It’s August and many of you may have some time on your hands to catch up on some reading. This week’s column offers some suggested titles in economics and finance that you can download to your e-reader or buy in your local bookshop. Of course, while the list is both short and subjective, it highlights that there’s more to contemporary economics than the latest inflation or GDP figures.
- ‘Thinking, Fast and Slow’ by Daniel Kahneman. To quote Bill Easterly’s review of this in the Financial Times, “There have been many good books on human rationality and irrationality, but only one masterpiece.” Kahneman won the Nobel Prize for Economics in 2002 and this book is the culmination of decades of research of his into behavioural economics. Essentially, Kahneman presents the human thought process as consisting of two modes of thought: System 1 is fast, instinctive and emotional; System 2 is slower, more deliberative and more logical.
- ‘Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty’ by Abhijit V. Banerjee and Esther Duflo. This book won the Financial Times & Goldman Sachs Business Book of the Year Award 2011. Based on 15 years of work spanning five continents, the authors attempt to understand the specific problems that come with poverty and outline evidence-based solutions. Both the book and accompanying website (www.pooreconomics.com) examine some of the most surprising facets of poverty, including why the poor need to borrow in order to save, why they miss out on free life-saving immunisations but pay for drugs they do not need, and many other puzzling facts about being one of the 850 million who live on less than 99 cents per day.
- ‘Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier’ by Edward L. Glaeser. Over half the world’s population lives in cities and they have become the hubs of a globalised economy. As one of the world’s top experts on urban economics, Glaeser is well placed to travel around the world to get “into the mind of the modern city”.
- ‘The Einstein of Money: The Life and Timeless Financial Wisdom of Benjamin Graham’ by Joe Carlen. It is probably fair to say that Benjamin Graham was the ‘father of investment theory’. In particular, his 1934 book ‘Security Analysis’ has inspired a generation of investors, including America’s wealthiest man, Warren Buffett. Carlen’s book outlines both Graham’s ‘value-based’ philosophy and his personal life. It is an entertaining and insightful biography.
- ‘Why Nations Fail: The Origins of Power, Prosperity and Poverty’ by Daron Acemoglu and James A. Robinson. The authors blend economics, politics, history and current affairs to provide some fascinating insights into one of the basic issues in economics: why some nations are wealthy and others remain poor. The breadth of the analysis – from ancient Rome through to modern China – and their ability to use arguments from authors, ranging from Max Weber to Jeffrey Sachs, mean that this book should be intellectually stimulating to anyone interested in global affairs.
- ‘Pricing the Future: Finance, Physics, and the 300-Year Journey to the Black-Scholes Equation’ by George Szpiro. Beginning with the futures and options markets of the Dutch tulip bubble of the 1630s, this book chronicles the centuries of study of physics, botany and mathematics that preceded the groundbreaking Black-Scholes equation. This option-pricing equation, which Robert Merton, Myron Scholes and Fischer Black worked out in 1973, has been credited for transforming investment banking and stock-broking. However, the equation has been equally criticised for incentivising traders to rely excessively on mathematical models, culminating in the current global financial crisis.
- ‘Soccernomics’ by Simon Kuper and Stefan Szymanski. Ahead of the new Barclays Premier League season, this book uses insights from economics, statistics, psychology and business to analyse how the game works. It explains why the US and Japan may soon reach a World Cup final and why England’s football team are unlikely to emulate the gold medal performances of their Olympic athletes.
Whether you are on the beach or on your sofa, these books should pr