."―William Easterly, The Wall Street Journal
"An excellent antidote to the most dangerous forms of economics bashing...Abhijit Banerjee and Esther Duflo, write beautifully and are in full command of their subject. Perhaps the greatest contribution of Good Economics... is precisely this: it demonstrates both the brilliant insights that mainstream economics can make available to us and its limits, which a progressive internationalism has a duty to transcend."
―Yanis Varoufakis, The Guardian
"Not all economists wear ties and think like bankers. In their wonderfully refreshing book, Banerjee and Duflo delve into impressive areas of new research questioning conventional views about issues ranging fromtrade to top income taxation and mobility, and offer their own powerful vision of how we can grapple with them. A must-read."―Thomas Piketty, professor, Paris School of Economics, andauthor of Capital in the Twenty-first Century
"A magnificent achievement, and the perfect book for our time. Banerjee and Duflo brilliantly illuminate the largest issues of the day, including immigration, trade, climate change, and inequality. If you read one policy book this year -- heck, this decade - read this one."―Cass R. Sunstein, Robert Walmsley University Professor,Harvard University, and author, How Change Happens
"Banerjee and Duflo have shown brilliantly how the best recent research in economics can be used to tackle the most pressing social issues: unequal economic growth, climate change, lack of trust in public action. Their book is an essential wake-up call for intelligent and immediate action!"―Emmanuel Saez, professor of economics at UC Berkeley
"One of the things that makes economics interesting and difficult is the need to balance the neat generalities of theory against the enormous variety of deviations from standard assumptions: lags, rigidities, simple inattention, society's irrepressible tendency to alter what are sometimes thought of as bedrock characteristics of economic behavior. Banerjee and Duflo are masters of this terrain. They have digested hundreds of lab experiments, field experiments, statistical studies, and common observation to find regularities and irregularities that shape important patterns of economic behavior and need to be taken into account when we think about central issues of policy analysis. They do this with simple logic and plain English. Their book is as stimulating as it gets."―Robert Solow, Nobel Prize winner and emeritus professor of economics, Massachusetts Institute of Technology
"In these tumultuous times when many bad policies and ideas are bandied around in the name of economics, common sense-and good economics-is even more sorely needed than usual. This wide-ranging and engaging book by two leading economists puts the record straight and shows that we have much to learn from sensible economic ideas, and not just about immigration, trade, automation, and growth, but also about the environment and political discourse. A must-read."―Daron Acemoglu, Elizabeth and James Killian Professor of Economics, MIT, and coauthor of Why Nations Fail
"Banerjee and Duflo move beyond the simplistic forecasts that abound in the Twittersphere and in the process reframe the role of economics. Their dogged optimism about the potential of economics research to deliver makes for an informative and uplifting read."―Pinelopi Goldberg, Elihu Professor of Economics, Yale University, and chief economist of the World Bank Group
"In Good Economics for Hard Times, Banerjee and Duflo, two of the world's great economists, parse through what economists have to say about today's most difficult challenges-immigration, job losses from automation and trade, inequality, tribalism and prejudice, and climate change. The writing is witty and irreverent, always informative but never dull. Banerjee and Duflo are the teachers you always wished for but never had, and this book is an essential guide for the great policy debates of our times."―Raghuram Rajan, Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business
About the Author
Academic justification of neoliberal economic policy
I've studied economics quite a bit as a policy professional and picked this up basically because I liked the title and its a "best seller" , whatever that means. This book is an easy read for being written by economists. It makes considerable effort to refute the populist rhetoric espoused by Trump, Steve Bannon, and the people that voted for Trump.I really wanted to enjoy the book, and it makes several good points. It is a good introduction to the application of economic theory in the real world, using plenty of easy to follow studies as examples. Perhaps I expected more from Nobel Prize winners? Because, to me, just another example of how out of touch the "coastal liberal elites" actually are. For example, the authors take hundreds of pages to explain all the ways how great immigration is for low-skilled workers, using plenty of convincing real world examples, but then comes to the tepid conclusion that, over the span of ten years, wages for low-skilled workers actually increase slightly as a result of immigration. As if that is somehow going to make up for the immediate problem of unemployment and housing shortages two