Everything I Know About Economics I Learned From This Guy

February 27, 2020

If you're fascinated with economics, check out Paul Krugman's Masterclass:

Nobel Prize winner Paul Krugman breaks down the economics behind taxes, teh health care market, income inequality, and international trade.

Lessons include topics like: fundamentals of economics, major developments in economics, how the 2008 crash happened, theory of crises, solutions to crises, growing inequality, divided society, understanding taxes, technological progress, healthcare problems and solutions, hyperglobalized world, China and economic geography, learning economics, writing economics, and the future of economics.

What are some good books for learning economics?

Naked Economics is THE best and most comprehensive book for learning about economics for the first time. It covers all the topics you need to get started and it is written as if you don't know anything about it already.

Freakanomics is kind of pop economics focused on entertainment, which isn't inherently a bad thing. It probably won't help you understand real economic theory fully or any entrepreneurial endeavour. That said a proper economics textbook isn't gonna be that useful for entrepreneurs either, better off reading books on startups/starting businesses.

Hall of Mirrors by Barry Eichengreen is a good book for an aspiring economist. The book covers the parallel stories of the banking crisis and Great Depression of 1929-33, and after, and the financial crisis and Great Recession of 2007-10, and after and all that central banks and governments have done to stimulate economies in the last decade or so is in stark contrast to the errors and confusions of the previous era. This might be a good place for you to start as it covers one of the most intresting time periods in the American economy and it shows how taxes, gdp, budget and recession affect the economy in some of the most extreme circumstances and how that has influenced politcs as we know it.

Also this provides you with the opportunity to do your own research into economics and will help ask the right questions as it gives you an opportunity to familarise yourself with the economic jargon whilst still keeping you captivated.

How to learn economics in an unbiased way?

I think this is extremely tough to find a middle-of-the-road, centrist, unbiased approach. You could:

  • consult different think tanks, such as the Brookings Institution, although they tend to lean a little left;
  • contrast two knowledgeable economists, such as Paul Krugman and Ken Rogoff;
  • read an economics textbook, macro and micro, then dive into books by some notable economists to gain the theoretical knowledge; and/or
  • read various periodicals--notably The Economist, Wall Street Journal, and New York Times--to learn about the practical side of economics.

The reason that it's hard to learn about economics from an "unbiased" source is because there isn't one. Economic theory and practical arguments are descriptive and no one can provide a "one size fits all" solution. I apologize if this is discouraging, but in my opinion you have to take all the facts and theories and decide for yourself what the is the best course of action.

Getting the concepts down, then moving to current events, then educational arguments seems like the way to go. It's imperative in social sciences to identify and analyze an author's argument. I remember an old professor who likened the level of complexity of theses from "basic->intermediate->advanced" as descriptive->explanatory->predictive."

Khan Academy has full video courses on both Microeconomics and Macroeconomics. It's a little slower than I liked but it sticks to the facts and principles. Sal Khan is an amazingly good explainer of everything.

Using only Khan Academy I passed the CLEP tests for both Micro and Macro.

What's the best way to learn economics without getting a degree?

This is a surprisingly difficult question.... I find that a lot of the material available is not particularly good, at least in the sense that it often stresses theory (often enough, sort of old and simple theory) over the modern empirical work that actually constitutes economics as it is done today. This is a problem even with textbooks: they often serve to cover the basic theory, which then gets amended and supplemented with empirical references by faculty.

I can think of quite a few books, podcasts, etc. that will expose you to modern economic thinking on various topics, but it won't be systematic of course.

One option you might consider is would be an online course of some sort. I've heard good things about Timothy Taylor's economics courses in The Great Courses.

Smelser and Swedberg's Handbook of Economic Sociology seems to be a common starting point at the graduate level, and I've seen bits at the undergrad level, too.

These two articles are classics, as is Karl Polonyi's The Great Transformation.

Keynes often gets a nod, too, but when I've seen him pop up in this context it's more the "animal spirits" Keynes and less the more policy-oriented Keynes. It's a good reminder that he was a political economist, not what we see as an economist today (i.e. it's more accurate to say he practiced political economy, not "economics," just like Adam Smith, Marx, and so on). I guess behavioral economics is popping up, but still...

I should also add these two papers. The first one (the Brian Uzzi piece) is a good place to start, given your interest in the empirical side of economic sociology.

If you're interested in globalization, Peter Dicken's Global Shift is a good place to start.

These guys aren't all strictly "sociologists," but that isn't a problem in my book. Economic geography and similar work in other fields is great.

I'm no authority on the field, by any means, but these are all sort of related to what I see as the core of economic soc. As far as further empirical literature goes, I think that would depend a lot on the problems that interest you. Stratification, for example, is a huge area.

Another direction economic sociology goes is into more constructivist concerns - for example, putting a price on a person's life didn't fly for a long time, but now we don't think twice about life insurance. I can't recall the name or author of that paper, though, and the brief googling I felt capable of didn't find it.

