What Books On Economics Should You Read in 2018?
People ask me all the time: what are the best economics books?
I hate this question. I really do.
And it’s because I don’t know where to begin. When someone asks this question, they probably don’t care what the best economics book is—they want to know where to start learning about economics. They’re looking for something general, something that’ll teach them basic concepts like supply and demand.
They want a textbook, or something like it.
If not, then what they’re after is a personal recommendation, something they wouldn’t have found on their own—maybe something interdisciplinary.
Second, I hate this question because I don’t know which economics they’re interested in.
Economists like to think that economics is a hard-and-fast science, like physics, that’s governed by immutable rules that yield predictable results—but it’s not. The only rule in economics is that every rule can be broken.
It’s with this perspective that I’ve created these lists.
The first list, the best books on economics, is my attempt at creating a list of books that will give someone with no prior knowledge of economics a solid education—if you only read ten books about economics, these are them.
Read them in the order I’ve ranked them if you can, you’ll get the most out of them that way.
And if you studied economics in university I recommend reading them all twice since you’re at a distinct disadvantage compared with people who know nothing about economics.
After all, it’s better to know you know nothing than think you know something, when you don’t.
The second list contains a bunch of popular economics books. Some are worth reading, some aren’t.
The books in the third list are some influential, and important historical economics books and texts that weren’t already mentioned. Some of them don’t have much to offer, but I was obliged to include them out of respect for history.
Enough talk. Let’s get to the books.
The Top 10 Economics Books You Should Read
1. A Splendid Exchange, by William J Bernstein
Most people would’ve started this list by recommending a textbook, or at least a standard book on economic theory.
In my opinion, that’s a huge mistake.
If you want to learn about economics you have to start with the history. History is the foundation of all the social sciences, it’s our ready-made laboratory, it’s our data-set, it’s our primary source.
The fact is that all economic theories are based in history: they attempt to explain what happened, and then use those explanations (economic models) to predict what will happen—but you’d never know that from reading a standard economics textbook.
The added benefit of starting with a book on economic history is that you’ll see just how many theories there have been throughout history—and you’ll see that they’re always open to question. As the times change, so to do the rules of the game.
Likewise, you’ll get a sense of the variety of economic systems that have existed: the economy doesn’t have to work the way it does. In many ways, the entire school of economics is a Procrustean Bed that attempts to fit the rules of history into neat little boxes—but they don’t fit very well.
William J Bernstein’s A Spendid Exchange is a comprehensive, yet accessible introduction to economic history. He covers everything from the neolithic period until today, in a chronological order. Very straightforward.
I also like his book because he’s relatively fair: he acknowledges that history sometimes (if not often) conflicts with what our economic models would suggest—reality is messy, theory is clean.
Alternatively, I also like The Ascent of Money, by Niall Ferguson. His book isn’t quite as long, and the reading is a little easier.
But what I like about his book is that he covers everything conceptually—it’s not a narrative history in the same way as Bernstein’s. For example, he has a chapter about the evolution of money, of credit etc.
It’s fun to read and the book is already pre-digested for you. A good starting point.
2. How To Lie With Statistics, by Darrell Huff
Darrell Huff’s How To Lie With Statistics is the classic introductory text for people wanting to understand how to understand statistics, how to interpret them—and how to spot fakes.
Economists routinely use data to prove their points, and most people take it for granted that their data says what they want it to say—often it doesn’t.
This book will remind you to stay skeptical, and give you the basic tools for reading any book on economics.
3. Basic Economics, by Thomas Sowell
Now that you’re familiar with the history of economics, and how economists
massage distort data to make it fit their theories, you’re ready to learn what some of those theories are.
Thomas Sowell’s Basic Economics is a great starting place. He writes clearly and concisely, and tells you what you need to know.
In fact, once you understand what’s in this book, there’s not a whole lot else classical economics has to offer.
Simplicity is truth.
Another reason I like this book is that Sowell isn’t too preachy: he explains economic’s foundational principles while restraining judgement.