or three years into a large immigration event. Yes they make the point that the economy is "sticky" but that's just applying an academic label to real people's lives, and it doesn't solve the stickiness problem.Being an immigrant to the US myself, I can identify with all the qualities the authors describe immigrants possessing, but I still can understand how an American with my skill set would resent my arrival to compete with him or her for a good paying job. Furthermore, given that immigrants are less apt to be demanding of their employers for better working conditions, and less likely to engage in collective action, a greater supply of workers reduces the quality and conditions of employment in the USA, especially among the professional class. Put another way, the authors completely ignore the very real fact that immigration to the USA benefits employers and Wall Street moreso than any other demographic. I wish the authors would have addressed the fact that American workers have no right to paid vacation, paid parental leave, and work longer hours than their counterparts in other countries.Here's the problem I have with the first half of this book: it attempts to provide distant, abstract, academic solutions to issues that often negatively affect people's lives on a personal level in the here and now. Try telling a low-skilled worker that he's better off losing his job because in ten years he'll have a better job when, two years into it, he and his friends are unemployed, addicted to opioids, and alternately ignored and scorned by their government.This book is, at best, out of touch and, at worst, condescending to the working class struggling with the impacts of neoliberal economics. I really wish they would have addressed what is, to me, the biggest economic issue in the USA today: the absolute failure of the for-profit health care industry.edit: I see my review has attracted some... criticism? Of my subjective opinion? OK. First of all, I have the kindle version of the book. I don't know how this can become a "verified" purchase. Also, I don't disagree with everything in the book. I support higher taxes on the wealthy and believe scapegoating immigrants is ignoring a much bigger, structural issue. It is encouraging that they at least look outside the US for policy fixes.I am, in theory, a supporter of Schumpeterian creative destruction that inevitably causes job loss and/or displacement, if the outcome is more just, equal/less polluting. But the policy shifts described in this book are not resulting in a more just, equitable and less polluted world; it's the opposite. The concentration of wealth into the hands of the very wealthy is accelerating, increased global trade has most definitely accelerated carbon emissions, all because of the policies this book supports (or at least doesn't do a good job of critiquing). I agree with the chapter addressing the very real impending tsunami of low skill job loss caused by automation (Andrew Yang's major issue). Telling people to "learn to code" is both insufficient and condescending (another sign of a deeply polarized union). It seems to strawman every stereotype of the ignorant Trump supporter without addressing the actual underlying problems that people in the heartland are seeing. We need more policy and less politics. These economic issues were not caused by Trump; rather, Trump is a symptom of the underlying issues.People need to turn off the TV and pick up a book, and if you're not an economist and not looking for concrete answers but some entertaining vignettes, this might be the book for you. Nevertheless, seeing as this is MY subjective opinion, and not a directive of what other folks should think, I, personally, will look elsewhere for answers.
The voice of reason is needed more than ever
Banerjee and Duflo show how economists can improve the debate on divisive issues like immigration, trade, inequality, tribalism, and climate change.The many interesting examples in the book include:• How a volcanic eruption off the coast of Iceland, which randomly destroyed some homes while sparing others, created a natural experiment to study the benefits of migration.• How a study on the impact of banning employers from asking job applicants about criminal convictions actually increased racial discrimination in hiring.• Economists used randomized control trials to figure out that it was more effective to give insecticide-treated bed nets to poor families for free than to sell the nets to them at a low cost (so the families would value them) to prevent children from dying from malaria.• Participants who were paid to stop using Facebook for a month were happier and no more bored than before the experiment.• How bankers were found to be more likely to cheat at a dice game if they were encouraged to think of themselves as bankers than if they were encouraged to think of themselves as regular people.Note that one incorrect fact on page 103 deserves updating. The authors state: “Elinor Ostrom, the first (and so far the only) woman to receive the Nobel Prize in economics, …” Of course, the number of women Nobel laureates in economics has doubled since this book went to press.
Helps understand the economic issues in today's presidential campaigns!
