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"Classics" in economics


trickster

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Hi guys, I wanted to create a list of "classics" in economics that I hope to read over the summer. What I want from these books is the philosophy behind economic theories, because I think it is as much important as fancy quantitative skills. I find it especially is the case for labor, IO, and monetary economics, (and of course many others; those are my main interests)

 

 

So here is my list, and I greatly appreciate suggestions!

 

 

Adam Smith, Wealth of Nations

 

Karl Marx, The Capital

 

M. Friedman, Capitalism and Freedom

 

I hope to chip in some books by Hayek and Mises, but I can't figure out which one to choose...

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Schumpeter's Capitalism, Socialism and Democracy (haven't read it) might be a good place to start if you like IO. Smith and Marx are very broad, so they're good for pretty much everything from labor to macro to public policy. I'd say Friedman is more in the political philosophy space, with emphasis on IO (imperfect competition and government intervention), labor (welfare), and monetary policy.

 

Oh, and if you're interested in inequality, there's a book by Thomas Piketty that just came out and is getting a ton of attention.

Edited by Khansian
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Hi guys, I wanted to create a list of "classics" in economics that I hope to read over the summer. What I want from these books is the philosophy behind economic theories, because I think it is as much important as fancy quantitative skills. I find it especially is the case for labor, IO, and monetary economics, (and of course many others; those are my main interests)

 

 

So here is my list, and I greatly appreciate suggestions!

 

If you want to understand the "philosophy" behind

 

 

Adam Smith, Wealth of Nations

 

Karl Marx, The Capital

 

M. Friedman, Capitalism and Freedom

 

I hope to chip in some books by Hayek and Mises, but I can't figure out which one to choose...

 

If you want to understand the philosophy behind economic theories then none of the aforementioned books are useful in any particular way. The first two are nothing more than outdated relics that have very little relevance to modern economic theory, and I can tell you from experience that Wealth of Nations was a terribly written book that isn't worth reading (there are a lot of contemporary rewrites that dispenses with the Old English and adopts a more modern dialect, but still not worth reading). Capitalism & Freedom is more political than economic, and is essentially Friedman selling his brand of libertarianism. An excellent starting place for someone who wants to understand why we do economics the way we currently do it is Friedman's book Essays in Positive Economics. The real gem though is the introduction for the book, an essay titled "The Methodology of Positive Economics". You can google it and read it, and you'll immediately develop a greater appreciation of why your first year in grad school will consist entirely of mathurbation. You'll also be able to call bs when some idiot says "Economists are wrong to assume rationality".

 

Ronald Coase's two seminal essays are also worth reading for someone interested in IO. Can't help you with labor economics, unfortunately. Not much deep economic/political philosophy behind ln(wage) = B(educ) + u apart from endogeneity issues.

 

Also there was a thread last summer discussing this same exact question, you should try using the search function.

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You'll also be able to call bs when some spanghewing meshuggener says "Economists are wrong to assume rationality".

 

economics could use more spanghewing meshuggeners & less of the smugness demonstrated in this post IMO, but yeah it's a good essay

 

i agree don't read smith or capitalism & freedom, (if u want to read friedman i would suggest a monetary history of the united states). capital isn't very pleasant to read but even if you're not a marxist it's useful to expose yourself to a different perspective that you'll never encounter in an economics class. reading capital probably not the best way to do that.

 

i'm also interested in labor and a book that i really liked that deals with labor history in the US (specifically the decline of unions in the 70's) is Stain' Alive by Jefferson Cowie. not economics but it will give you amazing historical perspective & is a pleasure to read

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Alchian's Exchange and Production is universally regarded in the profession as the best economics textbook from which to develop a solid beginner's economic intuition. Landsburg's Armchair Economist is also universally regarded as one of the best casual economics texts ever written - predating and in many senses still superior to Levitt's Freakonomics.

 

Besides the two "seminal essays" by Coase mentioned by yankeefan, "The Contractual Nature of the Firm" by Coase's disciple Cheung is a fantastic expository essay providing the modern, predominant interpretation of Coase's two essays, which is a conceptual prerequisite to pretty much all of modern IO, law and economics, and contract theory.

 

If you're really interested in the philosophy and justification of rational choice methodology, which is pretty much a settled debate in economics, you could go sideways into disciplines where there are still active debates going on about the role of rational choice. Daniel Diermeier's 1995 essay on rational choice in political science is really neat. You can find it within a book dedicated to the topic, The Rational Choice Controversy (Jeffrey Friedman ed.).

 

Smith, Marx, and Friedman's monetary history are of little value to anyone other than historians of economic thought. I'm not familiar with what Sen wrote, aside from apparently a few policies that induced mass starvation.

