Books on Economics That Are Worth a Read

I have always enjoyed reading, but about four years ago, I decided to set a goal of reading a book every two weeks. While I have kept to the pursuit of the goal, I have yet to meet it if one measures it on an annual basis. I have come close, but I have not yet completed 26 books in a given year. I do not read very quickly (unlike one of my daughters who devours books voraciously – her Dad shares with just a slight tinge of envy), so when I decide to read a rather thick tome, it takes me longer than two weeks.

Furthermore, most of what I read are books about economics or somehow related to economics, so they are not always the quickest reads. That may sound odd, since I am an economist, but honestly, it is really what I enjoy reading. I can’t help it; I am a nerd. To achieve some balance, I do read fiction, and even cookbooks, and thoroughly enjoy reading them.

Through this process, I have come across books that I have thought were excellent and others that maybe did not quite reach that level (does not mean they were not worth the read, though), so I thought it would be fun to put together a list of the books on economics that I have read over the years that I have found to be excellent.

So what is “excellent’? For this list, it does not mean they were the best-written books in the sense that they achieved high art with the English language. It also does not mean that I necessarily agreed with everything that was discussed in the book.

What it does mean is that these books extended my knowledge in new and interesting ways, presented complex ideas in novel ways, and/or just made me aware of an issue or made me think more deeply about an issue. I should also add that they reflect my own interests. After all, who reads books about topics in which they have no interest?

They tend to be heavily weighted toward urban economics, macroeconomics, complexity economics, cultural economics, economic history, and heterodox economics, although other issues are covered. While I think you will learn a good bit about economics from the books on these lists, it is not a list of the great books in the history of economic thought (maybe that will be a post for the future). It is also not comprehensive in any way of the best books on economics, as I still have a lot left to read, fortunately.

I also tried to stay away from textbooks, although a couple made it on the list. Also, keep in mind that this is my opinion, obviously, and you may not agree. I would like to hear what you think.

So, here is the list, not in rank order, with a comment or two inserted.

  1. This Time is Different: Eight Centuries of Financial Folly by Carmen M. Reinhart and Kenneth S. Rogoff (A dense read chocked full of data, but gives you a very good sense of the factors leading to financial crises and the hugely detrimental effects they can have on the economy from a long historical perspective.)
  2. Complexity and the Economy by W. Brian Arthur (If you have any interest in complexity economics, this is a great introduction to the subject. In fact, you should read anything by W. Brian Arthur.)
  3. The Death of Economics by Paul Ormerod (These two books by Ormerod are great reads on complexity economics.)
  4. Butterfly Economics by Paul Ormerod
  5. The Nature of Economies by Jane Jacobs (Jane Jacobs was not trained as an economist, but in my opinion, her writings on economics were some of the most important in helping us understand the functioning of the macroeconomy and urban economies.)
  6. Cities and the Wealth of Nations by Jane Jacobs
  7. The Death and Life of Great American Cities by Jane Jacobs
  8. Mis-Measuring Our Lives: Why GDP Doesn’t Add Up by Joseph E. Stiglitz, Armatya Sen, and Jean-Paul Fitoussi (Probably not the most exciting read on this list, but you will have a great understanding of the shortcomings of one of our main economic indicators – GDP – so I think it is a very important book.)
  9. Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier by Edward Glaeser (Some interesting arguments about the value of cities that may be a bit counter-intuitive.)
  10. The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War by Robert J. Gordon (Arguably the most eye-opening book on the list. It is a long book, but a great read with many fascinating historical anecdotes.)
  11. After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead by Alan S. Blinder (There are many good books on the most recent financial crisis and the Great Recession, but this is the best that I have read. Blinder is also quite entertaining.)
  12. Buddhist Economics: An Enlightened Approach to the Dismal Science by Clair Brown (This is one of those books that really stretched my thinking on economics. Fascinating stuff.)
  13. Economism: Bad Economics and the Rise of Inequality by James Kwak (If you want to understand the perils of misunderstanding and/or inappropriately applying economic theory, you should read this book.)
  14. Globalizing Capital: A History of the International Monetary System by Barry Eichengreen (Great read on the historical development of the international financial system, but you had better bring at least some knowledge of finance and the the financial markets.)
  15. Why Nations Fail: The Origins of Power, Prosperity, and Power by Daron Acemoglu and James Robinson (This book, along with the next three in the list, provide a great overview from different perspectives of global economic development throughout large spans of history.)
  16. Guns, Germs, and Steel: The Fates of Human Societies by Jared Diamond
  17. The Wealth and Poverty of Nations: Why Some are so Rich and Some so Poor by David S. Landes
  18. A Farewell to Alms: A Brief Economic History of the World by Gregory Clark
  19. Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World by Jeff Madrick (See the comment on Economism.)
  20. This Changes Everything: Capitalism vs the Climate by Naomi Klein (An interesting book on the relationship of economics to one of the most important issues of our time.)
  21. Creative Communities: Art Works in Economic Development by Michael Rushton (One of my main interests is in understanding the intersection between arts and economic development, so I found this book very interesting.)
  22. A Textbook of Cultural Economics by Ruth Towse (If you want to get a more in-depth understanding of the economics of arts and culture, this is a good book. As the title tells, it is a textbook, but Towse does a good job of explaining the economics, although some helpful details on the economic theories are missing, in my opinion.)
  23. Economics and Culture by David Throsby (Throsby is one of the leading scholars in the field of cultural economics, so if you have an interest in this, I highly recommend this book and the following one, as well.)
  24. The Economics of Cultural Policy by David Throsby
  25. Theories of International Economics by Peter M. Lichtenstein (To be honest, this is the book I am currently reading, so I have not finished reading it, but Lichtenstein does such a wonderful job of explaining international economic theory that I had to put it on the list. He also discusses international economics from the perspective of many heterodox theories, which I think it very important.)