Presidential candidate Andrew Yang postulates a fourth industrial revolution, where many people will be unemployed because of trade and technology—he proposes a “guaranteed basic income.” Elizabeth Warren thinks a “wealth tax” would solve our problems. They both agree with the authors of this book, who propose that people “tend to blame immigration and trade liberalization rather than the increasing vacuuming of resources toward the very rich.” If you wonder if such ideas promoted in the presidential campaigns would solve our problems (or even wonder what they are talking about!), this may be the book for you. Go to the experts: The Nobel prize in economics for 2019 was awarded jointly to Abhijit Banerjee, Esther Duflo and Michael Kremer "for their experimental approach to alleviating global poverty."The authors throw out various theories about how the economy can be fixed. They find the data does not always back up what seems intuitive: For instance, “…tax cuts for the wealthy do not produce economic growth.” They include studies from other countries, as well as the U.S. “A recurring theme of this book is that it is unreasonable to expect markets to always deliver outcomes that are just, acceptable, or even efficient.” The economy is “sticky” because of the idiosyncrasies we humans have, such as reluctance to leave our home and loved ones to pursue a better job.The authors started with the issues of immigration and trade, then went on to problems like inequality (“the evolution of inequality is not the byproduct of technological changes we do not control; it is the result of policy decisions.”) and climate change (how to pay for reducing pollution). They review some of the ideas that have been tried, and where available, data on the effects. They remind us that the Gross Domestic Product (GDP) doesn’t reflect things like time with a loved one or enjoying the beauty of nature, but only “those things priced and marketed.”Some quotes: “The spirit of this book is to emphasize that there are no iron laws of economics keeping us from building a more humane world, but there are many people whose blind faith, self-interest, or simple lack of understanding of economics makes them claim this is the case.” “…if collectively we as a society do not manage to act now to design policies that will help people survive and hold on to their dignity in this world of high inequality, citizens’ confidence in society’s ability to deal with this issue might be permanently undermined.” “Good economics alone cannot save us. But without it, we are doomed to repeat the mistakes of yesterday.”
A brilliant read!
This book arrived a little late but I’ll still give 5 stars based on the content for the authors sake and not the sellers.Firstly the edition of this book is one of the nicest I’ve held recently, it’s a really nice paper bound hardback, the paper is high gsm and feels really nice to touch.This is the second book I’ve read on economics from someone who had no real understanding beforehand, I bought it as it was one of the bill gates summer reading list books, really glad I bought it!The book starts off with talking about the public perception of economists and how there is a large distrust, usually pedalled by ‘bad economics’ and politicians.Some fascinating things I’ve learned since reading:- Economics is not a perfect science, it’s hard to compare data between countries and periods in time, however most often things improve because we learn from past mistakes (e.g. the Great Depression).- Immigration IS a good thing, the argument that the more people arrive to our developed countries the more people are out of work as the supply demand model would indicate, though this isn’t true as when people move to a new location for work, they earn a wage, pay tax and then spend their money on the local economy which boosts growth. Though remittance has a negative effect on the economy.- Interesting points about the efficiency wage, generally most employers won’t pay minimum wage and there is no evidence that most of them do due to the fact that it’s often costlier to keep re-hiring new people and they would rather pay a better wage and keep the employee.- Fascinating comparisons between western economics (mostly focusing on France the U.K. and the states) vs China and India’s economies.- Lower paid workers in SE and developing countries aren’t necessarily worse off, i.e if you stop buying cheap goods for moral reasons you’re reducing the income to these countries and families. Actually the more we spend having products manufactured in the developing world the more the inflow of cash and so the higher the standard of living for the residents. This is seen in China which less than 100 years ago experienced extreme famine under the Mao regime, now the huge growth (The China Shock) is seeing China moving away from large scale cheap labour manufacturing and more into new growth areas in tech (think Huwawie, Zoom and TikTok).- Interesting reads on automation and the replacement of humans in the workforce. As someone that works in the tech sector this really made me revaluate things. Simply put, some jobs can be replaced by machines but it’s not necessarily a good thing to do so. Companies would opt to do this for cost saving reasons, however doing this would cause a huge slump in the labour market. I.e poorer people would be out of work and therefore not paying tax, or claiming welfare and not spending much on the local economy. The results being the companies get bigger and richer but the people don’t. Some predictions actually say large scale automation would have a negative effect on GDP. Fascinating chapter.Last chapter (and I’ve not mentioned them all such as likes wants and needs, climate change and trade) was about universal basic income. This is relatively new turf but I think we’ll see a lot more of it in the future. Essentially people would get a guaranteed income regardless of their employment status. This is fascinating as it eliminates the survival instinct for work, meaning people would be less risk averse in their job often coming up with newer riskier ideas etc. Which is essential for growth (as shown by the Solow model). An interesting concept exists in Denmark called Flexicurity, whereby workers don’t have job security and companies can fire people without legal protection but they automatically receive UBI if they are found out of work. This in essence allows businesses to refine and streamline their business models and allows workers to move onto other work. In essence it’s the complete opposite of a ‘job for life’ mentality which Japan proved doesn’t work that well in the 1990s.I’m going to end this review here but thanks for reading all this if you have!! I’ve actually been inspired to start studying economics with the open university as a result of reading this book. Thanks very much to Abhijit and Esther for their work on this!!