 

As for works more closely related to the conceptual thinking and methodology behind modern economics: Angrist's econometrics book is a must read for anyone remotely interested in the new empirical methods of the last 20 years. Mokyr, North and Engerman/Sokoloff have texts that provide a good overview to the new and rising field of economic history; on a tangent, McCloskey has a moving tribute to Fogel which I think serves as an excellent ethnography of how great economists work. Becker's human capital book is not just a classic, but still highly relevant to a huge swath of studies in recent years (anything from empirical micro/labor/health to macro-level debates of institutions a la AJR vs Glaeser et al.). And instead of the traditional recommendation of Olsen's collective choice book for political economy, I'd look at Weingast's 1995 article on market-preserving federalism (and its citations) as a nice introduction to the kind of work that's becoming increasingly prominent in political economy and development. Shleifer's Inefficient Markets, known for its clarity, can serve as an convenient (though not by any degree comprehensive) introduction to three core areas of modern economics: finance, behavioral economics and contracts. And finally, Dixit's entire bibliography should be bought and read, and read again, alongside your economic theory courses.

Edited by chateauheart
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History of Economic Thought by E.K. Hunt. He's got a Marxist bent that he takes out most on Mill and Keynes but is still very thorough and does a good job to contextualize the developments in Economic thought with what was going on politically, economically, and socially at the time.
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economics could use more spanghewing meshuggeners & less of the smugness demonstrated in this post IMO, but yeah it's a good essay

 

What's smug about being able to rebut invalid criticisms of a field that you are trying to get a PhD in? I've seen grad students get apologetic when someone "points out" that economists are wrong for employing a certain method, because they failed to realize that the one who erred is not the economist, but the accuser for attempting to criticize something they know very little about. Case in hand, a bunch of us are discussing a paper done by a statistician answering a public policy question, and there are serious doubt over the validity of the regression methods he employed. Then one person shouts out "what do you guys know, everything you learn in econometrics was invented by statisticians" and the entire room goes silent. These are the types of spanghewing meshuggener that need to be Heckman corrected, and are usually the ones who think an economist's definition of rationality is the same as the one in the dictionary.

 

OP here's the thread I mentioned --> http://www.www.urch.com/forums/phd-economics/148491-must-read-books-before-embarking-economics-phd.html

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some great book recs itt

 

yankeefan: as with any theoretical assumption, there are problems and limitations in the assumption of rationality. the fact that some aspects of rationality don't hold up behaviourally raises serious doubts about any theoretical result dependent on it. i think economists could be more sensitive to this fact, especially given that theoretical arguments are often presented independent of empirical justification. economists are as "wrong" to assume rationality as they are for using convenient functional forms for utility or output--it's just a tool.

 

not sure what the relevance of someone claiming statisticians invented econometrics has to do with it, besides providing an example of someone else with a different opinion you disagree with. the smugness i was referring to is the assumption that anyone who holds a different opinion than the status quo one held by the field is arguing in bad faith. i imagine you could find people who know more than you or i about rationality and are as critical of its use in economics as any spanghewing meshugenner.

 

I'm not familiar with what Sen wrote, aside from apparently a few policies that induced mass starvation.

 

which policy? i know that sen wrote about policies that led to mass starvation, but didn't know that he wrote any himself...

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some great book recs itt

 

yankeefan: as with any theoretical assumption, there are problems and limitations in the assumption of rationality. the fact that some aspects of rationality don't hold up behaviourally raises serious doubts about any theoretical result dependent on it. i think economists could be more sensitive to this fact, especially given that theoretical arguments are often presented independent of empirical justification. economists are as "wrong" to assume rationality as they are for using convenient functional forms for utility or output--it's just a tool.

 

not sure what the relevance of someone claiming statisticians invented econometrics has to do with it, besides providing an example of someone else with a different opinion you disagree with. the smugness i was referring to is the assumption that anyone who holds a different opinion than the status quo one held by the field is arguing in bad faith. i imagine you could find people who know more than you or i about rationality and are as critical of its use in economics as any spanghewing meshugenner.

 

 

 

which policy? i know that sen wrote about policies that led to mass starvation, but didn't know that he wrote any himself...

 

You've completely misunderstood my post. In fact, it seems you've taken it quite personally. Did you read my post or did you just choose to zoom in on the part that offended you and blow it out of context? I didn't say the rational choice is a flawless paradigm; my jibe is with people who attack paradigms that they don't understand. This is also analogous to the situation where the person proclaimed that statisticians invented all the tools we use in econometrics ergo they automatically know more about regressions that economists. It was simply a case of the person not understanding the intellectual history behind the paradigm. I'm pretty big on behavioral and political economy and I've made several posts on this forum discussing these fields in great details and my biggest attraction to these fields is the rich methodological debates that underpin them - so I'm very well aware that rational choice is just a "tool". Its just that as contemporary economic research continues to transcend "economic" topics and have begun setting up shop on other social scientists' stomping ground, economists are encountering some resistance and criticism. Criticism is part of science and its how the academy grows, but as Krugman famously said [paraphrasing] - "You can't criticize what you don't understand". A lot of rational choice critics are bs not because rational choice is flawless, but because they don't understand what they're criticizing. Go to poli sci rumors and dig up one of their math/rational choice threads and you'll see my point very quickly. They even have a rational choice meme. The sad thing about it is that most economists do a very poor job of explaining rational choice to others because they themselves only have a vague understanding of the philosophical underpinnings, so when they are confronted with these misguided critics they become apologetic instead of calling bs. Enter Friedman's essays.

