Unlocking Economics :A Quick Guide to10 Books Every Economist Should Read

 Reading books and gaining extra knowledge on varied themes of economics is crucial in becoming a skilled economist. It broadens your understanding of diverse economic theories and concepts beyond the standard curriculum and also enhances critical thinking by exposing you to different perspectives and real-world applications. And trust me, that's when economics seems to be a fascinating subject. Reading keeps you updated with the latest trends and developments in economics, enabling you to analyze complex issues more effectively and make informed decisions in a personal or professional setting.

Here is a list of 10 books on themes related to economics along with short description of each book.

1. The Economic Naturalist: Frank explains how everyday puzzles and questions can be unraveled using basic economic principles, making complex ideas more relatable by applying them to real-life scenarios. I am reading this book currently and I believe is one of the best books for beginners.

2. The Armchair Economist:'Incentives' is one of the most important and fascinating concept in economics. In the following book, Landsburg takes readers through intriguing economic puzzles and counterintuitive insights, showing how incentives shape behavior in surprising ways, all through a witty and accessible approach.

3.The Undercover Economist:Harford uncovers the hidden forces behind everyday decisions and market dynamics, illustrating how economic theories are at work in situations as ordinary as supermarket pricing and urban traffic jams.This book will help you bring economics to life.

4.Discover your inner Economist:Cowen blends economics with psychology and practical advice, showing how applying economic reasoning can improve decision-making in personal and professional life.

5. Naked Economics: Wheelan demystifies the key concepts of economics without the jargon, focusing on the impact of markets, incentives, and government policies on individual choices and societal outcomes.

6. The new Economics: This one is unique !! Steve Keen challenges mainstream economic theories, particularly the reliance on equilibrium models, and advocates for a more dynamic approach to understanding the economy. He draws on complex systems theory and critiques conventional economic assumptions, proposing alternatives that better reflect real-world economic behavior.

7. Nudge: In Nudge, Thaler and Sunstein introduce the concept of "choice architecture," showing how small interventions or "nudges" can help people make better decisions in areas like health, finance, and environmental sustainability. They emphasize how behavioral economics can be used to design policies that improve individual and societal outcomes without limiting freedom of choice.If u are interested in behavioural econ this book is a must read for you.

8. Micromotives and Macrobehavior: A book by economist Thomas Schelling that explores how individual actions (micromotives) can lead to larger, often unintended outcomes in society (macrobehavior). Schelling uses examples like segregation in cities and traffic patterns to show how small decisions by individuals, based on personal preferences or incentives, can create large-scale patterns or behaviors that no one specifically intended. The book illustrates how even in the absence of a central authority, individual choices collectively shape social phenomena.

9. Gambling on Development: Why Some Countries Win and Others Lose by Stefan Dercon explores why some developing countries succeed in achieving economic growth while others fail. Dercon argues that successful development is not just about policies or resources, but about leaders making a "development bargain"—a commitment to prioritize long-term economic growth over short-term political gains.

10.Freakonomics:A book by  Steven D. Levitt and Stephen J. Dubner is a popular economics book that explores hidden incentives and unconventional causes behind everyday behavior and societal trends. Using real-world examples, such as why crime rates dropped in the 1990s and how schoolteachers might cheat on standardized tests, the authors show how economics can be applied to a wide range of surprising topics. The book challenges traditional thinking by revealing the underlying forces that drive human decisions, often through data analysis and economic reasoning. There's also a sequel to this book called - Superfreakonomics 

So what are you waiting for? Let's start this reading journey together from today!!

(All books are available on amazon) 

Comment down below if you have read any of the above books and if you have any more recommendations for the readers.

Traditions and Trends: Exploring Diwali Through the Lens of Behavioral Economics

    This Diwali, I found myself immersed in the warmth of age-old traditions while experiencing the excitement of modern trends. As I lit lamps, hung lanterns, and exchanged gifts, I began reflecting on how these timeless customs intersect with behavioral economics. Below are some of my observations on how modern behaviors during Diwali align with key concepts from behavioral economics.

