Good Economics for Hard Times

by Abhijit V. Banerjee, Esther Duflo

Overview

The winners of the Nobel Prize show how economics, when done right, can help us solve the thorniest social and political problems of our day.

Figuring out how to deal with today's critical economic problems is perhaps the great challenge of our time. Much greater than space travel or perhaps even the next revolutionary medical breakthrough, what is at stake is the whole idea of the good life as we have known it.

Immigration and inequality, globalization and technological disruption, slowing growth and accelerating climate change--these are sources of great anxiety across the world, from New Delhi and Dakar to Paris and Washington, DC. The resources to address these challenges are there--what we lack are ideas that will help us jump the wall of disagreement and distrust that divides us. If we succeed, history will remember our era with gratitude; if we fail, the potential losses are incalculable.

In this revolutionary book, renowned MIT economists Abhijit V. Banerjee and Esther Duflo take on this challenge, building on cutting-edge research in economics explained with lucidity and grace. Original, provocative, and urgent, Good Economics for Hard Times makes a persuasive case for an intelligent interventionism and a society built on compassion and respect. It is an extraordinary achievement, one that shines a light to help us appreciate and understand our precariously balanced world.

Product Details

ISBN-13:	9781541762879
Publisher:	PublicAffairs
Publication date:	11/12/2019
Sold by:	Hachette Digital, Inc.
Format:	eBook
Sales rank:	909,312
File size:	2 MB

About the Author

Abhijit V. Banerjee is the Ford Foundation International Professor of Economics at the Massachusetts Institute of Technology. Esther Duflo is the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics in the Department of Economics at the Massachusetts Institute of Technology. They are the winners of the 2019 Nobel Prize in Economics. Their previous book together is Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty, winner of the 2011 Financial Times and Goldman Sachs Business Book of the Year Award.

Table of Contents

Preface to the Paperback Edition ix

Preface xxi

1 MEGA: Make Economics Great Again 1

2 From the Mouth of the Shark 10

3 The Pains from Trade 51

4 Likes, Wants, and Needs 98

5 The End of Growth? 146

6 In Hot Water 208

7 Player Piano 227

8 Legit.gov 263

9 Cash and Care 277

Conclusion: Good and Bad Economics 323

Notes 327

Acknowledgments 385

Index 387

Editorial Reviews

★ 11/04/2019

MIT professors Banerjee and Duflo (Poor Economics), winners of the 2019 Nobel Prize in Economics, apply pragmatic, real world–tested economic ideas to such issues as global trade, immigration, prejudice, income inequality, and the feasibility of a universal basic income in this lucid and frequently surprising account. The authors’ findings often run counter to conventional wisdom, as in their conclusion that immigrants do not lower wages or steal jobs from native workers, but actually create more wealth and income as they expand local communities. Banerjee and Duflo contend that employment provides people with dignity and an identity, not just income; therefore, a universal basic income won’t solve problems stemming from the lack of well-paying and meaningful jobs. Misguided moral thinking, the authors reveal in their takedown of claims that the U.S. welfare system is rampantly abused, often gets in the way of sound economic policy. They also make the case that impoverished people make sound financial decisions more often than they’re given credit for, citing the example of a Moroccan man who prioritized buying a television over purchasing food. When the lack of entertainment in his remote village and the value of relieving his family’s boredom are taken into consideration, the authors write, the man’s decision makes sense. Banerjee and Duflo’s arguments are original and open-minded and their evidence is clearly presented. Policy makers and lay readers looking for fresh insights into contemporary economic matters will savor this illuminating book. (Nov.)

Publishers Weekly

"Excellent...Few have grappled as energetically with the complexity of real life as Esther Duflo and Abhijit Banerjee, or got their boots as dirty in the process...A treasure trove of insight...[Readers] will be captivated by the authors' curiosity, ferocious intellects and attractive modesty."—The Economist

A Wall Street Journal Bestseller
A USA Today Bestseller


"Carefully argued and backed with research...Good Economics is an effective response to Banerjee and Duflo's more thoughtful critics, some of whom argued that devotion to randomised trials had led to a narrowing of economics, in which complex questions that could not be scientifically tested should simply be set aside. The authors make a convincing case that empirical economics contains answers to many vexing problems, from populism to identity politics, especially when economists are willing to range outside their discipline's confines."—Financial Times

"'Good Economics for Hard Times' lives up to its authors' reputations, giving a masterly tour of the current evidence on critical policy questions facing less-than-perfect markets in both developed and developing countries, from migration to trade to postindustrial blight."—Wall Street Journal

"Their goal is to ground both sides of our national debate in hard evidence, and the process of coming up with ways to do that is pretty interesting in itself... Eager to distance themselves from the previous generation of economists who argued from first principles, Banerjee and Duflo say nothing that smells like special pleading. It would be hard to take umbrage with such studied humility. The authors admit, 'We clearly don't have all the solutions, and suspect no one else does either.' Even so, the prospect of a path towards consensus solutions through iterated experiments is enough to make for a compelling read."—National Review

"The studies they cite probe hot topics such as climate change, immigration and the viability of continued economic growth. Banerjee and Duflo synthesize the literature on what is agreed and what is controversial in an accessible, often entertaining way."—Nature

"Good Economics for Hard Times makes important policy connections and suggestions... Banerjee and Duflo explore traditional remedies (tariffs sure aren't the answer, they find, and job retraining and other trade adjustment tools are too narrow and take too long) and suggest some novel ideas... In crafting their carefully reasoned arguments, they marshal evidence assembled over decades from all sorts of areas-the fight against malaria, past efforts at tax reform, previous waves of migration-and propose commonsense solutions."—Foreign Policy

