Good Economics for Hard Times Book Summary

Book Summary

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Brief Summary

All of the big and overwhelming problems facing society are not unsolvable. Despite the doomsday messages shared by sensationalist news and politicians, it is possible to address poverty, inequality, climate change, immigration, and more.

You have to look to economics and data-driven solutions for policy ideas. It may seem hard to trust economists, but the ones that aren’t ideological extremists or paid for by corporations can offer meaningful solutions. Economists also can be more transparent and open about their fallibility to gain your trust in these ideas.

Many of the causes of problems are misrepresented by politicians. And the inaccurately use economics as support. The solutions require a nuanced approach. Economic growth must be balanced against inequality and climate change. Market shortcomings must be corrected with government interventions.

If you want to be able to evaluate real solutions, you have to be able to discuss them. This means not just holding on to your prejudices or only discussing ideas in an echo chamber. A diverse set of voices and opinions that can communicate openly will help fix rifts. And then you can fix the problems.

About the Author

Abhijit V. Banerjee and Esther Duflo are a husband-and-wife economist team that won a Nobel Prize in 2019 for their experimental strategy to address global poverty. This is the second book authored by Banerjee and Duflo.

Banerjee is an Indian-American who finished his first two degrees in India before completing his Ph.D. from Harvard University. Duflo is a French-American who first attended two French institutions before finishing her Ph.D. at the Massachusetts Institute of Technology. Both are professors of economics at MIT.

Banerjee is the son of two economics professors, both of whom taught at institutions in Calcutta, India. In addition to his Nobel Prize, he has received many accolades. He is a fellow of the American Academy of Arts and Sciences.

Duflo is the daughter of a pediatrician and a mathematics professor. When she won the Nobel Prize in Economics, she was the second woman and the youngest person to have won the award.

Topics

Politics

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Key Insights

With all the big issues facing the world, you may feel like giving up. From climate change threatening our existence to immigration threatening our livelihoods, it may seem hopeless. Especially when you see politicians and leaders doing more fighting than finding solutions.

Occasionally, you see experts offering their insights. But it doesn’t feel like they’re any better than the politicians. They just pop up on television and make dramatic statements or get involved in the political mudslinging. So it feels hard to trust the experts as well.

Economists get lumped into this problematic system. You might see them as part of the political machine, hired by a politician or business to support their positions. Or economists are academics that are not speaking to average people looking for solutions to the issues that concern them.

Fortunately, there are logical, fact-based solutions that economics can offer. But it will take some adjustments to the way economists evaluate theories and communicate their solutions.

Economists are not seen as trustworthy.

People see and interact with a variety of different professionals, but they don’t trust all of them. In one poll of public opinion of trustworthiness, nurses ranked the highest. Politicians were at the bottom, which is probably not a surprise. Near the bottom were also economists, barely above politicians.

Why don’t people feel like they can trust economists? Think of the economists you are most likely to hear from. These are the ones on the news. They are probably trashing a politician or espousing some theory about how everything is doom and gloom in the world.

Television economists usually don’t come with an unbiased agenda. They are generally hired by companies. Their goal is to provide messaging that supports that company’s interests. If you see that the economists are speaking on behalf of a corporation, it’s hard to trust them.

There are also academic economists, which are equally difficult to trust. Academics are often seen as having extreme views. Or they challenge mainstream positions. By upending what people already believe or have been told by politicians and leaders, economists have an uphill battle to gain public trust.

Transparency and admitting they can be wrong will help economists gain trust.

If economists want to gain trust, they have to share more than their conclusion. You need to see the process and information that went into getting to that conclusion. Walking through each step of the theory, including the evidence that supports it, makes economic analysis clearer.

Transparency is half of the trust equation. The other half is admitting that it’s possible to be wrong. Anyone can be wrong, including really smart economists. Being unwilling to admit fallibility seems like arrogance or delusion. Neither of these qualities makes for trustworthiness.

An economist looking to build trust should be open about their thought process, data, and conclusions. But they also have to admit that they could be wrong and are open to alternative positions.