8 ms·

Ask HN: what are some good resources to understand economics?

28 points by toumhi 15y ago

Given what's happening in the United States now, I think it's crucial to have a good understanding of the economy. I always feel that the press is not providing good resources (at least press I have access to). Do you know any good books/blogs/videos explaining subjects like debt/inflation/credit ratings/economic policies/ in-depth while being approachable by non-economists?

jtardie 15y ago
Personally, I really like Austrians. Mises.org is a good place to start in that regard.
- chrismealy 15y ago
  That's politics, not economics.
phyllotaxis 15y ago
Lewrockwell.com is a correlary to Mises.org. The focus there is on non-technical commentary, where LvMI is more scholarly. There are thousands of media files, audio, video, and e-book, on every imaginable topic. My first recommendation would be to read the best intro to "intuitive economics" ever: Henry Hazlitt's "ECONOMICS IN ONE LESSON" Here's an introduction to it http://mises.org/daily/3000 http://mises.org/daily/3000
epnk 15y ago
"Economics in One Lesson" by Hazlitt is digestible, a quick read, and gets to the heart of a lot of issues, IMO.
- ebaysucks 15y ago
  I second this recommendation. After reading this book, I suggest "What has government done to our money?" by Murray Rothbard to understand the monetary problems in more depth. Edit: Here are free pdf's for these 2 books: 1) http://www.fee.org/pdf/books/Economics_in_one_lesson.pdf http://www.fee.org/pdf/books/Economics_in_one_lesson.pdf 2) http://mises.org/books/whathasgovernmentdone.pdf http://mises.org/books/whathasgovernmentdone.pdf
  - steins 15y ago
    and 1 more source: http://www.hacer.org/pdf/Hazlitt00.pdf http://www.hacer.org/pdf/Hazlitt00.pdf
- chrismealy 15y ago
  This is one of the worst books ever written. It's just an introduction to 1940s right wing politics.
  - steins 15y ago
    Yet surprisingly it explains the shitstorm we have today better than most textbooks based on monetarist, keynesian, or efficient market theorists.
    - chrismealy 15y ago
      Show me in the book where that's true.
- dagw 15y ago
  Economics in One Lesson is a horrible book for people with no background in economics. Within economics there are several schools of thought, and this book is little more than an outright attack by a proponent of one (fairly niche) school on another (far more prominent) school. Despite its title it isn't an textbook, but a manifesto, and as such Hazlitt's goal isn't to educate you, but to convert you. Hazlitt sets out to do this with great skill, employing every rhetoric tool at his disposal. And I'll admit he's really good at it as well. He presents theories as gospel truth, making no mention of any caveats or qualifiers that you'd find in a more serious work. There is a complete lack of any sort of critical analysis of the ideas present, or any notion that they may be anything other than universal truths. He greatly misrepresents the ideas of his opponents and loves to use quotes out of context. He makes great use of leading rhetorical questions to lead the reader to make incorrect conclusions, without having to stick out his own neck and make the incorrect statement himself. So in my opinion the real problem with this book is that it is so convincingly written that a naive and uncritical reading of it will lead the reader to come away with the belief that economics is really simple and that all economic problems have trivial solutions, as spelled out in this book. That being said, the ideas present in this book aren't completely without merit, it's just that the few actually useful and interesting nuggets are buried in far too much polemic brow beating
ekm2 15y ago
I would suggest Greg Mankiw's Principles of Economics.He also has a blog here http://gregmankiw.blogspot.com/ http://gregmankiw.blogspot.com/
- ca136 15y ago
  +1 for anything by Mankiw. We read several of his books when I was studying Econ in college a few years ago. Given your interest in inflation, government spending, etc, you'll want to focus on the chapters on Macroeconomics. I also found a good presentation from the Berkeley website that might be interesting: http://emlab.berkeley.edu/users/webfac/wood/e100b_f08/intro.pdf http://emlab.berkeley.edu/users/webfac/wood/e100b_f08/intro....
pitdesi 15y ago
http://www.npr.org/blogs/money/ http://www.npr.org/blogs/money/ is great for understanding what's going on right now There was a fantastic 1980 PBS (video) series called Free to Choose, by Nobel-Prize winning economist Milton Friedman and his wife Rose. It's available for free viewing here: http://miltonfriedman.blogspot.com/ http://miltonfriedman.blogspot.com/ Once you get into economics, you will like this blog: http://marginalrevolution.com/ http://marginalrevolution.com/
- chrismealy 15y ago
  MR is a right-wing blog. Not so much economics.
