Thread by @besttrousers

"Good Economics For Hard Times" by Banerjee and Duflo is out today!

amazon.com/Good-Economics…

I was lucky enough to get an early copy. Here are some thoughts (1/15):

This is a very different book from "Poor Economics". It's not about RCTs, or even economic development more broadly.

(2/15)

Instead, it's about important contemporary challenges in developed countries - things like immigration, trade, welfare policy, and climate change.

(3/15)

But I certainly got the impression that a lot of their experience with running RCTs in developing countries underlies their thinking.

(4/15)

Doing that kind of work makes you appreciate how the details matter, and makes it harder for you to accept more abstract models of the economy, and make policy based on them.

(5/15)

It's hard to believe that W=MP if you've done work in developing countries.

(6/15)

It's hard to believe that people don't experience binding credit constraints if you've done work in developing countries.

(7/15)

It's hard to believe that people are poor primarily because of their own moral failures if you've done work in developing countries.

(8/15)

It's hard to believe there isn't a role for government intervention if you've done work in developing countries.

(9/15)

We can sometimes get away with these illusions in the developing world because most of the time we experience "thick" markets where highly abstract economic models are (usually) good enough.

(10/15)

But when they aren't good enough (for example, when factories close down and people can't find work), we tend to assume that the problem is rooted in ourselves, or in others - not the economic system itself.

(11/15)

This can lead to people feeling personally dejected, or blaming immigration or trade shocks (that are "outside" the standard economic system).

(12/15)

In many ways, the book read to me as an attempt to fulfill the promises Duflo made in "The Economist as a Plumber". It's about *why * details matter, and why it's important to get things right. economics.mit.edu/files/12569

(13/15)

Despite Banerjee's and Duflo's reputation as technocractic scientists, "Hard Economics" felt like a complement to @Chris_arnade's "Dignity" penguinrandomhouse.com/books/566661/d…

(14/15)

@Chris_arnade The end the book by defining the goal of social policy as “help[ing] people absorb shocks that affect them without allowing those shocks to affect their sense of themselves.” which I found to be a very useful reframing.

(15/15)

Oof, this should have been "developed" countries above (I think most people got it from the context).