James Kwak on John Komlos's "What Every Economics Student Needs to Know and Doesn’t Get in the Usual Principles Text": A Book That Needed To Be Written: Tuesday Book Review Weblogging
James Kwak: A Book That Needed To Be Written: "I have previously written about...excessive belief in the little bit that you remember from Economics 101....
Economics 101 usually paints a highly stylized, unrealistic view of the world in which free markets always produce optimal outcomes.... Most people in the world who have taken any economics have only taken first-year economics, and so they never learned that, from a practical perspective, just about everything in Economics 101 is wrong. (Complete information? Rational actors? Perfectly competitive markets?) This produces a nation of people like Paul Ryan... journalists who repeat what Paul Ryan says, and ordinary people who nod their heads.... The problem is... the way it is taught to first-year students....
What we need, I have often thought, is a companion book for students in Economics 101, one that points out the problems with the standard material.... Fortunately, John Komlos, who really is an economist, has written a book along these lines, titled What Every Economics Student Needs to Know and Doesn’t Get in the Usual Principles Text.... Most of the book after the first couple of chapters presents specific criticisms of the basic models presented in Economics 101... assuming that consumer demands are exogenously determined... that indifference curves are smooth and reversible... the assumption of the rational decision maker.... It should do an excellent job at its primary mission: showing first-year students that most of what they learn cannot be applied in the real world, at least not without significant modification. The world is a complex, messy place, and markets are complex, messy institutions like any others. The more people learn that lesson, the better.