Isofarro 15y ago
"Begg, Dornbusch and Fisher" for a one-volume treatise on Economics. That was my Economics 101 book last century, but constantly updated and revised the recent editions are still topical and clearly explained Dornbusch and Fisher also publish a standard one-volume treatise on MacroEconomics which might be a better fit for your country-level requirements.
kloncks 15y ago
Semi-related comment but...we need a HN-like site for Economics. I believe there was something like that before, but I'm not sure what happened to it. Anyone interested in starting something like that on the side as a hobby?
mrtron 15y ago
Keep in mind your question is quite broad like asking how to get started into programming. You will get conflicting opinions on economic models and theories like you would on programming languages and algorithms. The mainstream press provides brutally inaccurate opinion and talking points regarding economics. Completely ignore those articles and look into some expert talks like the npr posts recommended. Study how the federal reserve decides to move interest rates - it is the post important macroecon process.
- toumhi 15y ago
  True, I expect there's not one and only resource. I'd like to know of quality resources from different models, even contradictory ones. By just reading the news I learn about facts but not about underlying processes, root causes etc. Not about why it is necessary to bail out Greece with different scenarios that could play out if we don't do it.
  - SkyMarshal 15y ago
    http://tickerforum.org/ http://tickerforum.org/ Search for 'Genesis'. Ignore the political discussions, and don't bother with context, just find the few posts where he elaborates enough that you don't need the context of the rest of the thread. Or start reading his blog, http://market-ticker.org/ http://market-ticker.org/ starting back at the beginning around 2006. He's unabashedly conservative/libertarian, but he has had the strongest grasp of the mechanics of the financial crisis going all the way back to 2006 of anyone I've yet seen, even vs famous economists like Krugman. Originally an engineer, made his fortune as an entrepreneur, now manages his money from Florida, blogs about the crisis, and runs that discussion forum for investors.
Mrgt40 15y ago
http://www.calculatedriskblog.com/ http://www.calculatedriskblog.com/ has really awesome summaries of key economic data and development.
jhancock 15y ago
Accessible read on banking: http://mises.org/mysteryofbanking/mysteryofbanking.pdf http://mises.org/mysteryofbanking/mysteryofbanking.pdf I have always found the "back stories" on how/why our economy came into existence to be "pulled out of thin air". I just started reading this new book: http://www.amazon.com/Debt-First-5-000-Years/dp/1933633867 http://www.amazon.com/Debt-First-5-000-Years/dp/1933633867 I'm only about 1/3 the way into it, but so far impressed.
- thisuser 15y ago
  Oh Graeber's book is out! Lovely! I have been passing around his essay by the same name for some time now. Should be a good intro to the book http://blog.longnow.org/2010/04/22/debt-the-first-five-thousand-years/ http://blog.longnow.org/2010/04/22/debt-the-first-five-thous... I would also recommend anything by David Harvey. Start out with this animated version of one of his talks: http://www.youtube.com/watch?v=qOP2V_np2c0 http://www.youtube.com/watch?v=qOP2V_np2c0 Then move on to his Capital vol. 1 lecture series. http://www.youtube.com/watch?v=gBazR59SZXk http://www.youtube.com/watch?v=gBazR59SZXk There is also a book format of his reading guide
raintrees 15y ago
Two more sites: I use http://economistsview.typepad.com/ http://economistsview.typepad.com/ to get a summary of opinions and links to other sources, and I understand there are now some finance videos/courses at http://khanacadmey.org http://khanacadmey.org under the Banking/Money section (I haven't vetted them yet).
amayne 15y ago
Wealth of Nations, seriously. Over two hundred years ago Adam Smith laid out the important concepts.