 

For the record I didn't call anyone a "spanghewing meshugenner" if that's what offended you (in fact idk wtf it even means). I have a habit of typing p.p.l (without the periods) and it autocorrects to "spanghewing meshugenner" when I post.

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For the record I didn't call anyone a "spanghewing meshugenner" if that's what offended you (in fact idk wtf it even means). I have a habit of typing p.p.l (without the periods) and it autocorrects to "spanghewing meshugenner" when I post.
Wow, I knew vBulletin had some aggressive built-in autocorrection rules, but that one is simply mind-boggling.

 

Testing: ppl

 

^This is what I get when I type it in.

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You've completely misunderstood my post. In fact, it seems you've taken it quite personally. Did you read my post or did you just choose to zoom in on the part that offended you and blow it out of context? I didn't say the rational choice is a flawless paradigm; my jibe is with people who attack paradigms that they don't understand. This is also analogous to the situation where the person proclaimed that statisticians invented all the tools we use in econometrics ergo they automatically know more about regressions that economists. It was simply a case of the person not understanding the intellectual history behind the paradigm. I'm pretty big on behavioral and political economy and I've made several posts on this forum discussing these fields in great details and my biggest attraction to these fields is the rich methodological debates that underpin them - so I'm very well aware that rational choice is just a "tool". Its just that as contemporary economic research continues to transcend "economic" topics and have begun setting up shop on other social scientists' stomping ground, economists are encountering some resistance and criticism. Criticism is part of science and its how the academy grows, but as Krugman famously said [paraphrasing] - "You can't criticize what you don't understand". A lot of rational choice critics are bs not because rational choice is flawless, but because they don't understand what they're criticizing. Go to poli sci rumors and dig up one of their math/rational choice threads and you'll see my point very quickly. They even have a rational choice meme. The sad thing about it is that most economists do a very poor job of explaining rational choice to others because they themselves only have a vague understanding of the philosophical underpinnings, so when they are confronted with these misguided critics they become apologetic instead of calling bs. Enter Friedman's essays.

 

i wasn't offended in the slightest & i agree with this post entirely *hi-five*

 

i responded to your post because i'm sometimes depressed by the limitless powers of rational deduction assumed on part of economic agents in models. economics seems at once very sophisticated and hopefully naive to me sometimes. so i guess "don't like rationality?" *smooshes milton friedman in your face* in the context of your orig post seemed emblematic of this attitude

Edited by flopson
overzealous autocorrect
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Wow, I knew vBulletin had some aggressive built-in autocorrection rules, but that one is simply mind-boggling.

 

Testing: ppl

 

^This is what I get when I type it in.

 

My bad, in my first post I had typed I.diot when I had meant to say p.p.l. maybe I am a bit smug lol.

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i wasn't offended in the slightest & i agree with this post entirely *hi-five*

 

i responded to your post because i'm sometimes depressed by the limitless powers of rational deduction assumed on part of economic agents in models. economics seems at once very sophisticated and hopefully naive to me sometimes. so i guess "don't like rationality?" *smooshes milton friedman in your face* in the context of your orig post seemed emblematic of this attitude

 

I'm not aware of any consensus that views rational choice as having limitless powers. Friedman himself was certainly aware of the limitations; its just that in the absence of a better paradigm we simply stick to what we currently have. Behavioral, for all its huffing and puffing, still hasn't displaced rational choice as the dominant paradigm. The non-generalizable experiments and ad-hoc tweaks to models provide valuable explanations and insights in situations where rational choice fails us, but at the end of the day these are just complementary "add-ons" rather than a radical overhaul. In the absence of a workable alternative we still persist with rational choice models in situations where its clearly failing us not because we believe it has limitless power, but rather because we have limited tools. Its a similar case to when some genius points out the internal "contradictions" of capitalism and then berates economists for their "neoliberal" agenda. We're all aware of the shortcomings of capitalism; we persist with it because it still works better than all the other alternatives.

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yankeefan: as with any theoretical assumption, there are problems and limitations in the assumption of rationality. the fact that some aspects of rationality don't hold up behaviourally raises serious doubts about any theoretical result dependent on it. i think economists could be more sensitive to this fact, especially given that theoretical arguments are often presented independent of empirical justification. economists are as "wrong" to assume rationality as they are for using convenient functional forms for utility or output--it's just a tool.

 

Usually rational just means complete and transitive and perhaps the independence axiom. While the latter two assumptions (and especially the last) are probably not universally valid, they are far weaker than what people appear to think economists mean when talking about rational preference. Rationality in this context is entirely non-normative and so accepting or not accepting it isn't really even really much of a philosophical matter, in my opinion.

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