Economics Rules: The Rights and Wrongs of the Dismal Science

by Dani Rodrik

Overview

“A hugely valuable contribution. . . . In setting out a defence of the best in economics, Rodrik has also provided a goal for the discipline as a whole.” —Martin Sandbu, Financial TimesIn the wake of the financial crisis and the Great Recession, economics seems anything but a science. In this sharp, masterfully argued book, Dani Rodrik, a leading critic from within, takes a close look at economics to examine when it falls short and when it works, to give a surprisingly upbeat account of the discipline.Drawing on the history of the field and his deep experience as a practitioner, Rodrik argues that economics can be a powerful tool that improves the world—but only when economists abandon universal theories and focus on getting the context right. Economics Rules argues that the discipline's much-derided mathematical models are its true strength. Models are the tools that make economics a science.Too often, however, economists mistake a model for the model that applies everywhere and at all times. In six chapters that trace his discipline from Adam Smith to present-day work on globalization, Rodrik shows how diverse situations call for different models. Each model tells a partial story about how the world works. These stories offer wide-ranging, and sometimes contradictory, lessons—just as children’s fables offer diverse morals.Whether the question concerns the rise of global inequality, the consequences of free trade, or the value of deficit spending, Rodrik explains how using the right models can deliver valuable new insights about social reality and public policy. Beyond the science, economics requires the craft to apply suitable models to the context.The 2008 collapse of Lehman Brothers challenged many economists' deepest assumptions about free markets. Rodrik reveals that economists' model toolkit is much richer than these free-market models. With pragmatic model selection, economists can develop successful antipoverty programs in Mexico, growth strategies in Africa, and intelligent remedies for domestic inequality.At once a forceful critique and defense of the discipline, Economics Rules charts a path toward a more humble but more effective science.

Product Details

ISBN-13:	9780393353419
Publisher:	Norton, W. W. & Company, Inc.
Publication date:	10/11/2016
Edition description:	Reprint
Pages:	272
Product dimensions:	9.00(w) x 10.80(h) x 1.20(d)

About the Author

Dani Rodrik, a prize-winning economist, is the Ford Foundation Professor of International Political Economy at Harvard's John F. Kennedy School of Government. He is the author of The Globalization ParadoxandEconomics Rules.

Editorial Reviews

In Economics Rules, enjoyment enhances learning, with lessons for economists and non-economists alike—indeed, ten commandments for each. The book is a page-turner with every page carrying an important and memorable take-away.”

Margaret Levi

The best economists make the best methodologists, and Dani Rodrik is both. His Economics Rules is the single best source for explaining the strengths and weaknesses of economics to an outside audience.”

Tyler Cowen

Rodrik’s plea is for economics to be practiced with a bit more humility both by those who extol free markets and those who would tame them.

Steven Pearlstein - Washington Post

Full of good insights. . . . If you’re at all interested in economics you’ll want to read it.

William M Honig

06/08/2015
Lately, economics has acquired a bad rap. After all, if the "dismal science" couldn't even predict the Great Recession, what good is it? That is the question Rodrik (The Globalization Paradox) addresses in this excellent little primer, ideally suited to introductory courses, that explains with clarity and wit what economics can and cannot do. Economists, Rodrik explains, construct models—simplified versions of the real world—to help them predict how a particular economy will respond to a particular stimulus: say, a new tax, a raise to the minimum wage, or an increase in interest rates. Rodrik likens economic models to "fables" and notes that when these go awry, it is likely because they have been mistaken for reality. He takes care, though, to recount success stories, such as John Maynard Keynes masterminding the post-WWII economic order at Bretton Woods, or Ben Bernanke (in his view) stopping the Great Recession from becoming another Great Depression. He also says that we can thank economics for everyday conveniences like cheap airline tickets and efficient auctions of wireless frequencies. This book does indeed show that economics and economists exert an outsized influence, ideally wisely, in the world today. Agent: Andrew Wylie, the Wylie Agency. (Oct.)

Publishers Weekly

Economics Rules, by one of the world's truly great economists, describes in fascinating and incredibly well-written detail what it means to be an economist. In so doing it explains why, and when, economists often get it right, but also why they also frequently go astray.

George Akerlof

08/01/2015
Rodrik (economics, Inst. for Advanced Study; The Globalization Paradox) discusses the foundations of economics and the pitfalls that lead economists astray. He sums up the discipline as a navigable collection of models, and argues that their use is what makes economics a science, that the employment of correct frameworks can both illustrate how the world works and demonstrate what could be done to improve it. Problems occur, says the author, when incorrect theories are chosen or when a tool attempts to do too much. Rodrik explains the process of selecting, verifying, and utilizing models. As an example of the field's failings, he cites how most economists were surprised by the 2008 housing collapse because they had accepted the theory that self-regulating efficient markets would prevent such an asset bubble. VERDICT Rodrik's clear writing limits jargon, but his subject matter is necessarily demanding. Part rant, part survey, part critical assessment of his profession, the author's stimulating insights will be most helpful to practitioners and especially students embarking on serious study in economics.—Lawrence Maxted, Gannon Univ. Lib., Erie, PA

Library Journal

2015-06-04
Rodrik (Economics and Social Sciences/Princeton Institute For Advanced Studies; The Globalization Paradox: Democracy and the Future of the World Economy, 2011, etc.) challenges both his professional colleagues and broader public opinion regarding his much-maligned field. The author believes that economists have "none other than themselves to blame" for the widespread criticism of their competence. His account of the failures of the profession prior to the 2008 recession is spot-on, and his history of the post-World War II Bretton Woods agreements provides useful background information for his arguments. Rodrik sees the field as one that "excel[s] at contingent explanations of social life," and he takes issue with the idea that there can be any one particular theory, or model, about economic phenomena that is uniquely right, to the exclusion of all other concepts. As the author notes, economists should focus on what their profession can do and keep their own views about political issues out of their considerations. While "economists can provide useful input," going further often results in a situation of "malpractice." Noneconomists tend to judge economists by their predictions of market trends. During his presidency, writes the author, Harry Truman, "frustrated by the conflicting and hedged advice he was receiving from his advisers, was "said to have asked for a ‘one-handed economist.' " Rodrik insists that the strengths of economics are what most people, following Truman, say are its weaknesses. In arguing for the profession to both highlight the useful work economists are doing—e.g. Jean Tirole's recent Nobel Prize in Economic Sciences for his work on the regulation of industry—while being a bit humbler about it, he is also pointing out the misconceptions of noneconomists. He believes economists who stay silent ought to speak out. A hopeful contribution to the reconstitution of a profession whose reputation has been seriously damaged, both fairly and unfairly.

Kirkus Reviews