I think another important thing remember besides what others have pointed out is that economics is not a hard science (yet) so the models are contested and there are different schools where people totally disagree with members of other ones. In American universities we're taught mostly neoclassical economics, which is the academic consensus in much of the Western world, but not everywhere. But even here we offer courses that look at alternative systems, which I think are useful in situating the knowledge here

Which should you study first? Micro or macroeconomics?

Definitely need to narrow down your question far more -- what is your goal? What are you trying to achieve by learning it? We all have our interests, so what are yours? Why did you get into this? Economics is also huge and one of the biggest fields for interdisciplinary studies, so it will take a bit of homework to form the question to ask.

I’d say there’s no difference in what you take first. But I would coordinate so that you’re taking micro when you have an easier schedule. I personally took macro first and while the professor will sometimes make comments assuming everyone has already taken micro, it didn’t impact the class because he would do a review of a topic you needed to know from micro.

And it helped when I went on to micro because I already had a mini lesson on a lot of the chapters. So basically, take micro when you’re schedule is easier, and if you can, take macro first.

Why I don't like behavioral economics

How would someone enthusiastic and well educated about behavioral economics come to the point of view that behavioral was somehow in competition with economics, rather than a part of economics and the natural extension of economic theory? Even stranger, to come away with seeing the rest of economics as sort of bankrupt and even hostile to behavioral economics, and to have little or no broader awareness of behavioral's place in actual economic research as well as little awareness of empirical work in the rest of economics.

It just seems so odd, because to be well educated about behavioral economics you'd need to have been taught I'd think, to have read things written by behavioral economists and the like. And surely, behavioral economists wouldn't promote those kinds of attitudes in their op-eds, NPR interviews, AEA presidential lectures, and business school type book tours... would they? I mean, deliberately misleading students and the broader public in the interest of self-promotion or whatever other motive would be a rather rude thing to do, and I would have to assume that that would be beneath at least the kind of behavioral economist that manages to win a Nobel prize.

At any rate, all snark and vitriol aside, I genuinely think economics education would be better served if the small pool of behavioral economists who adopt an outsider branding in their public facing activities toned it down. It's problematic because that branding is crack for MBAs, physics majors, and a certain type of journalist - regardless of its relationship with the truth - and so has outsized impact on public understanding of economics. And I don't think the result of the continual drip drop of "rogue behavioral economist says..." pieces is a positive increase in awareness of behavioral economics or development of a more nuanced understanding of economics. I think it's mainly just causing people to confirm their priors that they should go with their gut on whatever economic issue since they're smarter than the so-called experts who either don't know or are currently struggling to understand the fact that drunk uncles make bad choices (or insert here whatever outrageous observation that the egg heads in Littauer will never understand).

Anyway, I don't mean to advocate for some twisted form of collective punishment for behavioralists because they have a few bad apples with irresponsible press presences. Heck, I don't even think there's a good way to regulate this - there are strong incentives in the form of media coverage and B school book sales for anyone that plays defect here. But it's still bad and that might as well be pointed out, little good it does. (I suppose on the other hand, it might be better to leave that to the real experts. Econ Twitter dropped a lifetime worth of shade during Post Nobel Twitter, after all.)

What's the problem with economics studies

It wasn't that my professors had an outright agenda to get us to believe things like a minimum wage is bad, they let us form our own conclusions. Problem was, they didn't emphasize that these were models, or highlight instances where the model failed.

Before econ, I would have considered myself left leaning politically... not cause I knew anything or had any informed opinions, it was just by default. I think you learn about things like activism in highschool and that just influences you toward left leaning views... especially since this was in California.

After Econ, I was definitely more conservative, maybe libertarian. It took a few years after college where I began reading more and seeing actual situations where these models are not adequate to explain what is going on, that now I have a more informed liberal stance. Not to mention one of the key assumptions in these models is that people make rational decisions... no they do not!

But the biggest takeaway for me from Econ and why I still think it is incredibly valuable for anyone to study, is that you learn that 1+1 can equal 3. Which gave me hope for humanity... here now we have proof that there is a benefit to cooperation and trade beyond just moral reasoning. We don't all have to be selfish bastards looking out for #1.

I think academia is trying to turn economics into a science like Chemistry and Physics, where laws govern all behavior. But it has just become a joke. The models they teach in post-graduate economics are so far removed from the real world... they are very elegant and mathematical, etc... but don't actually have any application for the real world.

For example, economists have made the assumption that people have rational expectations / behavior. This assumption underlies pretty much all of university economics and is complete and utter BULLSHIT.

There are a few economists who know the trend towards a hard science is bullshit, but they are the minority and are pretty much ridiculed by the "theorists".

Is modern economics compatible with any socialist thought?

It's a way of dismissing socialism used by people who don't really know what socialism is.