4. Future Babble, by Dan Gardner
Because the entire book is dedicated to explaining how, and why forecasters (particularly economists) are usually wrong.
That’s right. They’re usually wrong.
This is a bitter pill to swallow for most students of economics—some never swallow it. But if you don’t recognize the predictive limits of our economic theories, you’re doomed to failure.
And if it’s your career, probably posthumous ridicule and poverty.
5. Antifragile, by Nassim Nicholas Taleb
Nassim Taleb’s Antifragile is a game-changer. In it he explains how the world of economics (and many other disciplines) is governed by power laws—where variables have non-linear relationships.
What does that mean?
Basically, the world of economics is not governed by millions of small interactions, like classical economic models suggest, instead, it’s governed by a small number of unpredictable big changes—what he calls black swan events.
For example, almost all of the economic growth that occurred in England between 1300 and 1820 took place between 1800 and 1820, where the economy grew by over 8% per year.
However, between 1300 and 1700, the economy grew by an average of 0.21% per year—the growth in that 20 year period was likely greater than the preceding 800 year period. When things change, they change big-time.
Non-linear relationships are everywhere in economics: consider income inequality, market share of companies, the boom and bust cycle.
And perhaps the most important point that Taleb makes is that our economic theories don’t account for these shocks, which are exogenous conditions relative to our models (they exist beyond them, they can’t be accounted for).
Basically, the bulk of our economic models are useless in terms of prediction because they’re based on a false set of principles.
6. Thinking Fast And Slow, by Daniel Kahneman
Daniel Kahneman (who’s won the Nobel Prize in economics) and his research partner Amos Tversky are the founders of the field of behavioral economics, which applies the lessons of empirical psychology to economics.
The main point of Thinking Fast and Slow? People aren’t rational—we make most of our daily decisions according to a set of acquired and genetically hardwired heuristics (decision-making shortcuts).
This fact undermines the central premise of classical economics, that people are rational.
These findings help explain why economists are so often wrong: if you build your economic model on the assumption that people will make rational choices, but they don’t, the model is screwed.
In his book, Kahneman explains the psychology, and its applications to economics as simply and clearly as possible—anyone can pick up and enjoy this book.
You should, you’ll learn a lot.
If you’re looking for something a little meatier, you can read Kahneman & Tversky’s Judgement Under Uncertainty, which details their litany of experiments.
7. The Intelligent Investor, by Benjamin Graham
Most economists have safe jobs as tenured professors at universities: if they’re wrong, it doesn’t matter. They have no skin in the game.
Investors, on the other hand, put their money where their mouth is—if they’re wrong they pay (a steep) financial price. If they’re right, they’re rich.
That’s why I usually trust investors and businessmen over economists. They look at things from different angles, practical angles. They see the world for what it is, and don’t give a crap about theory.
Nassim Taleb, was actually a quantitative analyst on Wall Street before becoming a popular academic, for example (the guy managed billions, and made hefty profits in the 2008 meltdown).
But why this book?
Because Benjamin Graham is the father of value investing, which has been the most successful investing method in history—it’s what Warren Buffet does, for example.
Graham’s point is to look for companies with strong fundamentals, and proven track records, as opposed to hunting for “the next big thing.”
This book will give you a different perspective on economics, and will give you a taste of what really drives the economy: businesses and people, not abstract theories.
The book’s also good because it’s lessons are rooted in history—there is a wisdom in experience. Companies which have survived 50 years are likely to outlive companies that have survived 5 years (this is called the Lindy Effect).
Read this book for the perspective. You’ll be glad you did.
8. The (Mis)Behavior of Markets, by Benoit Mandelbrot
Benoit Mandelbrot is the genius who invented fractal mathematics and geometry—what he calls the mathematics of nature.
In his book The (Mis)Behavior of Markets, Mandelbrot extends the logic behind fractals (complex, repeating patterns that look the same no matter how close or far away you are) into the realm of stock prices and economics.
He observes that stock price fluctuations conform to fractal patterns: the chart looks roughly the same whether you’re looking at it by the minute, hour, day, week, month etc.
