A friend recently asked me for some advice on how to improve his understanding of economics. I asked my favorite advisor CJ to take a shot at it. Here is what he wrote, for the record:
Each of us has a unique learning style, of course. Here is mine.
Learning economics better requires reading. But here is the rub: one could read disjointed stuff on the web all day long and still not understand what it is all about. In fact, reading too much on the subject which is more in the “news” category is detrimental to understanding. Even reading the Economist will not help one understand economics any more than reading a lot of hospital news will teach one much about medicine.
My recommendation would be to start off with a decent undergrad textbook on micro theory first and read it very carefully. Then pick up another decent undergrad textbook on micro theory and read it very carefully. This will take less time. Then pick up another decent undergrad textbook on micro and read it very carefully. This will be very quick. Now you graduate to reading a decent undergrad macro textbook and do the same. Then read a book which has an overview of economics as a field: let’s say “Economics Explained” by Thurow and Heilbroner. Read something by Galbraith.
The point is that reading textbooks teaches you vocabulary. Vocabulary — precise meanings of words — is important because otherwise you cannot reason in the discipline. After you have learnt the vocabulary, you can read and comprehend sentences and paragraphs and thus follow an argument and figure out whether that argument makes sense or not. And more importantly, if you have the vocabulary, you will be able to figure out things for yourself and not just that, you will be able to express your point of view precisely for others to follow.
I stress reading different textbooks on the same topic because each author has a different point of view. When you approach a subject — however seemingly simple — from different directions, you get a multi-dimensional understanding. Like the proverbial blind men’s description of the elephant needs to be integrated to get a better understanding of what an elephant is, you need to integrate a set of different viewpoints to arrive at a better approximation of the subject.
Now here is something that works for me. If I have 8 hours of study time for a specific topic, I read for about 4 hours on the topic at most. The rest of the time, I just sit and turn the ideas over in my head. During this “processing time” I just let my mind wander around the topic. Directed day-dreaming. How does it fit in with all that I know? How does it change what I already know? What implications does it have for other ideas? And so on.
If you take the time to think, you will understand. If you are doing stuff all the time, then you don’t have time to think and end not understanding and you may end up doing all sorts of silly things. So my advice is to read a little, think a lot, and as far as possible avoid doing much at all.
Related post: Reasoning Economically.
9 thoughts on “How to study economics”
Reminds me of the wannabe author who thought it would be a good idea to be surrounded by literature, so he got a job at Barnes & Noble 🙂
Atanu, in one of the eco courses on tape, the Prof had a tough time trying to explain the difference between economics, finance & business. The question was posed as to why ppl in Wall St are successful at what they do when they mostly major in finance & have only a cursory understanding of eco. The Prof’s reply was something like “understanding movement of stock markets doesn’t have much in common with eco”.
One bloke asked why so many successful businesses are started by dropouts with no B-school experience – again a disconnect between books & the real world.
In my film, Dr. Ashford, an economist at MIT, felt “economists should stop lying to the public”, and Noam Chomsky echoed the same view when he said “economics is a dubious science. They measure some things but not others. Most economics models are flawed. If this is how Physics worked, we’d be very worried.” I once read an influential essay by Amartya Sen where he questioned some of the metrics used in traditional eco to measure stuff like prosperity & GDP & insisted that eco must include some sociological considerations as well especially for 3rd world nations.
Perhaps you would care to address these issues.
Beautiful advice, but govt bureaucrats need to look busy or they get into trouble. Of course, Einstein was a govt bureaucrat when he thought through some of his best ideas.
Any advice for us bureaucrats who like to think in this era where productivity is measured by empty busi-ness?
Deep down somewhere in my heart I have this wierd dream to pursue masters course in economics from DSE or LSE.
Thanks for introducing me to the starters before I start thinking of the main course.
A very timely post Atanu. I was planning to ask you for the same advice. Nevertheless, I would like to read your views on how to improve one’s understanding of economics.
Krishnan,I have a followup post on the topic called Reasoning Economically which addresses some of your points.
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