- steins 15y ago
  There is a little bit of good information in there, but his theories of value are terrible. When you read this do yourself a favor and research the subjective theory of value as well. It describes the real world far better than the labor theory of value.
joelhaus 15y ago
The federal reserve banks have some good resources, but I would go through these in this order: http://www.federalreserve.gov/aboutthefed/default.htm http://www.federalreserve.gov/aboutthefed/default.htm >> http://www.federalreserve.gov/pf/pf.htm http://www.federalreserve.gov/pf/pf.htm http://www.khanacademy.org/#current-economics http://www.khanacademy.org/#current-economics >> http://www.khanacademy.org/#banking-and-money http://www.khanacademy.org/#banking-and-money http://research.stlouisfed.org/ http://research.stlouisfed.org/ To qualify this, I do have a B.S. degree in Econ. [ADDED]: An important component of risk analysis is political risk (but it is often overlooked in discussions dealing with the U.S. due to the perception that it is most stable alternative). There is a fine Wikipedia article that discusses this, and in light of the recent downgrade, may help explain things: http://en.wikipedia.org/wiki/Political_risk http://en.wikipedia.org/wiki/Political_risk
gabrielroth 15y ago
A meta-comment on the answers to this question: For various reasons, a disproportionate number of HN commenters are fans of "Austrian School" economics. You'll see links to papers from mises.org, books by Murray Rothbard, etc. Without passing judgment on any of this work, if you're new to economics it would probably be helpful for you to understand that it's outside the mainstream. To answer your question more directly (although only partially): Wikipedia is quite good on the major economic concepts and figures. I'd imagine that the Wikipedia article on any of the subjects you mentioned would be a good, brief, thoroughly hyperlinked starting point. Check out http://en.wikipedia.org/wiki/Inflation http://en.wikipedia.org/wiki/Inflation, for example.
- chrismealy 15y ago
  I'll pass judgment on Austrian economics: it's terrible. It's just tarted up right-wing politics. They start with the assumption that free markets are magic and from that they conclude that free markets are magic. Seriously, they're against empiricism. They assume they're right and don't bother to check their work. That's why as a research program it's never gone anywhere. Austrians are just rightwingers who chose an economics to suit their politics. If people want to be rightwing that's fine. There's no reason to drag bad economics from the 1930s into it.
- toumhi 15y ago
  Yeah, Wikipedia works to an extent. I feel it's easier to grasp a subject with videos rather than with reference material. I've watched a few Khan academy videos about inflation/deflation, they're very accessible and explain the basics. I've read a few wikipedia articles but I think I've retained more from the khan academy.
credo 15y ago
My apps http://cascadesoft.net/EconomyApp.aspx http://cascadesoft.net/EconomyApp.aspx (iPhone, iPad, Windows PC) provide a snapshot of the US economy. The iPad and iPhone apps were once ranked #1 on Apple's top charts for the Finance category. Obviously, I can't claim to be entirely objective in this matter, but I think that the app is a great resource for anyone who wants to understand the US economy.
dxbydt 15y ago
>what's happening in the United States now, I think it's crucial to have a good understanding of the economy I aver its not crucial to understand economics. It is crucial to understand finance. This view was hammered into us repeatedly at the University of Chicago. The seminal paper, by Mr. Larry Summers, on the distinction: http://m.blog.hu/el/eltecon/file/summers_ketchup%5B1%5D.pdf http://m.blog.hu/el/eltecon/file/summers_ketchup%5B1%5D.pdf or on jstor ( http://www.jstor.org/pss/2327785 http://www.jstor.org/pss/2327785 ) You need to know how to add. You don't need to know about the well-ordering principle. I say this as a math major who would love it if everyone knew why add works in an integral field( ie. Peano arithmetic: http://en.wikipedia.org/wiki/Peano_Arithmetic#Arithmetic http://en.wikipedia.org/wiki/Peano_Arithmetic#Arithmetic ). To quote my professor, there's 2 big portions to econ - the narrative portion and the arithmetic portion. The first is mostly storytelling. Granted, there's some consensus around the arc of that story ( more consensus in micro-econ than in macro-econ ), but its still a story. The second completely ignores the story. It just says if debt is what it is, ie. some x, and inflation is y, what should the CDS be priced at ? ie. if CDS = f(x,y) what should that f look like ? Turns out that question is much more useful and actionable than the story-telling aspect. If somebody told you the Dow fell by 500 points, its more useful ( in a utilitarian sense ) to know what you should do with your personal portfolio, than to know the reasons for Dow's fall (assuming that set of reasons are even knowable). You might think the causation would be useful. It is, to a very small extent, but the actionable portion ie. what you must do, can be understood much more efficiently by simply focusing on the prices of individual instruments that characterize market indices, derivatives on those indices, ETFs that make a play on debt, inflation etc. The fact that there were 10,300 puts at 113 strike on the August DIA yesterday is more useful than what any individual economist thinks. It tells you that the short term consensus view of Dow is 113*100 = 11300 ...the trend is down-sloping in the short term. Ironically, Summers said finance guys were mere ketchup economists. The dept. of Ketchup pays ketchup economists huge salaries so they could calculate the price of 2 quarts of ketchup if the market told them the price of 1 quart. Whereas "real economists" were engaged in doing research on why a quart of ketchup was priced the way it was ie. due to consumer wages, tomato prices, cost of harvesting tomato, soil conditions etc. Paraphrasing Summers "Ketchup economists reject research of the ketchup market. They believe prices of ketchup are the only hard data worth studying". You may not agree with any of this - but I do urge you to read that paper. Its had a huge influence on the asset pricing community.