This book confronts many of the assumptions of classical economics, and will help you understand economics in a completely new way. Read this book to open your mind.
9. Economics and World History: Myths and Paradoxes, by Paul Bairoch
I may get some flak for including this on my list of the best books on economics, but I did it anyways.
Paul Bairoch’s Economics and World History: Myths and Paradoxes is a confrontational, revisionist history that challenges many of the assumptions that classical economists hold dear, including the notion of free trade itself.
But that’s precisely why it’s valuable: Bairoch’s contrarian positions and skepticism are a vital critique on a relatively ossified discourse.
It’s a breath of fresh air.
You never truly understand something until you’re familiar with all the conflicting sides: this book provides them.
Bernstein engages with Bairoch in A Splendid Exchange, so if you read that one you’ll have the added benefit of witnessing an academic struggle up close and personal.
10. How Rich Countries Got Rich . . . and Why Poor Countries Stay Poor, by Erik S Reinert
After all, isn’t that the whole point of economics? Making sure everyone’s as wealthy as possible?
Erik Reinert is a developmental economist who answers this burning question by looking at history: how did countries get rich in the past?
Reinert digs into the history looking for answers, and finds them.
I won’t spoil it for you, but it’s worth a read.
You probably won’t guess the answer.
Bonus: America Betrayed, by Spencer P Morrison
If you liked my recommendations on the best books on economics, you’ll probably love my own book, America Betrayed.
Like Reinert, my book looks at how countries get rich—but I combine a wider range of interdisciplinary scholarship than he did, and provide a better answer (if I do say so myself).
First, I begin by providing you with the hard economic data, and show you that America’s economy has been degrading since the 1970s (when America began embracing economic globalism). Basically, I prove that America’s economy is bad.
Next, I explain what’s causing our problems, and then get into why classical economics fails.
After that, we turn to history: I investigate why history’s richest countries got rich, and how (some of them) became poor again.
From there, I provide my thesis for economic growth, building upon the work of Nassim Taleb.
The book’s written for a general audience, and I tried to avoid jargon wherever possible. You’ll love it.
Get a copy.
Those are the Top 10 Books on Economics for 2018
If you read those books, in the order I’ve arranged them, you’ll learn more than enough about economics to get by.
And frankly, you’ll probably be in better shape than a lot of academic economists, who refuse to engage with opinions they disagree with: you’ll have a good grasp of both sides of the issues.
Let me know what you think about the lists, or the books themselves in the comments below. I love hearing from my readers.
Popular Books About Economics
Here’s a list of other relatively popular books on economics—these are the ones that went mainstream. They’re not all the best, but they’re the ones that’ll make for good water-cooler conversations.
I’ve read most, but not all of them, so forgive me for some of the descriptions.
If you think any other book should be included, let me know.
Economics In One Lesson, by Henry Hazlitt
I was debating whether to put this book on my list of the top books on economics instead of Sowell’s Basic Economics, but I went with the latter because it’s more comprehensive.
That being said, Henry Hazlitt has a way of making complicated things seem incredibly simple, and he boils down many of economics’ main points with absolute clarity.
This one’s well worth the read, and it should only take a few hours.
Short, easy, thorough. He delivers on the promise he makes in his title.
Freakonomics: The Hidden Science of Everything, by Steven Levitt & Stephen J Dubner
I haven’t read this book, but it’s one of the biggest “popular economics” books of all time. Some of the stuff in it has since been debunked, so approach it with skepticism.
Capitalism and Freedom, by Milton Friedman
Milton Friedman is a Nobel laureate, and a good representative of liberal economists.
He’s been massively influential in mainstream republican economic policy, so it’s a good idea to check out what he has to say.
The Signal and the Noise, by Nate Silver
This book’s about statistics and prediction, more so than economics, but it’s still worth checking out—especially since that’s much of what economists allegedly do.
Nate Silver’s lost some prestige since his spectacular failure to predict the election of Donald Trump (I could smell it a mile away), but his overall body of (early) work is quite solid.
