Which economics articles teach us the most about how to think about the world? Over the next few weeks, I plan to write about the articles that I think belong in this group. I am hoping that some readers will want to follow along and discuss the articles in the comments.
Here is what I propose. I will select an article and give anyone who wishes to some time to read it (optional). A few days later, I will write a post in which I give a framing summary and explanation of the article, and perhaps some questions for discussion. I will conclude each post with a link to the next article on the list.
I am shooting for ten articles. I haven’t fully decided on the list yet; suggestions, especially from my economics colleagues, are welcome. I will try to go in chronological order by publication date, though because I have not yet decided on the full list, there may be a little backtracking. The articles I am interested in are not necessarily those with the most citations or the ones that have had the most influence on the profession. I assume no one is interested in Heckman selection. I am looking for articles that provide the greatest insight into the world we live in.
If this sounds like something you’d be interested in, I encourage you to participate. I only ask that you keep the discussion in the comments civil and on topic. If you want to be uncivil, you can always post on your own blog about what an idiot I am. And of course feel free to pass this link around to other people who might be interested.
I will aim the discussion to be at the level of an intelligent and educated general reader with no prior background in economics (trained economists are of course welcome to participate as well). My hope is that this exercise will be helpful to many of you. I believe that studying and discussing these articles is a way to get a lot smarter very quickly. I also hope that by blogging about them, I will organize my own thoughts about them and their importance.
The first article in the series will be Ronald Coase’s 1937 article The Nature of the Firm. See you in a couple days.
11 Comments
Sounds like fun! Good one to start with, too. I have two suggestions: Hayek’s The Use of Knowledge in Society and Akerlof’s The Market for Lemons. Both provide profound insights into the world we live in, and both are very accessible for the non-economist reader, I think.
I will definitely cover Hayek. The interesting thing about Akerlof is that while the Lemons model is relevant to some extent in medical insurance, it is not at all relevant in the car market, which is the one he wrote about. Firms (like Carmax) have solved the Lemons problem. Note also that in life insurance markets there are quantity discounts, which suggests propitious selection, not adverse selection.
Oh I absolutely agree that it’s not specifically relevant–though (I just gave it a look again) he does have the caveat that the car market is chosen for its “concreteness and ease in understanding rather than for its importance or realism.”
I don’t think that Akerlof provides a problem that isn’t without real world solutions, but I think the first step to understanding the solutions is understanding the problem. I can’t remember who the authors were but there was a famous paper about sovereign credit; the credible commitment problem, and the way it was framed made me think immediately of Akerlof.
Eli, this is a fantastic idea. I’ll have to start considering some suggestions. See you at APEE!
I’m off to read! I think this is an excellent idea, and I’m hopeful I can think of something to add.
Looking forward to the discussion. Just don’t forget “The Welfare Costs of Tariffs, Monopolies, and Theft”
I second the motion for Hayek’s Use of Knowledge. No other article has had me scrawling as many notes in the margins as that one.
UKIS is a must, and I really get a lot out of Alchian’s Evolution paper. It would be interesting to see if there are recommendations not on Williams’ list.
The most recent publication on Williams’s list is 1972.. so the real question is, can anything published in the last 40 years compete with the “classics” .. limited to 10 choices I’d say no.. The discipline is well out of the formative phase, today’s insight requires something a bit different, and naturally it won’t be quite as grand (none of us are likely to come up with something as revolutionary as, say, coining and defining the term public good).
It might be fun to make another list restricted only to more recent work, say after 1972.
Perhaps Friedman’s Methodology of Positive Economics?
I just read Stigler’s “What Can Regulators Regulate? The Case of Electricity,” and I’m not sure of its influence but I thoroughly enjoyed it. Also if we’re gearing this toward non-economists, “I, Pencil” and/or Bastiat’s Candlemaker’s Petition are terrific illustrations of basic principles, even though they’re not true scholarly articles.