Read This First
At some point, it’s extremely useful to pick up a first-year economics textbook. There are many introductory economics textbooks; many of them say the same thing. Pick any choice from:
- Mankiw, Principles of Microeconomics and Principles of Macroeconomics
- Krugman and Wells, Economics
- Cowen and Tabarrok, Modern Principles: Microeconomics and Modern Principles: Macroeconomics
- Hubbard and O’Brian, Economics
Popular books: The Core
- Landsburg, The Armchair Economist, 1995. This book basically teaches you the first quarter of Micro 101 at a popular, easily-accesible level. He skimps out on market failures but will teach you classic “applied price theory.” This should be read first, because it helps to get a good handle on what economists usually do before branching out into the specifics of different subfields.
- Dixit and Nalebuff, Thinking Strategically, 1993. This book is a great follow-on to Landsburg and teaches you the economics of game theory: how individuals act and react when in competition with each other.
- Schelling, Micromotives and Macrobehavior, 1978, reprint 2006. This is a lovely book that analyzes the various non-intuitive things that happen when we try to aggregate up from individual behavior to societal aggregates.
- Heilbroner, The Worldly Philosophers, 1999. This is an excellent introduction to the “history of economic thought” (which is separate from “economic history,” mind). It covers major thinkers from Adam Smith through Keynes and Schumpeter.
- Kahneman, Thinking, Fast and Slow, 2013. It’s often useful to read economics in the context of psychology. This is a solid introduction to behavioral economics, the field of microeconomics that explores the boundaries between economics and psychology.
- Florida, The Rise of the Creative Class, 2002, revised 2012. It’s often useful to read economics in the context of sociology. This is a book that does just that, exploring how trends in economics (jobs, technology, and urbanization) have affected American society. He nicely touches on issues of inequality and class stratification.
- Thaler and Sunstein, Nudge, 2009. This is the second book in the behavioral economics triad. It’s useful for its broad swath of interesting and sensible policy recommendations.
- Ariely, Predictably Irrational, 2010. Third book in the behavioral economics triad.
- Krugman, Pop Internationalism, 1997. Krugman’s writings in the 1990s are a worthy successor to Galbraith and exemplify moderate-to-left economic thought. This selection of essays is a powerful exposition on trade and protectionism.
- Krugman, The Accidental Theorist, 1999. This is another excellent collection of essays that attacks both the supply-side pop-economics of the political Right and the protectionism of the political Left. He does a good job of carrying the banner of clear, precise economic thinking, applied to the problems of the day.
- Malkiel, A Random Walk Down Wall Street, 1973, revised 2012. This is a classic book on finance and investing. It’s required reading if you’re interested in finance. Malkiel covers the basic random-walk hypothesis of stock pricing, explains and examines the efficient markets hypothesis, and tackles some of the salient criticisms of the EMH. Throughout he covers interesting episodes in financial history and new advances in the sophistication of financial products.
- Levitt and Dubner, Freakonomics, 2010. This book jump-started the pop-economics trend of the past few years. Readable and enjoyable.
It’s often useful to start with some classic popular books. To that end, I like:
- Friedman, Capitalism and Freedom, 1962, revised 2002. The classic statement of “market economics.” This book was much more radical and necessary in the 1960s, when it was first published; many of its recommendations were taken to heart in the 1980s and 1990s. It remains excellent reading.
- Friedman, Free to Choose, 1980, revised 1990. This is a bit of a companion volume to C&F: longer, more practical, less theoretical, and applied to many institutional arraignments in the economy.
- Galbraith, The New Industrial State, 1967. If you read Friedman, you owe it to yourself to read Galbraith. Galbraith and Friedman were standard-bearers for their respective economic philosophies and clashed for nearly twenty years. Many of Galbraith’s observations on the concentration of industry and importance of union bargaining are outdated, but his message remains important.
- Galbraith, The Affluent Society, 1958, revised 1998. This work is the intellectual foundation of 1990s-era moderate liberalism, and is an important read for that reason alone. This book tackles the hard questions of economic affluence, security, and income inequality.