The Road to Serfdom, by F A Hayek & Bruce Caldwell
Never read it, but it’s on my list.
Nudge: Improving Decisions About Health, Wealth, and Happiness, by Richard H Thaler & Cass R Sunstein
The premise of this book is a little creepy and Orwellian: basically, they advocate for applying the findings of behavioral psychology (how people make decisions) in order to help people make “better” choices.
They think that by researching and investing in “choice architecture” we can make the world a safer and better place.
For example, if we want people to eat more veggies, we can psychologically prime people with images of vegetables before they enter the workplace cafeteria etc.
Whether or not we should be trying to subconsciously control other people is up for debate, but their findings are based on solid research, and are worth considering in many contexts.
The Big Short, by Michael Lewis
This book’s all about the 2008 financial crash, and the guys who saw it coming. It’s since been made into a blockbuster movie, but the book’s much more informative.
The Rise and Fall of American Growth, by Robert Gordon
People always recommend this one to me, but I have yet to read it. Will get back to you.
Globalization and Its Discontents, by Joseph Stiglitz
Joseph Stiglitz is something of a maverick, but his work is always worth exploring. In this book, he questions the benefits of economic globalization and international free trade.
Free Trade Doesn’t Work, by Ian Fletcher
Ian Fletcher took a lot of heat for this book—and that’s exactly why it’s worth reading.
Fletcher lays out a cohesive argument as to why global free trade has been bad for America.
I agree with him. This book is worth reading, and questions many of the presumptions of classical economics.
80/20 Principle, by Richard Koch
This book isn’t really about economics per se, but it applies. The book explains the Pareto Principle, which states that 80% (or some disproportionately large share) of the output comes from 20% of the input.
For example, you’ve probably noticed that your most productive co-workers (and yourself, of course) do most of the work, while everyone else slacks off. You’re not delusional. It’s true.
Richard Koch provides lots of examples from the world of business, and beyond, to illustrate his point.
It’s a simple book, and you could probably get away with reading the first bit and then skimming the rest.
Classic Economics Books & Texts
I figured that I would compile a list of some the most important historical works on economics, because it’s always good to go back to the primary sources—you’d be surprised at how badly modern academic economists distort the classics to make their facile points.
This list will keep growing, but for now I’ve included some of the basics. Feel free let me know what I’ve forgotten (or should add when I have more time).
I’ve linked to free copies where I could, since there’s no point in paying for classic texts that are in the public domain.
Let me know if you have a better link, or if one is broken.
The Wealth of Nations, by Adam Smith
The foundational work of modern liberal economics. Classical economic ideas like absolute advantage and the invisible hand come from Smith’s work.
It’s long and boring, and frankly, most of it’s not worth your time unless you’re a scholar.
On The Principles of Political Economy and Taxation, by David Ricardo
Ricardo is the guy who came up with the theory of comparative advantage, upon which global free trade is predicated.
Everything you need to know about this book can be found in my article on comparative advantage.
Report on Manufactures, by Alexander Hamilton
This isn’t a book, it’s the Founding Father Alexander Hamilton’s report to the US Congress on the state of America’s manufacturing industries. He argues in favor of tariffs, and created the “infant industry” argument.
This report shaped America’s trade policy for almost 200 years, so it’s something you should know.
The General Theory of Employment, Interest, and Money, by John Maynard Keynes
Ever hear of Keynesian economics? This is the guy behind it all.
Principles of Political Economy, by John Stuart Mill
Mill was influential in the age of classical liberalism (Victorian Era). He’s had a profound impact on liberal politics, more so than economics.
Das Kapital, by Karl Marx
Know your enemy.
Progress and Poverty, by Henry George
Haven’t read it.
The Competitive Advantage of Nations, by Michael Porter
In this book, Porter argues that international trade isn’t governed by comparative advantage, but by competitive advantage, which takes into account a ton of variables that Ricardo and Smith ignored (things like tax rates, proximity to markets and resources etc.).