SkyMarshal 15y ago
Tough question to answer, since economists don't fully understand economics yet either, and still get it wrong (how many professional economists besides Roubini foresaw and warned of the financial crisis again?). Some of the most important bits of foundational knowledge I've accumulated over the years: 1. The Industrial Revolution demonstrated to humanity that wealth could be created from thin air, on a large scale, and hence civilizations had an alternative to stealing it from each other. There are basically two ways of creating wealth: -1) Harvest raw materials, apply labor, capital, and innovation to convert them into finished products worth more than the sum of their parts. The diff between what it cost to make the product and what you sell it for is the wealth you've created out of thin air (more commonly known as profit). It's why manufacturing is important. We used to take hundreds of dollars worth of wood and iron and turn it into thousands of dollars worth of sailing ships. Now we take hundreds of millions of dollars worth of sand, aluminum, and copper and turn it billions of dollars worth of microchips. -2) Provide a service that saves other people time and/or money. Time & money = wealth. With the time/money saved, they can either do more of #1 or #2, invest it, spend it in leisure, or whatever else is of value. More commonly known as specialization. Most things are combinations of the two - products that save time or money (web apps, cars, etc.), or services that reduce the cost of #1 or increase its final value. 2. In a fiat currency system, the underlying of everything is interest rates, and the underlying of interest rates is the risk-free rate of return. If you only watch one single data point, the risk-free rate is the most important. When it moves, everything moves (since all other interest rates are indexed off of it). Normally the risk-free rate is considered to be US Treasuries, but over the past few years there's been thought amongst some actuaries, economists, traders, etc. whether it's not something else, like a composite of US Treasuries and LIBOR, or something else. But just be aware that there is a concept of a baseline interest rate upon which all other interest rates in the economy are indexed on, and even tiny movements in the baseline rate have major ramifications for the entire rest of the economy. 3. Incentives matter. One of the things that all economists across all schools of thought agree on. One good article: http://economix.blogs.nytimes.com/2009/09/09/what-weve-learned-incentives-still-matter/ http://economix.blogs.nytimes.com/2009/09/09/what-weve-learn.... Plenty more if you google the phrase. 4. Fractional reserve banking. Many people misunderstand how this works, so I'll preface by saying that individual banks cannot create money. Eg, an individual bank cannot loan out more than it has in deposits. If a bank has $100 in deposits, and the Federal Reserve sets the reserve ratio at 10%, the bank must keep 10% in reserve, eg it cannot loan out more than $90 of its $100. But, the banking system can essentially create money, or multiply it, based on the fractional reserve ratio and the money multiplier. Wikipedia has a good table that demonstrates how this works: http://en.wikipedia.org/wiki/Money_multiplier#Table http://en.wikipedia.org/wiki/Money_multiplier#Table 4. On a meta level, don't subscribe to one economic school or another, rather learn and understand them all, where and why they disagree, but don't get emotionally invested in any one of them. I see lots of Austrians in this thread and a Keynesian or two. Listen and understand, don't believe. Economics is the study of one of the most complex, dynamic, and intractable systems we know of, and no school has it completely right yet, all are subject to further revision. 5. In that vein, read Benoit Mandelbrot's The (Mis)Behavior of Markets for a good discourse on why economics is so difficult and intractable. http://www.bearcave.com/bookrev/misbehavior_of_markets.html http://www.bearcave.com/bookrev/misbehavior_of_markets.html 6. Also read Charlie Munger's Harvard Commencement speech, "On the Psychology of Human Misjudgement", for a reminder of why not to get emotionally invested in one school of econ, or worldview, or religion for that matter. https://duckduckgo.com/?q=munger%20psychology%20of%20human%20misjudgment&kh=1&kg=p&kp=-1&kb=d https://duckduckgo.com/?q=munger%20psychology%20of%20human%2... I can think of more, but that's enough for now, hope it helps a little.
