This book is a series of loosely organized essays about "how economists think." The target audience appears to be people like myself, who are interested in economics, but are not highly trained in the field. It's a good companion to "The Economics of Public Issues," which focuses on real-world illustrations of basic economic concepts. This book focuses on how to approach analyzing the real world for yourself.
According to the Introduction, many of the essays have grown out of discussions Landsburg had with his regular lunch group ... and what lunches those must have been! Questions are raised, and explanations batted about and critiqued. Assuming that Landsburg is a typical economist, the book succeeds spectacularly in illustrating "how economists think." Many of the essays retain what must have been the original feel of the lunchtime debates (ideas are raised, then criticized, then rejected or refined) -- a form which sheds considerable light upon how economists approach problems. The essay about why economists are sometimes wrong is very enlightening. It describes why economists thought that unemployment and inflation were inversely related -- until government started acting on that assumption, which destroyed the relationship. While I'm not very good at macroeconomics, Landsburg's explanation of this is simple and persuasive, and creates more insights into how the study of economics works.
As a series of essays, some are better than others. Landsburg slips easily between making arguments about issues to making assertions about issues. Since the target audience is amateurs like myself, it's a little hard for an untrained reader to critically evaluate the assertions, but (after much head-scratching) I think some of them are flawed. Landsburg clearly feels strongly about some topics, and it's possible that when he gets worked up about an issue he loses some of his open-mindedness. The essay on environmentalism beats up on environmentalist excess but provides little in the way of alternatives. (I worked for an environmental group at one point; Landsburg's critiques are largely accurate but veer off-topic and illuminate little.) He ridicules several prominent public figures (Felix Rohaytn, extensively, and several US presidential candidates from 1984-1992) for making statements reflecting economic illiteracy, but fails to address the issue: the public's economic illiteracy would instantly render unelectable a candidate who said the things Landsburg says.
Still, distilling several years of what must have been stimulating lunchtime discussions into a book which can be read in a few hours is a valuable service. The reading is easy, the topics are accessible (for the most part), and the thinking is clear. Also, since these essays came from leisure time, they successfully communicate some of the joy of studying economic issues.
The book feels like one long lunch with a great group. The more standoffish, angrier essays were concentrated near the end, so they feel like one guest had had one too many martinis and should go home rather than back to work. But they'd still be worth eating with again.
(N.B. Landsburg has a monthly column for Slate, if you'd like to sample some of his writing or you liked this book and want more.)
What is particulary amusing about economists, in general, is their intractable belief that people make rational decisions. A recent body of thought, behavioral economics, would argue against that as a certainty. Dr. Kent Hickman et al. (Gonzaga University) published an interesting study on this topic in a Harvard edited journal, which examined bidding on the game show 'The price is right'. It's not difficult to read, but may require a search at a university library to find it.
Economics can be fun, and conceptually at least, isn't beyond the understanding of the common man.
Another illustration: in his last chapter he attacks environmentalism. There are environmental arguments against recycling, but he refuses to make them, in large part because they would confuse the real issue, which is his right to a preference set. It should be clear from his previous discussion that what he is objecting to is not the notion that pollution imposes a cost, nor that it is improper for people to want a clean earth; he is defending his right to a preference set, and not to have it itself dismissed out of hand.
The glibness and sloppiness that cost him his star may well make the book more effective for what it was intended -- to introduce a way of thinking, and follow it to its sometimes unexpected conclusions.
The second time I read it I found it almost infuriating in its naivete. His focus on individual consumer preference and dismissal of other factors result in a dismal science indeed.
Applying Landsburg's framework to an extreme example, we might find slavery to make perfect economic sense. The buyers and sellers of the "commodity" would simply be expressing their preferences via prices and transactions. Of course, in this case, human suffering is left out of the equation. So in many of Landsburg's examples, something is invariably missing from the equation.
Landsburg is especially passionate in his denouncement of environmentalism as "a force-fed potpourri of myth, superstition, and ritual". Perhaps he did personally encounter this debased version of environmental, but he must not have looked very far for another kind. His mistake is in making the colonial assumption that natural resources are free and endless. This may have seemed a natural mistake for Adam Smith, but it's inexcusable for Landsburg writing in 1993. His model of "Grimyville" and "Cleanstown" takes a different turn once health costs and cleanup costs are added to the equation.
Apart for his environmental blind spot, Landsburg also fails to discuss Econ 101 topics such as externalized costs, the tragedy of the commons, and the principal-agent problem.
The difference between my first and second readings was five years of living in the real world. This book might be great for late night discussions in the freshman dorms, but will eventually ring hollow once reality sets in.
P.S. Since I will be trying to sell my used copy of the book, does my negative review demonstrate irrational behavior?