GOOD ECONOMICS FOR HARD TIMES summary

Introduction

Good Economics for Hard Times by Abhijit Banerjee, Esther Duflo What's in it for me? Discover how economics can create positive change in the world. So many things seem to be going wrong in the world that it's tempting to throw your hands up in despair. We hear that immigration is out of control.

We're told that imposing high import taxes on goods will cause the economy to plummet. If we save the environment it will mean sacrificing people's jobs, but if we don't we'll become extinct. This is a horrifying cacophony of doomsday scenarios. And what makes it worse is that we often don't know who to believe.

Instead of engaging in substantial debate, politicians seem to be screaming over each other. Amid this hubbub, we sometimes see economists popping up on TV, making dire predictions, or criticizing the policy of one political candidate or another. Economists seem intrinsically partial, aligned to business interests or a political ideology. We don't really understand what they do, or how they reach their conclusions.

In this summary, you'll have a chance to regain your faith in economics. With down to earth insights from two Nobel Prize winning economists, you'll learn that a lot of the economic theories peddled by politicians are flawed, and that the most seemingly intractable social problems have clear economic solutions.

Trust in Economics

Economists can help us solve the world's gravest problems but they first have to gain our trust. In a public poll about how much people trust the opinions of different professionals, nurses ranked the highest and politicians, perhaps unsurprisingly, the lowest. What might be surprising is that economists were ranked only slightly above politicians.

Their opinions were seen as being very unreliable. But why? Perhaps because the vocal economists we see on the news are not the most trustworthy. Often, they are actually employed by a company and have a very pointed agenda toward protecting market interests.

Alternatively, they may be academic economists with extreme views. Whether on the right or the left, economists with an ideological axe to grind don't always give the most nuanced, trustworthy analysis. Often, even good economists don't take the time to explain the evidence and reasoning in a way that others can understand. To make matters worse, the opinions of academic economists can seem counterintuitive or illogical because their views don't match up with what we're told by politicians.

The fact that people don't trust economists is problematic. Why? Because they can give us very important information about how to solve some of the world's most critical problems. So, how can economists start to earn our trust and talk about issues in a way we understand?

For a start, they have to be willing to share their thought processes as well as their conclusions. If we have access to the data they use as evidence and are privy to how they think about that evidence, we're more likely to believe them. Even more importantly, they have to be willing to admit that they're fallible. Today's political and economic debate has become like a shouting match, with each side dearly attached to their own point of view.

Economists have to be willing to look at the evidence with an open mind, and where necessary, revise their opinions and admit when they get it wrong.