 

Again, I hope you find this list interesting and maybe even useful, and if you decide to read any of the books, I hope you enjoy them as much as I did. Lastly, if you really want to understand how the economy functions, I strongly encourage you to read about some of the heterodox or alternative economic theories (which is why I included some books on this list that do just that), and I also highly recommend that you read books on topics of interest from the perspective of anthropology, political science, sociology, psychology and all of the other social sciences, humanities, and natural sciences.

Happy reading!

Steve

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Interesting Changes in Industry Concentration in San Antonio

One common indicator used to get a sense of the structure of a local economy is the location quotient. Specifically, it measures the concentration of an industry in a local economy, such as a metropolitan area economy or a state economy, relative to the concentration of the same industry in some base area, typically the national economy. The most often used data to calculate the location quotient is employment, but income or wages is also used. The location quotient for industry i in region r is calculated using the following formula:

LQir = (Employmentir/Total Employmentir)/(EmploymentUS/Total EmploymentUS)

I did these calculations for the San Antonio metropolitan area economy using this formula. I calculated the location quotients for the NAICS 2-digit level industries. The names of these industries and the location quotients as of January 1990 and April 2017 are shown in the following table. April 2017 was used because it was the most current data available at the time I made the calculations.

Four industries in San Antonio have seen increases in their concentration levels since January 1990 (highlighted in yellow). The construction, mining, and logging industry saw the largest increase in relative concentration followed by financial activities, professional and business services, and manufacturing.

The largest declines in the location quotients were in the government sector followed by other services. The hospitality and education and health industries also saw smaller declines in their relative concentrations, and while the trade, transportation, and utilities and the information industries both saw declines so small one should probably just treat these as being inconsequential.

It is also interesting to note that a location quotient greater than 1.00 indicates that the concentration of the industry in the region is greater than the concentration at the level of the national economy.

As of April 2017, the industries with such location quotients were construction, mining, and logging; information; financial activities; education and health; hospitality; and government. The highest location quotient as of April 2017 was the financial activities industry; it had the second highest location quotient in January 1990. The industry with the highest location quotient in January 1990 was government.

Slide1

These changes highlight two interesting characteristics of the San Antonio economy.

First, it is an economy with a broad base of industries with relatively high concentration levels. Second, the relative base of employment has shifted away from government. This is not to say that government activities and funding are not still a vital component of the San Antonio economy because they are. The military has a big impact on the local economy, and it is worth noting that the military does not have to report employment levels, so I do not believe they are captured in these calculations.

Additionally, government funding of healthcare is very important to the San Antonio economy due to the size of the healthcare industry in the region. That said, the government sector still has a location quotient of 1.08. This fact combined with the diversity of the industry base in San Antonio is why the economy also tends to be somewhat stable relative to regional economies with more focused industry bases.

Steve

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Broad-Based Growth Continues in San Antonio

With the exception of the information sector, growth continues across all other sectors of the San Antonio economy through June of this year. The growth is lead by large increases in the construction, mining, and natural resources sector (just indicated as construction/mining in the chart) and the education and health sector. I suspect most of the employment gains in the former sector has probably come from the construction industry, but with the recovery of oil prices and activity beginning to pick-up in the Eagle Ford Shale area, the mining and natural resources industries have likely contributed their parts as well.

Growth in the education and health sector is probably driven by the continued strong expansion in the healthcare industry in San Antonio. Professional and business services (indicated as prof. services in the chart) has also shown some nice increases in employment growth this year.

The question is whether or not these sectors will continue to show strong growth.

As long as the economy keeps humming along, the construction industry is probably going to continue to grow, but there are indications that the economy is reaching capacity (as noted in my previous post) and housing prices are starting to move beyond the level of affordability for many folks.

Regarding the mining and natural resources industry growth, this is going to be driven, in part, by what oil prices do. I do not think anybody really knows where oil prices are headed over the next few years, but I think the experts feel like there will be some increase.

It seems to be a safe bet that the healthcare industry will continue to grow. However, many of the healthcare organizations in San Antonio receive a large portion of their revenues from federal government sources, so the wild card is what ultimately happens with healthcare policy and the federal budget. That may be more difficult to predict than oil prices.

Employment Growth by Industry San Antonio June 2017

NOTE: TTU is the trade, transportation, and utilities sector.

 

Feel free to contact me with any questions.

Steve

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