Seriously, go take an economics 101 class. Better yet, take some advanced economics courses, too. Although these courses have a very pro-capitalism bend, you will find that the material taught doesn't conflict with socialist theory, as much as libertarians want to believe. There will be times in class that you cringe, like when you read about how evil planned economies are, and how socialism is North Korea, but all that aside, it's not like it proves Marx wrong or anything like that. Let me put it this way: I've taken several economics classes, and not once have I read something that has made me think "Oh shit, maybe capitalism really is the best we can do!"

I'd say the biggest difference between mainstream economics and socialist economics, and biggest reason why socialism seems like it's for people who "don't understand economics", is that mainstream economics never dares to think outside the box of capitalism, while socialist economics is all about that. That's why people who don't understand socialism say things like "you don't understand economics!". The idea of thinking beyond capitalism is so foreign to them, that when they here of an ideology that suggests such a thing, they are completely unable to grasp it, and respond with nonsense. It's just not an idea they have been introduced to, besides when the professor tells the class that socialism is North Korea during the first day of class.

For instance, if capitalism is allowed to run its course it could be described as akin to survival of the "richest" and [the richest company] eliminate the competition that threatens its profits. Once that happens and only a few have monopoly over it, if the population decides to no longer purchase their products to save money or decides to boycott, then would it not be in the best interest of that company to provide incentive (in a way that includes the population) in order to keep itself going? Then, once innovation is achieved citizens have purchasing power again. And the cycle would continues but perhaps with another company that dominates instead? All of this only works if the company won't control the government and media using lobbyist tactics.

Of course population size would be a huge factor. For instance, in a family, altruism (socialism) is a functional unit and acts are done because they are obligated in order for the greatest good for the family to be achieved. However, once there are more families doing this simultaneously, the burden of obligation decreases and people from different families become "free" from obligation because the greatest good becomes arbitrary or is shifted to a smaller focus (ex. greatest good for a company, greatest good for XYZ..) all while competing for the same finite resources (cue in capitalism).

Why typical economics studies are disattached from the real world

For instance, why can't economists see the reality of class? For one thing, they have only a crude understanding of capital: in most situations it's all combined and added up to a single dollar figure (which is more or less an educated guess) and all the details are handwaved. The idea that those with capital can dictate what's produced first requires you to recognise that capital is not identical with money.

Likewise, income distribution is not given much attention. An outcome where 1 person has $100 is considered just as good as an outcome where 100 people have $1. When capital and money abstracted to some phenomenon totally separate from human experience, the concept of class is unhelpful, so economists won't use it. What's more, economics is founded on a "rational", "self-interested" individual. The concept of class isn't even coherent in econ. Think of Thatcher's quote, 'There is no such thing as society.' If you think that society is just the sum total of individuals, social forces don't exist.

This is just a quick example I've typed up, but you can imagine how many examples of this there might be. Once we're familiar with the arguments and rhetoric, we can better understand how to fight it.

Plus, I don't think economics is utterly useless! It trains you in systemic thinking: given certain assumptions, what outcomes can we expect? The problem with economics is they spend practically no time questioning those assumptions. As critical thinkers, we recognise that concepts like "human nature" and "profit" are intrinsically tied up with social, historical circumstances. Thus, we can't take them as universal truths and hope to arrive at universal conclusions. And in certain cases, capitalist economics is good at describing certain phenomena in capitalism (eg., why tech companies concentrate in Silicon Valley). With a discerning eye and knowledge of radical economics, we can determine when these cases apply.

Aggregate capital is a huge, mostly unresolved problem in economics. Tons has been written about it, but there are few satisfying solutions and definitely no consensus. When it comes to actual applied economics (as opposed to just pure theory) it's usually handwaved.

Likewise, the constitution of the economic subject isn't really questioned. When people don't behave in line with the model, of course economists try to update the model. But they do so by adding more rules, talking about cognitive biases, etc. Examining the fundamental assumption that people behave out of rational individual self-interest doesn't occupy much time for economists. They just assume that in most cases that's how it works. I guess the major exception is when economists start talking about households.

Generally, there is literature examining the problems I identified (and other problems I didn't), but even at the professional level they are not really resolved. The fundamental axioms of economics are more or less static. Since Ricardo, economics has followed physics in attempting to mathematically model reality rather than to describe it qualitatively.

What programming language should you learn if you're interested in the technical side of economics?

Python makes perfect sense here.

  • Widely applicable if you choose to pursue other areas
  • Commonly used in finance and data science
  • Great libraries for data analysis, machine learning, etc
  • Very intuitive and the quickest language to pick up and learn
  • Great online resources for learning / getting up to speed
  • Great documentation for the vital packages (pandas, numpy, sklearn, etc)
  • Really, I could go on - but Python suits perfectly I think.

Python is a lot easier to learn and more widely applicable than R and Java. Both have their merits, but Python will be more useful imo. R and Python are hands down the best, but from my experience, Stata (government and academia) and SAS (everywhere else) are going to be the most prevalent, like it or not. Eventually get good at R and/or Python, but I'd also recommend a working knowledge of one or both of the latter two. Understanding SQL would be useful as well.

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