The Soulful Science: What Economists Really Do and Why It Matters

First let me say that I approached this book with trepidation, based on the reviews of certain economists, fearing that it would be a smug apologetic for mainstream economics. It is not a smug apologetic, it is an up-to-date, superbly well-written and entertaining survey of interesting recent trends in economics. However - I agree with John Wenzler here - the argument does not support the conclusion, which is that mainstream economics is basically healthy. Why is this? It starts by profiling an economic historian. Great. But economic history is generally shunned by mainstream economists, and widely deleted from curricula. It emphasises that empirical work is important in economics - excellent - but you won't learn solid, painstaking empirical work as a foundation for a career in the best economics departments. It cites Keynes several times; but Keynes's books are labelled "obscure" by prominent mainstream economists. And it emphasises growth as an important issue - brilliant - but scarcity is the foundation for neoclassical economics, not growth. One reads with amazement that "culture, institutions and technology interact subtly", hardly daring to think that this could be a brilliant insight into the kind of reconciliation that is needed in the human sciences. And one's caution is ultimately warranted. Because lurking at the end of this work is an all-too-familiar conclusion, that if "rational choice and the use of equilibrium... are limitations, so be it"; and the same old assertion of the "power" of neoclassical models. Whenever I hear an economist talk about the "power" of mainstream modelling, I can't help but recall the phrase "the violence of abstraction". Coyle even cites recent sociological research (p 252), to the effect that individuals learn to use financial economic theorems, as evidence of the power of the model! That's not the power of the model, it's the power of the ideology. I feel Michael Brady's review is right in this regard - Nassim Taleb's critique of mainstream economics and finance is relevant, and is underplayed. Furthermore, Coyle cites Holander's recent research on graduate economics students as support for her thesis that economics is changing - without mentioning the much more pessimistic view of his colleage Klamer, on the basis of the same evidence, and included in the same book. It would also have been interesting to see a reference to Steve Keen's work, also, which is a good, thorough critique of the internal inconsistencies of mainstream economics. I do appreciate Coyle's concession that not all critics of mainstream economics must be derided for not wanting to learn mathematics - that is a concession that should be accepted by some other reviewers of this book. As the French students have pointed out, there is no general objection to learning mathematics, providing it is an aid to understanding actually existing economies. Ultimately, mainstream economics has retarded understanding of econ

Perhaps the most important thing to know, if you want to be a good citizen, is some basic economics. This book is a good way to learn it.

Think back to those economics classes you took in college. You can probably still define a few concepts like price elasticity, opportunity cost and diminishing returns, but the rest may be somewhat hazy. Like most busy people, you probably haven't stayed abreast of the latest research on the causes of economic growth or poverty, the metrics for economic policy, the economics of information and the use of evolutionary modelling. Don't worry. In this pleasant fly-over, economist Diane Coyle shows you the newly discovered economic territory you might have missed. Her presentation is all right, though she's defensive about her chosen profession and sometimes dodges around a bit before coming to the point. Still, we believe you'll find her book sensible, accurate, apolitical, fairly well-organized and far more "utility maximizing" than econ class.

Want to find out about quantum mechanics without sweating out all the partial differential equations? There are a dozen excellent books. Want to find out about what's happening in economics without slaving over arcane journal articles? You are out of luck. Once in a while an interesting economics book will come along, but invariably by someone proselytizing for his own particular take on the policy issues of the day, or eager to teach you the bizarre behavior of the neoclassical rational actor. I have longed for a solid description of what's been happening in the field recently by a competent economist without a policy bone to pick. At last I would have something to offer my friends and family so they could actually answer the oft-repeated question "What do economists actually have to say about the issues of the day when they're not simply expressing their personal political views, or those of their employers?" Coyle's book the rare example of such a book. People are generally ignorant of modern science and they know it. They are even more ignorant of the basic principles of economics, but they think they know more than they do. Therefore, they despise and fear economists, who are easily pilloried as other-worldly academics who throw around big equations but couldn't meet a payroll or punch a time clock if their professional future depended on it. Conservatives and liberals alike cherish basic principles of economics that are as stupid and inane as intelligent design and flat-earth-ism. We need a dozen more books like this excellent contribution by Diane Coyle. Coyle covers the history and theory of economic growth, the sources and potential cures for world poverty, the nature and source of happiness and its relationship with income and wealth, the economics of adverse selection and moral hazard, rent-seeking and the politics of state intervention, evolutionary economics, behavioral economics, and the new, analytical institutional economics. Since she has a Ph.D. in economics from Harvard, Coyle for the most part acts as a participant in dealing with the issues, not simply a journalist reporting the news. Generally, her take on the various issues is insightful, balanced, and engaging. However, I would be remiss if I failed to find something in the book to grumble about, so I will discuss her treatment of behavioral economics, which I consider more of a journalistic than a professional account. The common take on behavioral economics is that traditional economics assumes people are rational optimizers whereas the experimental evidence is that they are boundedly rational, or even irrational, non-maximizers. This is incorrect and indeed dangerous. I say this is incorrect because the evidence shows that people are not purely self-interested and they are prone to committing decision-making errors based on both weaknesses of human nature and on having incorrect theories of stochastic events. But there is no evidence that people are not fully ratio

It is always pleasant when somebody says nice things about your profession. Especially when you are, like me, a graduate student of economics, and you are used to criticism and misunderstanding from non-economists. In fact the book explicitly aims to counter the standard criticisms of modern economics (autistic, removed from the real world, obsessed with macho mathematics, centered around irrealistic concepts as rationality and equilibrium etc.) by showing, as the subtitle announces, "what economists really do and why it matters". Although admitting and defending the fact that rational economic man still forms the core and benchmark of economic analysis, this means that Coyle spends a lot of time on relatively new and sexy subjects in economics. Behavioral economics, evolutionary economics, happiness economics, economics of social capital and social norms, and the economics of asymmetric information all have their own chapters. If you like the questions of social science, it all makes fascinating reading. Coyle has clearly read herself to the frontier of many research fields and does a very good job at making them come alive. Even while being an economists myself, I found plenty of new insights. Although she does not write quite as well as for example her natural science counterpart Bill Bryson, she is clearly passionate about the subject and manages to convey this very well. In the end, the subtitle a bit misleading, since the reader will not find chapters on things that economists clearly also "really do" such as industrial organization, macroeconomics, finance, international economics or monetary economics. The only older and more established field that is extensively covered is growth theory cum development economics, with the aim of tackling big questions about poverty and global income inequalities. But given the aim of the book we can forgive her for that, as we can forgive her for the sometimes over-ubiquitous-ness of superlatives such as "incredibly insightful" and "extremely fascinating" with which insights are presented. However, it is also this enthusiasm plus the displayed knowledge of discipline that make this an interesting and entertaining book for both economists and non-economists, and a must read for everyone who criticizes economics without knowing what's been going on in the last 20 years.