There are also modern books worth reading. I recommend:
- Leamer, Macroeconomic Patterns and Stories, 2008. This is the single best macroeconomics textbook available at the intermediate level. It’s pitched at those who want a broad introduction to macroeconomic data and data analysis. There’s basically nothing wrong with this book as long as you’re willing to learn a little math. Pitched at the MBA level, any undergraduate with a semester of statistics and year of intro economics should find this book readable. Warning: this book is a bit higher-priced than others on the list, and is more academic.
- Deaton, The Great Escape, 2013. This is a popular book on two important long-run trends: growth in average income per person and the rise in income inequality. Deaton describes both the “trend” and the “spread” of income and health outcomes with clarity and precision.
- Hartford, The Undercover Economist Strikes Back, 2014. While Deaton covers growth and inequality, Hartford covers recessions and short-run economic fluctuations. He has an easygoing, informal style and explains recessions with some lucidity.
- Snowdon and Vane, Modern Macroeconomics: Its Origins, Development, and Current State, 2005. An exposition of the various schools of macroeconomic thought. Requires a year or two of economics training to appreciate, but could easily be a companion book to an intermediate course in macro.
- van Overtveldt, The Chicago School, 2006. This is an exhaustive (and sometimes exhausting) treatment of the Chicago economics department and its influence on economics, law, business, and society.
This is a short list of books that tries to tackle the big questions of economics: why are some countries rich and other countries poor? Is there anything that poor countries can do to make themselves rich? I’m not going to try to summarize each of these books in one paragraph, but will give a one-word hint as to the answers each provides. None is perfect; none has found the One True Key to economic prosperity. However, taken together, they provide a balanced view of many factors that affect economic growth.
- Diamond, Guns, Germs and Steel, 1999. Despite its flaws, this is required background. (Geography/natural endowments)
- Landes, The Wealth and Poverty of Nations, 1999. (Culture)
- De Soto, The Mystery of Capital, 2003. (Economic institutions)
- Mokyr, Gifts of Athena, 2004. (More technical, with a specific focus on ideas/innovation and the Industrial Revolution)
- Clark, A Farewell to Alms, 2008. (More technical. Focuses on productivity, with an emphasis on the Industrial revolution)
- Acemoglu and Robinson, Why Nations Fail, 2012. (Political institutions)
These books look specifically at the question, “what can poor countries today do to become rich?” Again, I’m not going to summarize all of them. Many have a special focus on the (in)effectiveness of foreign aid. All of these are geared towards a popular audience.
- Sen, Development as Freedom, 2000.
- Easterly, The Elusive Quest for Growth, 2002.
- Easterly, The White Man’s Burden, 2007.
- Sachs, The End of Poverty, 2006.
- Sachs, Common Wealth, 2009.
- Collier, The Bottom Billion, 2008. Contains an interesting overview of the Easterly-Sachs debate.
- Collier, Wars, Guns and Votes, 2010. Focus on political development in Africa.
- Yunus, Banker to the Poor, 2003. Perspectives on microcredit from the man who started it all.
- Yunus, Creating a World Without Poverty, 2009. Further thoughts on microcredit, and where we go from here in micro-finance.
- Cooter and Schafer, Solomon’s Knot, 2013. Focuses on law and economics.
- Banerjee and Duflo, Poor Economics, 2012. Interesting report from the trenches of micro-development, with a good empirical bent.
- Karlan and Appel, More than Good Intentions, 2012. The pitfalls of aid.
So You Want to go to Grad School…
…read these books first.
- Warsh, Knowledge and the Wealth of Nations, 2007. Notable for its piercing look into the inner workings of the economics profession. The first half of the book is basically a discussion of how economics became what it is today, covering the rise of mathematics and the rise of the “freshwater” and “saltwater” schools of thought. The second half discusses the journey of one economist, Paul Romer, and his ideas about knowledge, innovation, and economic growth.
- Colander, The Making of an Economist, 2008. This book is a critical examination of graduate training in economics. Worth the buy for the interviews alone.
- Athreya, Big Ideas in Macroeconomics: A Nontechnical View, 2013. As claimed in the title, this is a fairly non-technical overview of modern macroeconomics. It’s an excellent book to browse in the summer before starting graduate school, and well worth re-reading in the winter break after the first semester.
Biographies and Retrospectives
These are a “view from the trenches,” written by economists and practitioners on their time in public service.
- Rubin, In an Uncertain World, 2004. The Clinton economic team.
