Stumbling upon the Freakonomics phenomenon in the late ‘00s probably made me study economics.
The books, podcasts, and informational phenomenon that University of Chicago economist Steven Levitt and journalist Stephan Dubner launched beginning in 2005 was less economics than it was pop psychology wrapped in an economics framework. The result was still one of the largest and most positive PR campaigns for economics in recent decades, with millions of books sold and five hundred episodes made; it was the compelling and accessible writing in combination with real economics-related problems that made the authors a household name.
In How Economics Can Save the World: Simple Ideas to Solve Our Biggest Problems, the paperback out next month in the US, Stockholm University philosophy professor Erik Angner tries to do something similar for the next generation. In extremely well-written and accessible prose — no equations, about three, very simple graphs — Angner explores key economic themes. He deals with poverty and schooling, wealth and environment, and a few chapters on unorthodox things such as how to be happy and how to calibrate your inner overconfidence.
He mentions a writing coach (“made me unlearn decades’ worth of academic writing ‘skills’”), and the reader can tell: he quotes Adam Smith with as much flair as he quotes Hamlet, the work of Deirdre McCloskey as elegantly, if less extensively, as that of Ellinor Ostrom. The conversational tone is excellent for the wide audience he intends — those skeptical of economists and economics — and it’s easy enough to follow along his clear prose even for those without prior training in our arcane arts. With plenty of personal anecdotes, Angner illustrates relevant and crucial economic themes of our times, summarizing well-established literature and occasionally offering some ways in which economics can indeed help save the world.
It’s a little unclear what Angner thinks is economics as opposed to other careful quantitative social science. Though, if one were to consult a nearby university program in economics, that cutoff isn’t so obvious either. “Economists might tell you that they study humankind in the ordinary business of life… They mean, effectively, anything that occupies us — anything we’re engaged in. Economics has a very broad remit.” Carving out a sum total of zero space for the discipline, Angner writes “Economists are trained to distinguish information that’s trustworthy from information that’s not.”
He suggests that “You don’t have to be an economist to be able to interpret data, but it helps,” a statement for which he provides no evidence and which seems altogether strange given that there is precious little that separates economics from other (quantitative) social scientists in his book. The explanations of economists’ heuristics — thinking on the margin, opportunity cost, solving for the equilibrium — are great but also some of the most economics-unique content we find.
The book is also a bit derivative. Even without consulting the footnotes, a reader can tease out the underlying books and research programs Angner bases his chapters on. The parenting chapter comes from Bryan Caplan’s Selfish Reasons to Have More Kids and Emily Oster’s books. The organ donation chapter is straight from Alvin Roth’s post-Nobel Prize book Who Gets What and Why. The poverty chapter is Abhijit Banerjee and Esther Duflo’s Good Economics for Hard Times.
In the parenting chapter, the pages are littered with subjective value — “what works for you doesn’t work for someone else” — and economic analysis comes down to individual preferences, whereas in the much under-analyzed climate chapter, the “socially optimal number of barrels” of oil is a quantity known to a benevolent social planner. The role of economist as providing true, causal information is replaced by a strong urge for social and political activism: “If scientists communicate their knowledge about a problem in a way that makes people less likely to fix it,” Angner writes, “the scientists have failed.”
The book thus jumps awkwardly between the position of positive, value-free economist, and interventionist, paternalizing central planner. The scientist shouldn’t merely search for truth on the best evidence, but has a wider social obligation to shape the world in his image. Angner incorrectly compares carbon taxes to dieting and hand-waves away informational problems about how much and what levels. Just as losing weight means calorie deficit and you can immediately inspect the result, says Angner, all you need for a carbon tax to do its work is get the direction right and we can observe the result. (This isn’t accurate, neither about the economics of emissions nor about losing weight.) Falling into the same well-trodden traps as market socialists of the previous century, Angner suggests that neither informational nor practical problems for a carbon tax are important: we can infer the correct social cost of carbon by whether greenhouse gasses indeed fall. In so doing, he presumes that it’s crucial that they fall as well as pretending that assessing carbon content of imported goods be a simple matter of inspecting the goods arriving at customs and slapping them with a suitably technocratic import tax.
In the other chapters he doesn’t get that far out over his skis. His investment and savings advice are middle-of-the-road, almost boring — though definitely tailored to a twentieth-century history that might not be suitable for the future. The summary of Ellinor Ostrom’s work on governing the commons excellent and the storytelling riveting.
Whenever someone proclaims to ‘save the world’ one should instinctively apply skepticism — and a front-cover blurb from Klaus Schwab doubly so. It’s far from clear that the world needs saving, who’s doing the saving, or whether the cure is worse than the disease.
Publishing hyperbole aside, what Angner compiles is, for the most part, much less grand and doubles as a careful summary of current economic research in broad fields that society at large is much concerned with. His previous book, A Course in Behavioral Economics, was an excellent and competent introduction to that subfield. With How Economics Can Save the World he expands the domain in two directions — to the wider public and the economics discipline as a whole.
The book is a great introduction to economic topics and thinking, and a mostly wonderful defense of a discipline so often rejected as ideological or cruel, financial, or irrelevant.
Happy reading.