   One of the most cherished Diwali traditions is buying new clothes. Diwali was often the only time new clothes were purchased in the past, particularly during our parents' childhood. Today, however, brands offer significant discounts and limited-time offers during the festive season. This is where the concept of anchoring comes into play: brands display high original prices to make discounted prices appear even more attractive. As a result, many people experience FOMO (fear of missing out) or loss aversion when faced with these deals, often leading them to purchase more than they actually need. While the tradition of shopping remains important, modern marketing strategies leverage behavioral biases to influence consumer decisions.

    Another interesting observation is the way social media has transformed Diwali. Decorating homes with lights and diyas holds deep spiritual significance, but the modern trend of showcasing these decorations online is a clear example of social proof. People feel compelled to display their Diwali decorations on social media simply because they see others doing the same, reinforcing the idea that one should participate in these trends.

    The traditional use of diyas has also evolved, influenced by government efforts to promote environmentally conscious choices. Nudging has played a role in encouraging the use of eco-friendly or clay-made diyas, as well as in the growing movement to ban firecrackers in favor of quieter, greener celebrations.

   Similarly, the custom of gift-giving during Diwali, originally tied to goodwill and blessings, has become influenced by the modern concept of reciprocity. The expectation to exchange gifts can create pressure to select expensive or extravagant presents, shifting the focus from the original sentiment of generosity to the need for equivalence.

   Diwali remains a celebration of light, tradition, and togetherness with family and friends. Yet, in today’s world, our behaviors are shaped not only by these ancient customs but also by modern psychological influences. As we continue to observe these changes, it becomes clear how deeply behavioral economics impacts even our most cherished celebration.

The Curious Case of Indian Currency: Gresham’s Law Explained

    A British Economist Henry Dunning Macleod termed an interesting law namely Gresham’s law in 1858. (named after an English financier and advisor Sir Thomas Gresham) The law states that bad money drives out good money. It implies that when two forms of money are in circulation, and one is seen as more valuable (good money), people try to hoard it and use the less valuable money, that is the bad money for transactions. The law applies most clearly when the two forms of money that are being compared should have the same face value but different intrinsic value.

                                                             Henry Dunning Macleod 

                                                               Sir Thomas Gresham

   After learning about the law, my mind instantly started searching for a real-world application of the law. In India, in the current context, both Rs.10 coins and Rs.10 notes are in circulation. Is this law applicable here? Do people tend to hoard either of two(the coin or note) because they value it more? Not really. There is mild application of the law which is based more on public perception and convenience. In some regions in India, (Tamil Nadu, Andhra Pradesh, and Chhattisgarh) shopkeepers used to refuse Rs.10 coins due to the rumors that these coins were fake. However, this is not the perfect application of the law as there is no difference in the intrinsic value of the note and the coin.

    The law seems to apply when people tend to use older or worn-out coins or notes for everyday transactions and hoard the newer and shinier coins. Old coins, that is bad money, stay in circulation as people prefer to use them while they hoard the newer coins in their wallets or piggy banks. Another example is the use of small denomination coins vs. large denomination coins. 50 paise coin is still a legal tender in India but has disappeared from circulation. The 50 paise coin is seen as bad money because it has low purchasing power and is inconvenient to use. In contrast, Rs.1 and Rs.2 coins are seen as good money.

   And now here’s an example from ancient times. In ancient times in India, silver coins were in wide circulation, and gold coins were considered more valuable and people hoarded them because of high intrinsic value. As a result, gold disappeared from circulation. This can be considered the perfect example of the application of Gresham’s law.

      Well, if you thought that the law applies only to the forms of money, then here are some other examples. On social media, misinformation, sensational headlines, or inappropriate videos gain more attention than high-quality educational videos. The law can apply in any situation where two types of goods or services are treated the same but one is lower intrinsic value or lower quality. Do you know any more examples? Share them in the comments!!