Book review: How to Think Like an Economist (Roger Arnold)

If you ask many economics teachers, they will tell you that they really want to teach students how to think like an economist. However, in amongst the supply and demand curves, the elasticities, and the multiplier effects, the core goal of teaching students to actually think like an economist gets lost, overwhelmed by a lot of do this stuff like an economist. So, it's interesting when a book actually tries to get behind the models and teach the underlying thinking.

That's what the 2005 book How to Think Like an Economist, by Roger Arnold, tries to do. Arnold explains that:

To teach students how economists think, we must tell them stories. While we tell the stories, we must point out just what is "running through the economist's head." In this book, I have tried to focus on what goes through the economist's head as he or she looks at the world.

And mostly, Arnold is successful, although it isn't always the case that every economist would think in the same way. For example, Arnold makes a big deal about ratios. And while ratios are important, I for one am never thinking about the ratio of marginal benefit to marginal cost, when I can simply think about which one is larger. The ratio is redundant.

There is a lot to like about this book, and Arnold surfaces some of the more surprising (to non-economists) ways that economists would think about problems. For example, who but an economist would even ask the question, "What is the optimum amount of hitting yourself in the head with a hammer?". And yet, Arnold treats us to a consideration of exactly that question in the second chapter.

Having said that, I felt like the book was quite uneven. Although Arnold warns readers at the beginning that the book is intended as a companion to a more thorough textbook economics treatment, and gives examples of how the chapters can be mixed and matches with various styles of economics courses, a reader reading the book chapter by chapter is constantly confronted with terminology that is left unexplained until later chapters. This was most jarring in the case of the 'equilibrium price', which came with no explanation of what equilibrium is, nor why the equilibrium price is important at all. Similarly, Arnold uses the term ceteris paribus first, without explaining what it means. And if you want to understand how the economist thinks, understanding the meaning of ceteris paribus (which, for the record, means holding all else constant) is kind of important.

Arnold also betrays a lack of understanding of some real-world context. Blackjack is provided as an example of a zero-sum game played between the players. However, blackjack in the real world is not at all like that. Blackjack players are playing against the house, not against each other. One blackjack players win does not in itself entail a loss to the other players.

So, although understanding how economists think is important, and I applaud the effort and the approach that this book takes, I feel like it fell a bit short of the mark. This book is long out of print, but that might not be such a bad thing.