"Lucid and frequently surprising... Banerjee and Duflo's arguments are original and open-minded and their evidence is clearly presented. Policy makers and lay readers looking for fresh insights into contemporary economic matters will savor this illuminating book."—Publishers Weekly, Starred Review

"A canard-slaying, unconventional take on economics...This might look like yet another conventional state-of-the-world economics book, but it is anything but. It is an invigorating ride through 21st-century economics and a treasure trove of facts and findings."—The Times (UK)

"Good Economics for Hard Times lives up to its authors' reputations, giving a masterly tour of the current evidence on critical policy questions facing less-than-perfect markets in both developed and developing countries, from migration to trade to postindustrial blight."—William Easterly, The Wall Street Journal

"An excellent antidote to the most dangerous forms of economics bashing...Abhijit Banerjee and Esther Duflo, write beautifully and are in full command of their subject. Perhaps the greatest contribution of Good Economics... is precisely this: it demonstrates both the brilliant insights that mainstream economics can make available to us and its limits, which a progressive internationalism has a duty to transcend."
—Yanis Varoufakis, The Guardian

"Not all economists wear ties and think like bankers. In their wonderfully refreshing book, Banerjee and Duflo delve into impressive areas of new research questioning conventional views about issues ranging fromtrade to top income taxation and mobility, and offer their own powerful vision of how we can grapple with them. A must-read."—Thomas Piketty, professor, Paris School of Economics, andauthor of Capital in the Twenty-first Century

"A magnificent achievement, and the perfect book for our time. Banerjee and Duflo brilliantly illuminate the largest issues of the day, including immigration, trade, climate change, and inequality. If you read one policy book this year — heck, this decade - read this one."—Cass R. Sunstein, Robert Walmsley University Professor,Harvard University, and author, How Change Happens

"Banerjee and Duflo have shown brilliantly how the best recent research in economics can be used to tackle the most pressing social issues: unequal economic growth, climate change, lack of trust in public action. Their book is an essential wake-up call for intelligent and immediate action!"—Emmanuel Saez, professor of economics at UC Berkeley

"One of the things that makes economics interesting and difficult is the need to balance the neat generalities of theory against the enormous variety of deviations from standard assumptions: lags, rigidities, simple inattention, society's irrepressible tendency to alter what are sometimes thought of as bedrock characteristics of economic behavior. Banerjee and Duflo are masters of this terrain. They have digested hundreds of lab experiments, field experiments, statistical studies, and common observation to find regularities and irregularities that shape important patterns of economic behavior and need to be taken into account when we think about central issues of policy analysis. They do this with simple logic and plain English. Their book is as stimulating as it gets."—Robert Solow, Nobel Prize winner and emeritus professor of economics, Massachusetts Institute of Technology

"In these tumultuous times when many bad policies and ideas are bandied around in the name of economics, common sense-and good economics-is even more sorely needed than usual. This wide-ranging and engaging book by two leading economists puts the record straight and shows that we have much to learn from sensible economic ideas, and not just about immigration, trade, automation, and growth, but also about the environment and political discourse. A must-read."—Daron Acemoglu, Elizabeth and James Killian Professor of Economics, MIT, and coauthor of Why Nations Fail

"Banerjee and Duflo move beyond the simplistic forecasts that abound in the Twittersphere and in the process reframe the role of economics. Their dogged optimism about the potential of economics research to deliver makes for an informative and uplifting read."—Pinelopi Goldberg, Elihu Professor of Economics, Yale University, and chief economist of the World Bank Group

"In Good Economics for Hard Times, Banerjee and Duflo, two of the world's great economists, parse through what economists have to say about today's most difficult challenges-immigration, job losses from automation and trade, inequality, tribalism and prejudice, and climate change. The writing is witty and irreverent, always informative but never dull. Banerjee and Duflo are the teachers you always wished for but never had, and this book is an essential guide for the great policy debates of our times."—Raghuram Rajan, Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business

From the Publisher

2019-08-29
"Quality of life means more than just consumption": Two MIT economists urge that a smarter, more politically aware economics be brought to bear on social issues.

It's no secret, write Banerjee and Duflo (co-authors: Poor Economics: A Radical Rethinking of the Way To Fight Global Poverty, 2011), that "we seem to have fallen on hard times." Immigration, trade, inequality, and taxation problems present themselves daily, and they seem to be intractable. Economics can be put to use in figuring out these big-issue questions. Data can be adduced, for example, to answer the question of whether immigration tends to suppress wages. The answer: "There is no evidence low-skilled migration to rich countries drives wage and employment down for the natives." In fact, it opens up opportunities for those natives by freeing them to look for better work. The problem becomes thornier when it comes to the matter of free trade; as the authors observe, "left-behind people live in left-behind places," which explains why regional poverty descended on Appalachia when so many manufacturing jobs left for China in the age of globalism, leaving behind not just left-behind people but also people ripe for exploitation by nationalist politicians. The authors add, interestingly, that the same thing occurred in parts of Germany, Spain, and Norway that fell victim to the "China shock." In what they call a "slightly technical aside," they build a case for addressing trade issues not with trade wars but with consumption taxes: "It makes no sense to ask agricultural workers to lose their jobs just so steelworkers can keep theirs, which is what tariffs accomplish." Policymakers might want to consider such counsel, especially when it is coupled with the observation that free trade benefits workers in poor countries but punishes workers in rich ones.

Occasionally wonky but overall a good case for how the dismal science can make the world less—well, dismal.

Kirkus Reviews