[The Montana Professor 18.2 Spring 2008 <http://mtprof.msun.edu>]
Charles Wheelan
New York: W. W. Norton, 2002 (2003)
260 pp.; $15.95 pb
Pietra Rivoli
Hoboken N.J.: John Wiley and Sons, 2005 (2006)
288 pp.; $16.95 pb
Steven Levitt and Stephen Dubner
New York: William Morrow (HarperCollins), 2005 (revised and expanded 2007)
336 pp.; $27.95 hc
Douglas J. Young
Agricultural Economics and Economics
MSU-Bozeman
Few people doubt the importance of economic affairs in today's world, but many people have difficulty approaching the subject via the traditional principles textbook. The leading texts emphasize the analytical foundations of modern economic theory and its applications in free markets. As a result, they are full of abstract "if ..., then ..." statements, equations (e.g., %Δ[x/y] ≈ %Δx - %Δy), and charts like this one:/1/
This approach may work well in a classroom setting, but what about people who don't have to take an Econ 101 exam?
The three titles reviewed here take quite different approaches to economics, which make them much more accessible--perhaps even enjoyable--for non-economists. At the same time, teachers of economics will find a wealth of material to enliven and enrich their classrooms.
Naked Economics: Undressing the Dismal Science by Charles Wheelan is best described as "economics by anecdote." Indeed, there is not a single graph, chart, or equation in the entire book. Wheelan, formerly the Midwest correspondent for The Economist magazine, can actually write and explains economic principles by examples instead of math. An early chapter is entitled "Incentives Matter: Why you might be able to save your face by cutting off your nose (if you are a black rhinoceros)." Wheelan describes the plight of the black rhino, whose population has fallen from 65,000 to 2,500 in 30 years, and explains how this is related to the rewards local people receive from poaching versus preservation. When local people share in the profits from tourists shooting rhinos with cameras, they are more likely to help preserve them. Understanding incentives also helps to make sense of North Korea, teacher salaries, airline pricing, stock options for CEOs, overfishing, and the benefits of "green taxes" to combat environmental problems.
Wheelan is a fan of capitalism, but he recognizes the costs of market dynamics: "Creative destruction is a tremendous positive force in the long run. The bad news is that people don't pay their bills in the long run. The folks at the mortgage company can be real sticklers about getting that check every month" (36-37). Technological progress inevitably displaces some workers and firms--in fact, technological progress destroys (and creates) far more jobs than globalization does. Even though the gains from these changes outweigh the losses, how society treats the losers is an important policy issue.
Two chapters address Government and the Economy ("I: Government is Your Friend and a round of applause for all those lawyers" and "II: The Army was Lucky to get that Screwdriver for $500"), while other chapters discuss the Economics of Information, Productivity and Human Capital, Financial Markets ("What economics can tell us about getting rich quick--and losing weight too!"), The Power of Organized Interests, The Federal Reserve, Globalization, and Development Economics. The survey approach of Wheelan's book makes it an excellent introduction to contemporary economics, and also suitable as a supplement in a traditional principles course.
Pietra Rivoli's The Travels of a T-Shirt in a Global Economy does exactly what the title suggests: Rivoli, a professor of economics at Georgetown University, traces a t-shirt she bought on a Miami boardwalk back to the companies and people that printed it (Florida), that manufactured the raw shirt (China), and that grew the cotton (Texas). In a clear and engaging fashion, Rivoli explains the history of cotton in the United States over the last 200 years, including the roles of slavery, migrant Mexican labor, farm subsidies, and technological change.
Her chapter, "Sisters in Time, From the Farm to the Sweatshop and Beyond," describes how sweatshops--often employing young women from rural areas with few alternatives--were the leading edge of economic development in many countries, including England and the U.S. in the eighteenth and nineteenth centuries, and Japan, Taiwan and Hong Kong earlier in the 20th century. A similar process continues today in China and other emerging nations. Almost 40% of China's labor force is still employed in low productivity rural occupations, ensuring an ample supply of workers for continued industrialization. As bad as the pay and working conditions in the sweatshops are, they are a big step up from gathering animal dung for fuel.
A three-chapter sequence describes the perverse effects and unintended consequences of U.S. t-shirt trade policy, and the dramatic consequences of ending protectionism. Two chapters explain "Where T-Shirts Go after the Salvation Army Bin"--namely, to markets in East Africa. This last section is titled "My T-Shirt Finally Encounters a Free Market."
Rivoli's approach combines history, travelogue, and storytelling, and puts a human face on the sometimes arcane subject of globalization. As one reviewer put it, "This book is unlike any text in International Economics 101. It's totally entertaining and without those dreadful equations."/2/ While definitely not The Sisterhood of the Travelling Pants, Rivoli's T-Shirt never fails to entertain as well as inform.
Steven Levitt and Stephen Dubner's Freakonomics: A Rogue Economist Explores the Hidden Side of Everything is better known than either Naked or T-Shirt./3/ The book was conceived after Dubner, a journalist, wrote a piece on Levitt, an economist at the University of Chicago, for the New York Times Magazine. The article received such a positive response, and Dubner and Levitt found their skills so complementary, that they decided to write a book.
As an economist, Levitt's forte is bringing evidence to bear on intriguing and often important social issues. In contrast to the polemicists of the broadcast media, Levitt lets the evidence speak for itself, skewering many a cherished belief along the way. Most famously, Levitt analyzes the decline in crime rates in the U.S. in the 1990s. Was the decline the result of capital punishment? (Answer: no evidence to support); stiffer sentencing such as mandatory minimums for three time offenders? (Answer: yes, partially); new policing techniques à la New York City? (Answer: no evidence to support); simply putting more cops on the street? (Answer: yes, partially); or did more citizens carrying guns deter criminals? (Answer: no evidence to support). Actually, Levitt concludes that the largest single factor causing the decline in crime was Roe v. Wade. Broader access to legal abortion, especially among poor, teenage women, significantly reduced the number of unwanted children who were most likely to become criminals 20 years later.
Another chapter examines why drug dealers still live with their moms (Answer: the average dealer on the street makes about $3.30 per hour), why prostitutes earn more than architects, and whether crack cocaine was the worst thing to hit Black America since Jim Crow. Levitt's eclectic research examines incentives for cheating in a number of occupations, including school teachers when they are rewarded based on test scores of their students, sumo wrestlers, and office workers who may fail to leave a dollar for the Bagel Man.
Two chapters examine various aspects of good parenting, including whether it is more dangerous for your child to play at a friend's house where there is a gun or a swimming pool (Answer: swimming pool, by a factor of 100), the effect of school choice on disadvantaged students in Chicago (Answer: no effect), obsessive parents and the nature-nurture quagmire, and what your parents were telling the world when they named you.
From the perspective of an economist, Levitt's perspective and approach are captivating. His conclusions are often controversial and--as with any social science study--should not be taken as the last word. But many of the issues are vitally important, and Dubner's presentation skills make the book engaging and enjoyable even for the non-economist.
Taken together or one at a time, the three titles reviewed here provide an accessible, entertaining and intriguing view of economics today.
Notes
[The Montana Professor 18.2 Spring 2008 <http://mtprof.msun.edu>]