A recent editor, Rupert Pennant-Rea, once described The Economist as “a Friday viewspaper, where the readers, with higher than average incomes, better than average minds but with less than average time, can test their opinions against ours. We try to tell the world about the world, to persuade the expert and reach the amateur, with an injection of opinion and argument.” Taken fom The Economist
In my introductory microeconomics class, I require students to write a book review in the style of The Economist. The Economist book reviews are so good that in many ways, once you have read the review you really don’t need to read the book–unless for pleasure of course! These reviews provide an excellent basis on which to decide if a particular book is worth your time. With respect to my class, I am very interested in reading the assignment because the book reviewed is Cocktail Party Economics. (Both The Economist and Cocktail Party Economics are published by Pearson.) Here is my promise to the class–I won’t read the names of the authors so my students can truly write in the spirit of The Economist (authors are anonymous). Opine away!
Few people would claim to know very much about economics, perhaps seeing it as a complex and esoteric subject with little relevance to their everyday lives. Introduction to The Economics Book: Big Ideas Simply Explained by DK (with contributors and Niall Kishtainy acting as the consultant editor)
If I ever teach a course in the History of Economic Thought, I would use this book as a text. I love the structure (I became a fan when I bought the similar Philosophy Book) because it suits how I think. (In fact, my book Cocktail Party Economics: The big ideas and small talk about markets has a similar approach.) The chapters are limited to one big idea, with some pithy quotes from a famous economist. I guess great minds do think alike! I really loved their table of context (that’s right context not content) which puts that idea in historical perspective. Short and sweet. Most ideas have a biography in a box of the famous economist who was the key thinker. (Like the gossip columns in my book but mine are more gossipy.) They also have a flow chart which outlines the main components of the point for a fast visual explanation. If that isn’t clear, then old-fashioned paragraphs finish off the explanation. Unlike my book, sections are colour coded with lovely photographs to complement the time of the idea’s genesis. It is the kind of book you can read a chapter at a time and not worry about losing the plot. If you read this book you will know more about Economics than most!
“I am not interested in what you think you know about baseball, or what you think I don’t know about it. I am not interested in guts or heart or determination or anything else the fans or what your mothers love about you. I’m interested in getting you on base. If you can do that, we win.” Taken from MONEYBALL (the movie pg 75 of script.)
Economists always teach how consumers maximize utility (happiness) subject to a budget constraint or how firms minimize costs subject to a production level. These are known as optimization problems. It seems to me that Moneyball is a combo of the two. The Oakland A’s set out to maximize their wins subject to a salary cap much like a consumer going shopping except the Oakland A’s are a firm trying to make a profit–and wins help the bottom line.
Moneyball also uses the concept of exchange or trades to solve this problem. Statistically overvalued players are traded for undervalued players much like overvalued currencies or stocks are bought with overvalued ones. Players are traded to get the right mix that accomplishes the goal of maximizing wins. Furthermore, these trades can include money but not necessarily. In other words, the trades are partly barter. The movie showed a multi-player trade which beautifully demonstrates the nail-biting concept of arbitrage and coincidence of wants which is the rationale for why money is the common medium of exchange in the wider economy.
Who knew that baseball could teach us so much about Economics?