duncan_bayne 15y ago
There is a wealth of articles, free (good!) books, etc. at http://www.mises.org/ http://www.mises.org/, home of Austrian economics online.
bumbledraven 15y ago
I like Price Theory by David D. Friedman (http://www.daviddfriedman.com/Academic/Price_Theory/PThy_ToC.html http://www.daviddfriedman.com/Academic/Price_Theory/PThy_ToC...) and Human Action by Ludwig von Mises (http://mises.org/resources/3250 http://mises.org/resources/3250).

Tycho 15y ago
Just like to say I've been really enjoying your contributions to Hacker News. And thanks for the link to the Summers paper, will give that a read. Thinking about your point though, isn't it more important that the average person understands economics so that they don't vote for economically/financially illiterate policies/politicians?
- dxbydt 15y ago
  Thanks! My finance buddies in IB/PE like to say that finance is the only portion of econ that actually works. The braindead portion = econ minus finance, is only good for academia, a shot at the Nobel and a job at the treasury :) I actually think econ is a huge distraction net-net, because of the compelling number of contradictory narratives that cannot obviously all be simultaneously true. In that event, the only objective function is the asset price. In that sense, its important to latch on to asset prices and functions of those prices, understand how the slopes of those functions change, and then understand how the vector sum changes if you take a bunch of those products in tandem. Personally, I've been able to protect my portfolio only by not getting distracted by the underlying economic explanations( assuming those are even valid, given the dubious nature of the source ie. right-wing economist vs left-wing vs freshwater economist vs saltwater vs libertarian vs pseudo-socialist vs social-democratic vs conservative vs religious-conservative vs fiscal-conservative vs 100 other flavors ) and just focus on market indices that matter and derivatives that hedge those indices in case things go south. I will go out on a limb and claim that if you spend $100 subscribing to 4 trading forums/chatrooms ( whether day-trading or swing-trading or commodities or derivatives or fx ), you are saving yourself a lot of grief than if you spend the same $100 buying econ publications. Atleast the former opinions can be validated by simply buying/selling whatever asset they advocate ( not necessarily with real $, just paper-trade ). The latter cannot be validated at all. I remember attending a lecture where the reputed economist says unemployed people must be taxed at a higher rate because they are consuming oxygen but not paying revenue towards the GDP! That is actually very sound economics from some bizzaro school of thought ( http://healthcare-economist.com/tag/oxygen-tax/ http://healthcare-economist.com/tag/oxygen-tax/ ) taken to its logical conclusion! Rather than think about this dismally depressing scenario, tell me the price of such oxygen contracts and I'll see if the market is sufficiently liquid so I can take a position in those contracts :)
  - Tycho 15y ago
    Hmm, the finance/economics divide is reminding me somewhat of the morality/legal divide. It's tempting to look at the idea of basing all your decisions about viable strategies on hard finance data as being akin to basing all your moral judgement on whether an action aligned with current laws. The latter seems obviously flawed, but at least it offers some degree of empirical certainty - whereas nobody can actually agree on a standard of morality (there are many differing philosophies etc.).
    - dxbydt 15y ago
      There's a beautiful, beautifully argued book by Martin Gardner ( http://www.amazon.com/Whys-Philosophical-Scrivener-Martin-Gardner/dp/0312206828 http://www.amazon.com/Whys-Philosophical-Scrivener-Martin-Ga... ). There are 2 chapters on economics in that book, one on free market capitalism ( "why i'm not a smithian" ), one on i guess you could call it lite-obamaism ( "why i'm not a marxist" ). Gardner rejects both. He works out some math behind their assumptions. Then states his moral objections to both of them. I used to think Martin Gardner was a giant puzzle-master with super high IQ. After reading that book, I discovered a thinking, anxious, doubtful, religious, deeply charitable & generous human being. To date, it remains my favorite Gardner book. Do check it out, I think you'll love it. The rest of the book documents Gardner's careful rejection of all of the popular philosophies ( solipsism, anarchism, polytheism, monotheism, relativism, pantheism, determinism etc. ). Its a monumental piece of work.