Spring Break Reading List

During my stay in France and England I managed to read five books and six ebooks. Because A RESTING MIND IS WASTED TIME! Here is a small overview including a comment by moi.

1. Adapt – Why Success Always Starts with Failure by Tim Harford

Comment: Overall I would say that it’s a little weaker than ‘The Undercover Economist‘. The part about military adaptation – although interesting – got a little too long for my taste and it was a bit tedious to remember all the different names and the character’s relation to one another. However, these minor weaknesses were easily offset by chapter four (finding what works for the poor or: selection), five (climate change or: changing the rules for success) and six (preveting financial meltdowns or: decoupling). I also liked the small part about ‘positive black swan’ events. When it comes to technological progress most humans (or just Germans?) seem too pessimistic. Some of the examples Tim Harford used to illustrate his broader point are also overused by now (Phinaes Gage, Tetlock, Yunus), but it might be hard to find less prominent ones. Still reading Adapt surely is no waste of your time. Recommended.

Quote:The problem in all of these cases is that the safety system introduced what an engineer would call a new ‘failure mode’ – a new way for things to go wrong. And that was precisely the problem in the financial crisis: not that it had no safety systems, but that the safety systems it did have made the problems worse.

Rating: 8/10

2. The Holy Grail of Macroeconomics – Lessons from Japan’s Great Recession by Richard Koo

Comment: On the back it is advertised as brilliant and I agree. It’s one of the best popular science books on economics that I’ve read up to date: Extensive use of data, very good graphs, sharp analysis, sophisticated enough (some authors make things so simple that it looks superficial). The concept of a balance-sheet recession has profound implications for how to deal with our current crisis. The book also provides a framework for fighting these recessions and a line of argument politicians could use, if they wanted to defend fiscal stimulus. I’m not sure I agree with him that monetary policy is entirely useless at the zero lower bound – NGDP targeting? His view seems to black/white here. The continued critique of Paul Krugman and Ben Bernanke over a few remarks also comes off as a little childish – maybe they have a private feud going on? Furthermore his occasional talk about (hyper)inflation is a bit weird. Still I highly recommend this book.

Quote:Over the years, this has led policymakers in many nations to adopt fiscal-consolidation policies at inopportune moments, with tragic consequences.” TRUER WORDS WERE NEVER SPOKEN!

Rating: 9/10

3. This Time Is Different – Eight Centuries of Financial Folly – by Carmen M. Reinhart & Kenneth S. Rogoff

Comment: Wow, a beautiful display of vast amount of data. I can’t begin to fathom how time-consuming their research must have been. Hut ab! Yet, I don’t understand why Rogoff and Reinhart are hailed as the saviors of modern macroeconomics only because they show that countries actually did default on their debt since the beginning of time… to me it seems like a “No shit, Sherlock“-conclusion (I’m being unfair here). The book also lacks an equivalent analytical part. The data presented does provide a very good starting point for further analyses and maybe a more sophisticated view on debts and defaults (financial crisis are no black swan events if the recent human history is taken into account and that investors, politicians and the people should adjust their expectations?). To their defense they do outline a prototype on page 271 and have some policy recommendations (i.e. better data gathering & monitoring agencies). It might’ve been better as an ebook release with all the data sets attached.

Quote:The greatest barrier to success is the well-entrenched tendency of policy makers and market participants to treat the signals as irrelevant archaic residuals of an outdated framework, assuming that old rules of valuation no longer apply.

Rating: 7/10

4. Connected – The Amazing Power of Social Networks and How They Shape Our Lives by Nicholas A. Christakis & James H. Fowler

Comment: A nice presentation of different effects social networks have on us and how we influence our own social network. It also provided me with evidence for my prejudices (mood affiliation etc. pp) against females: they find married men more attractive; they find men more attractive when another woman is smiling at them; they find them more attractive when they have a girlfriend, they find them more attractive when they are surrounded by females. For men it’s basically the opposite. Also females with no close relationships to their fathers tend to be bitches, errr, more sexually active ;) I already knew quite a bit of the findings through my studies, so I had no revelations while reading it. For anyone who’s searching for an introduction into network research this book is recommended.

Quote:[…], each of us tends to stay put in a particular long-term disposition; we appear to have a set point for personal happiness that is not easy to change.” TOUGH LUCK!

Rating: 7/10

5. You Are Not So Smart by David McRaney

Comment: A nice compilation of how we delude ourselves all the time (Wikipedia on cognitive biases). Many don’t know about it or do, but we shouldn’t care (because that would throw us into utter despair) our should (because that would make other people’s life less miserable). Complicated. The book automatically makes you question yourself while reading. He anticipates your excuses/thoughts and at the end you realize: You Are Not So Smart On Average. I know some of the biases mentioned don’t effect me as much as others, the problem is that it’s hard to to know which ones.

Fav. “Chapters”: The Texas Sharpshooter Fallacy, Introspection, Brand Loyality, The Just-World Fallacy (very important from a political perspective!), Supernormal Releasers, Catharsis (I didn’t know that at all & actually tried to resolve my anger this way. Will have to change that!)

Rating: 7/10

1. The Rent Is Too Damn High by Matthew Yglesias (8/10)
2. The Gated City by Ryan Avent (8/10)
3. Launching the Innovation Renaissance. A New Path to Bring Smart Ideas to the Market Fast by Alexander Tabarrok (8/10)
4. In Gold We Trust? The Future of Money in an Age of Uncertainty by Matthew Bishop and Michael Green (6/10)
5. Budgeting and Macro Policy: A Primer by J. Bradford Delong (7/10)
6. Race Against The Machine by Erik Brynjolfsson & Andrew McAfee (8/10)

As a small reward I bought some more books:
1. The Return of Depression Economics And The Crisis Of 2008 by Paul Krugman
2. Thinking, Fast and Slow by Daniel Kahneman
3. Crisis Economics: A Crash Course in the Future of Finance by Nouriel Roubini & Stephen Mihm
4. Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu & James Robinson
5. Stabilizing an Unstable Economy by Hyman P. Minsky
6. Eco-Fads: How the Rise of Trendy Environmentalism is Harming the Environment by Todd Myers [Kindle]
7. Finance and the Good Society by Robert J. Shiller [Kindle]

Started to Read:
The Rational Optimist: How Prosperity Evolves by Matt Ridley
Why the West Rules – for Now: The Patterns of History, and What They Reveal About the Future by Ian Morris
Confidence Men: Wall Street, Washington, and the Education of a President by Ron Suskind


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