Tuesday, August 4, 2015

Summer Reading...

Spent some of the summer reading a couple of books that have been on my list. Below are the books and my brief opinion.

Krugman's academic writings, which won him the Nobel Prize in 2008, are very different from his popular press writings. His academic work recognizes the benefits of trade while his popular writings seem a little protectionist. I thought it would be interesting to read some of his "in-between" stuff. As expected, "The Return of Depression Economics" was "in between". A very easy and pleasant read, it was long on stories but very short on analysis. Krugman tries to suggest that economic liberalization can lead to an environment where deep and long-lasting recessions can occur. But the attempts, which are anecdotal at best, seem to fall flat. While his writing in entertaining (for an economist), the conclusions seem a little flimsy.  Eh, I'll give it a 5/10.

I also finished reading Gneezy and List's "The Why Axis". John List, who may one day win the Nobel Prize, might be the most productive economist in the world.  Some of his work in finance has made an important splash, but that splash is minor compared to his crusade to use field experiments to test existing economic theory. Interested readers could spend hours looking through his website located here.  The Why Axis is also a nice read. The authors' straightforward discussion about the implications from their field experiments is, at times, fascinating, but by the end of the book, the discussion becomes a little predictable. Most of the research in the book has a behavioral slant. For instance, many of the field experiments discussed in the book employ the concept of loss aversion. One of the most interesting studies (in my opinion) examined secondary teachers' performance in the classroom (as measured by students' standardized test scores). One treatment group of teachers were paid a bonus prior to the beginning of the quarter under the agreement that if the students didn't meet some score threshold, the teachers would repay the bonus. Relative to the control groups (i.e. teachers that were not paid a bonus), the performance of students' tests scores improved significantly. The magnitude of the increase resembled something similar to the literature's previous estimates of a one standard deviation increase in teacher quality. Another group of interesting studies attempted to explain the gender pay gap. The press, and nearly every democrat running for office, often point out that women are paid (on average) $.77 for every $1 that is paid to men, Gneezy and List conduct field experiments to determine whether a woman's aversion to competition can explain some of this pay gap. The tests, and their results, seem to be pretty compelling. Although it was definitely worth the read, the book, however, was about 75 pages too long.  Eh, I'll give it an 8/10.

Last, but not least, I read Tom Sowell's "Black Rednecks and White Liberals". I had  read his book "Race and Culture" earlier this year and, while a tougher read, I quite enjoyed it. So I was anxious to read this more up-to-date analysis of the intersection between culture, race, and economics. Sowell provides a very thorough look of the cultures of the antebellum south, the Jews, and the Germans. He provides an impressive link between the strength of culture within these (and other) groups of people that are persistent across time. Culture, as he discusses, is present in these groups throughout several generations, regardless of the migration of these groups throughout the world. For those interested in this type of analysis, I think Black Rednecks and White Liberals is a must read. Eh, I'll give it a 9.5/10.

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