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Read: Economics - The User's Guide

Chang’s Economics: The User’s Guide is less a guide to economics as it is practiced but more to an economics that should be: A pluralistic study of the economy, not one single approach to analyze everything.

Chang introduces to some of the non-mainstream approaches to economics and shows where they differ from the mainstream by discussing concrete current economic issues (with a slight emphasis on macroeconomics) and how we got there. As such, the Guide is rather a work in economic history and comparative economics. The presentation of relevant statistics on a wide range of countries to provide context is commendable.

Underlying the obvious narrative, an introduction to economics, there seem to be two theses. First, economics is inseparable from politics. Politics provides the institutional context, the rules of the game, economic analysis has to be performed within this frame. Economics, however, provides the reasoning for many political decisions, it “is a political argument.” The two fields cannot be without the other. Second, as a result, all economics is normative. There is no value-free economic analysis. “[T]here are no objective truths in economics that can be established independently of political, and frequently moral, judgements.” Hence, “[e]conomics is not - and can never be - a science.”

While I mostly agree with the first thesis, I do not agree with the second one. Economic analysis (in particular of microeconomic issues) can be purely descriptive, positive. Without some understanding of the causal links, the mechanics of the economy, the decision-making behavior and process a meaningful normative analysis would not be possible. I would also argue, that, e. g., experimental economist are not just going through the motions of the scientific process of knowledge generation, they are scientists: Observing, hypothesis generating, falsifying, and theory building scientist.

Read: Foundations and Fundamental Concepts of Mathematics

While Eves’ Foundations and Fundamental Concepts of Mathematics is certainly a bit outdated by now – it is 1997 reprint of a textbook originally published in 1990 – it was still fun and interesting to read.

The books offers a nice historical overview of fundamental concepts of mathematics (hence the title) that includes not just the historical background but a solid introduction of each concept itself. Of course, solid means here that the introduction just provides as much depth as is needed to understand what it is all about. As such the different chapters may whet one’s appetite for more on the respective topic. Just when it gets interesting the text stops. It has to. Otherwise, Eves would not be able to cover as much as he does.

Sometimes maybe, the little detail that is given can also already seem a bit too much. Getting to a theorem 48 in just one chapter shows that Eves is certainly not just skipping over details when he feels the reader may benefit from a rigorous presentation of the material.

Read: Generalized Linear Models for Categorical and Continuous Limited Dependent Variables

On first impression, the small textbook by Smithson and Merkle is a nice companion for Agresti’s Categorical Data Analysis and Analysis of Ordinal Categorical Data. It briefly discusses the theoretical foundation of the applied modelling approaches, explains the models using concrete examples, and provides a brief introduction to the relevant R (and Stata) functions.

On a more careful inspection, however, it becomes clear that the discussions are often too shallow. In particular the applied models would have benefited from more detail. The reader is referred to other textbooks for the missing details that would be necessary to really learn and understand why a certain approach should be taken and how to interpret and check any estimations. The text cannot stand alone. Its contribution is, thus, a mere cursory overview of a few select functions in R (and stata). Some additional functions for R are provided on a accompanying webpage. What, of course, begs the questions why the authors did not package these functions in an R library that is made available an the standard electronic archive for R, CRAN.

What really made me question the text, however, were phrases like: “…its p value is 0.057, which conventionally would not be regarded as not quite significant…”, and “This model is not quite significantly superior to the preceding one (… p=0.068).” This is not quite good scientific practice. In a textbook of all things.

Read: Understanding The New Statistics

Understanding The New Statistics is about understanding statistics and applying statistical methods that are not new at all. They are just under-used in the social and behavioral sciences.

It is all about abandoning Null Hypothesis Significance Tests and replacing them with the more informative Effect Sizes and Confidence Intervals. Targeted at students as a complementary text to their standard textbook the most important and distinguishing feature of Cumming’s book is its attempt to create intuition for the variability of data and derived statistics. The many excercises that rely on simulating (small) data (sets) and observing the variability of summary statistics are a great tool for understanding the properties and interpretation of these statistics.