- Taylor, Global Financial Warriors, 2007. The Bush economic team.
- Greenspan, The Age of Turbulence, 2007. A perspective on advances in economic policymaking just before the financial crisis.
- Meyer, A Term at the Fed, 2009. The Greenspan Fed during its Clinton-era heyday.
- Wessel, In Fed We Trust, 2009. The Bernanke Fed during the crisis.
- Paulson, On the Brink, 2011. Inside the “panic days” of the financial crisis.
- Introductory: Mankiw’s Principles or equivalent
- Intermediate: Abel and Bernanke, Macroeconomics
- Advanced undergraduate: Romer, Advanced Macroeconomics
- Graduate macro: Sargent and Ljungqvist, Recursive Macroeconomic Theory
- Graduate monetary: Gali, Monetary Policy, Inflation, and the Business Cycle
- Introductory: Mankiw’s Principles or equivalent
- Intermediate: Varian’s Intermediate Microeconomics
- Advanced undergraduate: Varian’s Microeconomic Theory
- Graduate: Mas-Collel, Whinston, and Green, Microeconomic Theory
- Advanced graduate: Kreps, Microeconomic Foundations
Additional Detail on Textbooks
- Mankiw: Principles series (principles of economics/micro/macro: A very decent introduction to each topic. Especially his principles of economics text is well-used in most programs.
- Pindyck and Rubinfeld: Microeconomics: Heard good things about this text as well, contains some calculus
- Perloff: Microeconomics: A good introductory text to micro, contains some intermediate stuff but very light on the mathematics
- Varian: Microeconomic Analysis: A very decent book (but outdated at some points).
- Jehle and Reny: Advanced Microeconomic Theory: A very compact and readable book. IMO strikes a nice balance between rigour and intuition, while covering some quite advanced topics quite well. Not too math heavy, but requires some skill to use to its full potential.
- Intermediate macro:
- Mas-Colell, Whinston, and Green: Microeconomic Theory: The definitive PhD microeconomics textbook. Some of my colleagues argue that the best use of this book is as a paperweight or to balance desks, but I digress. Contains just about everything you’ll need or run across in your endeavors. Curt, dry and requires some mathematical sophistication.
- Kreps: Microeconomic Foundations I: Choice and Competitive Markets: Whereas MWG goes for broke in their scope, this book sacrifices breadth for depth. Covers about a third of MWG or less, but to much, much, much greater degree. Requires a solid mathematical background.
- Stokey, Lucas, and Prescott: Recursive Methods in Economic Dynamics: The macro book for the macro theorist. Used in numerous PhD programs as the go-to for PhD macro.
- Ljungqvist and Sargent: Recursive Macroeconomic Theory: Excellent PhD-level treatise on many topics in macro, also heavily used in PhD programs during the 1st year.
- Gali: Monetary Policy, Inflation and the Business Cycle: for the monetarily inclined. A compact treatise on monetary policy. Requires a working knowledge of how things are done in macro, otherwise you’ll get lost.
Introductory read baby Wooldridge)
- Wooldridge: Introductory Econometrics: An excellent intro book, highly recommend this one if you’re interested in metrics.
- Stock & Watson: Introduction to Econometrics
- Doherty: Introduction to Econometrics
- Verbeek: A guide to modern Econometrics
- Greene: Econometric Analysis: The encyclopedic reference for all things metrics. YMMV, not the most pedagogical of approaches to teaching the subject
- Hayashi: Econometrics: Written by a macro guy, but an excellent, excellent book that covers finite- and large sample theory particularly well, and in an approachable manner. GMM, IV, MLE, it’s all here, although MLE is handled at a pretty general level.
- Cameron & Trivedi: Microeconometrics: Exactly what it says on the tin. Everything you would want to know about micrometrics, and more. A solid book to learn from.
- Wooldridge: The econometrics of cross section and panel data: Papa Wooldridge, along with Hayashi, easily the best book on this list for PhD metrics.
- Angrist & Pischke: Mostly Harmless Econometrics: An empiricists guide to modern treatment-effect econometrics and causal inference. A useful and extremely well-written book, but contains precious little technical details. Now this means, that should you want to utilize this book to its full potential, you will have to have the required technical knowledge beforehand.