DisappointingBook poor economics is book of everyone. Everyone can easily grasped what author want to say in that.But this is book for professional economist. Issues and arguments are not easy to grasp. They are very acedemic in nature.
Economics without figures?
The main criticism first : the book suffers from a lack of charts and figures, as a reader I feel insulted that the authors do not think me able to understand them. Since a good graph or chart is better than many words, the book could have been shorter. Second, I couldn’t shake the feeling that the book was written with a conclusion in mind, and the research has been selected with a bias, and sometimes the facts are stretched to illustrate the conclusion. Third, I remain unconvinced. Still, I read it to the end, it has the merit of being thought provoking.
What needs to change in our world and how...
‘Good Economics’ is an enjoyable and engaging book that anyone with an interest in socio/political/economic affairs will find interesting to read. Take it as read, this not a book that admires of libertarian style readers will appreciate. The authors feel that the state – with is power to legislate, tax and subsidise and promote activities that the free market might otherwise ignore, is a powerful tool for delivering useful social outcomes. (examples: less pollution/improved social and occupational mobility and more efficient land use) l Even more important is the fact that states need to collaborate much more with each other in order create gains not just for the ‘elites’ but for all citizens, who and wherever they are. But this not an old fashioned centralist ‘big government’ line of argument. Rather, that the markets need to regulated or in some cases cajoled to be more efficient in order to deliver gains that can generate socially optimised outcomes. So, looking at areas such as patents, land rights, universal income, employment and training subsidies, information provision and ‘nudges’ to change business and consumer behaviour in appropriate ways.The book is based around three basic viewpoints. Firstly, that there are ever widening gaps between the rich and the poor and this has led a breakdown of trust in institutions, the democratic process and the diminishing sense of common ground between citizens. Secondly, that the world is changing and we need to adapt to the new realities – from climate change, the implications of increased robotic technology and the impacts on labour market, to poverty and the resulting economic migration are but a few of the issues that the authors rightfully consider need our prompt attention. Thirdly, that economics can help provide some of the policy answers to the problems with which it is currently afflicted. The authors though recognise that change will not happen unless leaders/politicians and the populations they are there to serve are convinced that the policies suggested can be seen to ‘work’ and not seen as discriminatory or there to promote sectional interests only.The authors have a basic approach that seems faint –hearted at first, but is actually nuanced and mature in outlook. Banerjee and Dufflo suggest that whatever policies are enacted in a particular field, research has to be undertaken to ascertain that the projected outcomes are likely to happen. Also, that changes in economic policy have done with the understanding and cooperation of those people who are to be affected (particularly in aid /regional regeneration projects). Finally, that no one policy approach will be sufficient to engender change- governments have got to be creative and multi –dimensional in their approach (this suggests ‘joined up thinking’).In all, a very timely book. Highly recommended.
Finally some answers
Excellent book which should be read by allPoliticians, journalists and leaders. Insights into the current challenges and opportunities to help solve societies real not perceived problems. Short on solutions but it’s difficult so they did the best they could. Ranks up there with Factfulness by Hans Rosling as a must read for anyone wanting answers and inspiration to contribute to making the world a better place for all - not just the few who are manipulating us all.