Nevertheless, beyond facilitating said intuition the text has little additional value. The theory, the necessary math is often not presented. The exercises and indeed much of the book rely on a (free) proprietary software that I cannot use since it depends on another commercial software that I don’t own and would have never used for statistics (excel). Therefore, much of the text remained cryptic. I would have preferred an open source approach, maybe an R package.

Further, for a text that is advocating replacing NHST with substantial statistics on effect sizes and uncertainty there are too many asterisks signifying different levels of statistical significance. More surprising was, however, the absence of any glimpse at Bayesian methods that would fit the bill perfectly, showing likely effect sizes and their corresponding uncertainty. In the context of meta-analysis I would have expected an updating of our beliefs, a Bayesian aggregation of the accumulating evidence. Instead, the text remains 100% frequentist.

In the end, the text is maybe not for the student but for the teacher. And maybe the text should not be read for its content in a narrower sense but for the ideas on pedagogy on how to teach introductory statistics.

Read: How Markets Work

After a few a little bit more radical, heterodox critiques of current (textbook) economics Prasch’s “How Markets Work” is rather orthodox. It still deviates from the standard introductory textbook treatment of markets in the sense that it does not blindly follow The (competitive) Market is best doctrine that advocates the market institution as the easy solution to many problems – if only the market was unregulated. Yet, the critique focuses rather on the unreflected application of the perfectly competitive commodity market model to goods and services that do not fit into the standard commodity category.

Hence, Prasch discusses the peculiar deviations of specific markets that render the standard textbook toy model inapplicable. He discusses e. g. financial asset markets that are characterized by positive feedback loops instead of negative feedback loops and that are therefore not necessarily self-stabilizing and labor markets that feature non-monotonic supply curves that bend backwards, forwards, and backwards again and may have four different equilibria, two stable and two unstable one, at different levels of wages. He also touches upon the issue of prices, values, and incommensurability. There are contexts in which the orthodox utility framework seems not to apply, where the choice problem cannot easily be represented by a scalar utility model.

Overall, Prasch’s “How Markets Work” is utterly unspectacular, non-revolutionary, orthodox, and just well thought-out. The didactic approach, starting with a discussion of property rights, is impeccable. As an added benefit the book is easily accessible also for the uninitiated and mostly non-technical as even the number of graphs is kept at a minimum. It may be a good supplementary reading for any introductory (micro-) economics course covering the analysis of demand and supply.

Read: The Economics Anti-Textbook

Teaching evaluations are just in and it does not look bad. The changes I implemented during the last fall term had some positive impact. Though there is still room for improvements, and I already have a few ideas… I am a bit surprised though that there are some students demanding “more math (it is ultimately economics)” – these were principles courses. Given the huge heterogeneity in math skills this is not going to happen! And I also don’t think there is much to be gained by applying math to the over-simplified models of a first year principles course in economics. For grad school they should rather take dedicated math courses.

Indeed, I rather want to strengthen the discussion part of the course, the critical reflection of the theory.

Enter the Economics Anti-Textbook: A Critical Thinker’s Guide to Microeconomics by Rod Hill and Tony Myatt. The Anti-textbook is a great source for inspiration for such in-class-discussions. It provides a nice anti-thesis to the standard neoclassical textbook treatment, it makes the underlying value judgments explicit, and it provides an antipole to the doctrine of fundamentalist free-market theory (see Jim Stanford in Labour/Le Travail for a review that mirrors my own sentiment of the book quite well).

Much of their critique is not new. However, they provide a very accessible juxtaposition of orthodox and heterodox views, and a set of very thought provoking questions that should get the discussion started after students were treated with the standard view in class. Hence, this is where some of the ideas for next fall will come from.

I like this anti-textbook much more than Steve Keen’s Debunking Economics (that I also mentioned to the more curious students this fall). The anti-textbook is accessible and perfectly suited as a companion for a microeconomics principles course (a macroeconomics equivalent is still in planning). Thus it will be included in my recommended readings list in the future.