Naked Economics


Book Review - People of my generation exhibit some deficiencies, as critics are quick to point out. Millennials, they say, lack extensive vocabularies and the ability to carry on a conversation. They can't write and are unable to perform the simplest calculations. But I have noticed another glaring deficiency that is not limited to my generation, and that is lack of economic knowledge. Sad though it is, one can get by with a paltry vocabulary and use a machine to add or calculate 15% of a total, but patently false economic arguments are dangerous. I can't count the number of times people have relied on the most basic of economic fallacies to support some position or policy.

I've never been an official student of economics, but economic principles are the foundation for politics and law and, well, life. Markets run the world. They are amazingly powerful and quite beautiful in their efficiency and complexity. I often ask myself why people, especially those whose very identity is wound up in a particular theory or idea, don't stop for a moment to learn more and to test the validity of their presumptions. Then I remember that economics is known as the dismal science, and that people think it is extraordinarily dull. As one definition goes: "An economist is someone who is good with numbers but does not have the personality to be an accountant."

Indeed, most of the books I've read on economics have been textbooks or academic journal articles that tend to be very dry and very long. There are notable exceptions, such as Bastiat's essay What Is Seen and What Is Not Seen, and Adam Smith's The Wealth of Nations, but before I read Naked Economics: Undressing the Dismal Science by Charles Wheelan, I had not read an "accessible" and entertaining overview of basic economic principles. In the Forward, Burton Malkiel notes that people often become glassy-eyed when confronted with the study of economics because "economists generally do not write well and. . . most economics texts rely far too much on algebraic manipulation and complex diagrams. Moreover, few economists are able to transmit the considerable excitement of economic analysis or to show its relevance to everyday life."

Wheelan's book is very light but comprehensive. My primary criticism is that it's too pop-sciencey, but I suppose that's also part of its strength. Wheelan does a good job of bringing the "old" ideas or theories together with what's happening now, he explains basic economic principles in plain English, and then he explains why they are relevant. He says, "one need not know where to place a load-bearing wall in order to appreciate the genius of Frank Lloyd Wright. This book is not economics for dummies; it is economics for smart people who never studied economics. Most of the great ideas in economics are intuitive when the dressings of complexity are peeled away. That is naked economics. Economics should not be accessible only to the experts. The ideas are too important and too interesting."

Why did the chicken cross the road? Because it maximized its utility. If you want to understand that and so many other useful, beautiful concepts, read the book. Memorize it. I hope you become as excited about economics as I am. "Our best hope for improving the human condition is to understand why we act the way we do and then plan accordingly."