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Dani Rodrik

Economics Rules

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“A hugely valuable contribution. … In setting out a defence of the best in economics, Rodrik has also provided a goal for the discipline as a whole.” —Martin Sandbu, Financial Times

In the wake of the financial crisis and the Great Recession, economics seems anything but a science. In this sharp, masterfully argued book, Dani Rodrik, a leading critic from within, takes a close look at economics to examine when it falls short and when it works, to give a surprisingly upbeat account of the discipline.

Drawing on the history of the field and his deep experience as a practitioner, Rodrik argues that economics can be a powerful tool that improves the world—but only when economists abandon universal theories and focus on getting the context right. Economics Rules argues that the discipline's much-derided mathematical models are its true strength. Models are the tools that make economics a science.

Too often, however, economists mistake a model for the model that applies everywhere and at all times. In six chapters that trace his discipline from Adam Smith to present-day work on globalization, Rodrik shows how diverse situations call for different models. Each model tells a partial story about how the world works. These stories offer wide-ranging, and sometimes contradictory, lessons—just as children’s fables offer diverse morals.

Whether the question concerns the rise of global inequality, the consequences of free trade, or the value of deficit spending, Rodrik explains how using the right models can deliver valuable new insights about social reality and public policy. Beyond the science, economics requires the craft to apply suitable models to the context.

The 2008 collapse of Lehman Brothers challenged many economists' deepest assumptions about free markets. Rodrik reveals that economists' model toolkit is much richer than these free-market models. With pragmatic model selection, economists can develop successful antipoverty programs in Mexico, growth strategies in Africa, and intelligent remedies for domestic inequality.

At once a forceful critique and defense of the discipline, Economics Rules charts a path toward a more humble but more effective science.
This book is currently unavailable
244 printed pages
Original publication
2015
Publication year
2015
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Quotes

  • Довран Одаевhas quoted4 years ago
    Ten Commandments for Economists

    1. Economics is a collection of models; cherish their diversity.

    2. It’s a model, not the model.

    3. Make your model simple enough to isolate specific causes and how they work, but not so simple that it leaves out key interactions among causes.

    4. Unrealistic assumptions are OK; unrealistic critical assumptions are not OK.

    5. The world is (almost) always second best.

    6. To map a model to the real world you need explicit empirical diagnostics, which is more craft than science.

    7. Do not confuse agreement among economists for certainty about how the world works.

    8. It’s OK to say “I don’t know” when asked about the economy or policy.

    9. Efficiency is not everything.

    10. Substituting your values for the public’s is an abuse of your expertise.
  • Довран Одаевhas quoted4 years ago
    Ten Commandments for Noneconomists

    1. Economics is a collection of models with no predetermined conclusions; reject any arguments otherwise.

    2. Do not criticize an economist’s model because of its assumptions; ask how the results would change if certain problematic assumptions were more realistic.

    3. Analysis requires simplicity; beware of incoherence that passes itself off as complexity.

    4. Do not let math scare you; economists use math not because they’re smart, but because they’re not smart enough.

    5. When an economist makes a recommendation, ask what makes him/her sure the underlying model applies to the case at hand.

    6. When an economist uses the term “economic welfare,” ask what he/she means by it.

    7. Beware that an economist may speak differently in public than in the seminar room.

    8. Economists don’t (all) worship markets, but they know better how they work than you do.

    9. If you think all economists think alike, attend one of their seminars.

    10. If you think economists are especially rude to noneconomists, attend one of their seminars.
  • Довран Одаевhas quoted4 years ago
    Economics provides many of the stepping-stones and analytic tools to address the big public issues of our time. What it doesn’t provide is definitive, universal answers. Results taken from economics proper must be combined with values, judgments, and evaluations of an ethical, political, or practical nature. These last have very little to do with the discipline of economics, but everything to do with reality.
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