Aught Lang Syne: The Rise of Popular Economics

One clear development in nonfiction during the Aughts has been the rise of popular economics. Popular economics nonfiction existed before this decade, but the genre proliferated in 2005 with the wild success of Freakonomics. Discover Your Inner Economist, More Sex is Safer Sex, Predictably Irrational, The Economic Naturalist, and SuperFreakonomics among others followed.

What is popular economics? Well, this nonfiction is popular in the sense that it’s written in a way that any moderately intelligent person could understand the material without any previous exposure to economics. While none of the authors of these books have writing skills as superb as Malcolm Gladwell’s or Michael Lewis’, several of the authors employ quite deft prose. Freakonomics and SuperFreakonomics were co-written by a journalist, Stephen Dubner, which explains why they’re the best of the bunch in terms of writing style. Their focus on anecdotes to tease out concepts and findings is a method used to some degree by all of the authors to make their books accessible. But, perhaps the best part of their writing is their explication of their findings. For instance, they explain why the correlation between blacker names and lower income is not causal:

“The data show that, on average, a person with a distinctively black name—whether it is a woman named Imani or a man named DeShawn–does have a worse life outcome than a woman named Molly or a man named Jake. But it isn’t the fault of their names. If two black boys, Jake Williams and DeShawn Williams, are born in the same neighborhood and into the same familial and economic circumstances, they would likely have similar life outcomes. But the kind of parents who name their son Jake don’t tend to live in the same neighborhoods or share economic circumstances with the kind of parents who name their son DeShawn. And that’s why, on average, a boy named Jake will tend to earn more money and get more education than a boy named DeShawn.”

What a beautiful and simple explanation of correlation not equating to causation. Tyler Cowen, author of Discover Your Inner Economist, is a very good communicator of ideas, although he is not up to Dubner/Levitt level. He tends to assume the reader has a certain baseline of economic knowledge and will have lines like: “This runs counter to the usual ‘adverse selection’ hypothesis from economics, which predicts—incorrectly—that the best drivers are most likely to forgo insurance because they need it the least.” Levitt and Dubner would likely offer a much fuller explanation of the concept of adverse selection. Ariely, author of Predictably Irrational, is a great writer, employing a more informal tone than Levitt/Dubner and Cowen while also focusing on narratives from his experiments that demonstrate his always interesting results.

But, in what sense is all of this economics? All of the authors have degrees in and teach economics. But, an economist can write a book that has nothing to do with economics. In reality, most of these books are strikingly interdisciplinary. Predictably Irrational and behavioral economics generally depend as much—if not more—on insights from psychology than insights from economics. Discover Your Inner Economist uses a lot of psychology too, particularly when Cowen discusses self-deception. Much of Freakonomics involves clever applications of statistics, including its best chapter, on cheating.

What unites all of these books under “Economics”? Well, most of them are attuned to incentives and how they affect our decisions. But, uniting these books based on incentives would be deceptive because that assumes that each of the books take the rational-choice model for granted–that they take for granted that people rationally respond to incentives. Predictably Irrational, for one, is partially about systematic cognitive irrationalities that make us unresponsive to incentives. In reality, these books are united by a desire to understand human behavior. Economics has no monopoly over this domain (although, economists love to act like it does, sometimes in an insularly arrogant way!), which explains why tools from psychology, statistics, sociology, and other disciplines are used almost as frequently as exclusively economic methods to reach the conclusions that each of these books do.

So, maybe this genre should be called something else besides “popular economics”, but, regardless of the genre’s name, it has been a very positive development for nonfiction. Popular economics has taken much of what was once the exclusive domain of academic study or public policy and made it accessible to everyday life. It has made statistical analysis exciting. It has helped me—and I’m sure many others—understand the world and myself better. I purposely seek out dingy restaurants in low-rent areas (which usually results in great food) due to Discover Your Inner Economist, try to resist anchoring due to Predictably Irrational, and will have no hesitancy about naming my future daughter Laquisha because of Freaknomics.*

*Well, that’s not entirely true. But, I won’t fear that her name will lower her income and educational potential.

Admittedly, part of the cause of popular economics’ rise is the fact that economists have actually shifted towards researching topics that are more conducive to popular dissemination. Behavioral economics—which points out the irrationalities in our everyday decisions—is perhaps the fastest growing subfield of economics and is much more conducive to popular book form than say, monetary economics, a quite popular subfield in the 1970s.

Wherever the causal arrow points, the result is excellent: I expect in this next decade we will witness the continued proliferation of nonfiction applying insights from psychology, economics, and statistics to phenomena outside of the strict domain of those disciplines.

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3 responses to this post.

  1. Posted by doc on December 19, 2009 at 1:34 PM

    Good post, Josh and your observations are right on. I look forward to the role academic psychology will play in popular economics. Maybe Obama’s economic plan should be called the “Stimulus-Response Package”.

    Reply

  2. […] Aught Lang Syne « Aught Lang Syne: The Rise of Popular Economics […]

    Reply

  3. […] (see Vernon Smith, Richard Thaler, and Daniel Kahneman), but he is a pioneer in its popularization, a quite important trend of the Aughts. He shows, among other things, that behavioral economics need not simply be an exercise of pointing […]

    Reply

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