Book review: Understandable Economics

I used to review a lot of popular economics books, the kind that are written to explain key economic theories to general readers. Popular economics books vary widely in quality, but also in the ideological underpinning of the authors, and some authors are better than others at muting the underlying ideology. When they fail (or don't try) to avoid the ideology, to me it often gets in the way of a clear-headed explanation or omits key understandings of the real world. For example, that was the case for the market fundamentalist book Common Sense Economics (which I reviewed here). Since reading that book, I have mostly avoided popular economics theory books.

However, I couldn't avoid them forever, and I recently finished reading Howard Yaruss's Understandable Economics. Yaruss is absolutely not a market fundamentalist, and his sympathies to more left-wing ideals are clearly on display throughout the text. It can be a little preachy, but to me it didn't get in the way of understanding. Apparently, the original title of the book was to be 'Economics for Activists'. I'm glad Yaruss didn't choose that title, as I don't think it accurately conveys the content of the book.

The book is tightly focused on understanding the US economy, and much of the content relates to macroeconomics and public policy. Readers from other countries will therefore get less out of the book than US readers (although the general underlying principles are mostly the same for other countries). The examples are also very specific to the time that the book was published. This is a book for its time, and it will not remain current for too long.

Having said that, I really appreciated some of the commentary and some of the explanations. For example, Yaruss clearly explains why currency in a bank vault is not 'money' (as defined by economists):

Only currency in the hands of someone who can actually spend it, like a consumer, a business, the government, or a thief who stole currency from the bank and managed to get away, counts as money. So, although currency in bank vaults may look very much like money, it cannot be spent by anyone and, therefore, isn't money.

I also liked the example of an auction to explain money's role in creating inflation:

Imagine an auction where a fixed number of play "dollars" are divided among participants so that they can buy the goods on display. If the total number of play dollars were increased (remember, these play dollars have no value outside of this auction) without an increase in the number of goods for sale, people would be willing to bid and will, in fact, bid more and pay more for each good. Therefore, the bids, or prices, for each of these goods will go up - there will be inflation.

Back in the days when I hoped to one day write a book about the economics of the reality TV series Survivor, I had intended to use the 'Survivor Auction' (which has recently been revived for season 46 after many years absent) as an example. The explanation for why a Survivor contestant would pay $400 for a burger in the Survivor Auction would be almost identical to Yaruss's explanation above.

I also appreciated Yaruss's humour. Consider this quip about the averages:

If there is wide variation, an average can be very misleading. Think about the fact that the "average" adult human being has one breast and one testicle.

Overall, I enjoyed this book. However, I think that there are better books within the popular economics category that general readers would benefit from. However, in terms of clearly explaining the US economy and public policy, this book is great.