Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street by Tomáš Sedláček

Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street by Tomáš Sedláček

The guy drives me crazy trying to persuade that gender equality is much higher at distant districts of that (quite patriarchal) country, than in capital. The best argument he uses “econometrics shows this, and you know, math doesn’t lie”. When we run down devils in details, it turned out that the guy used share if girls among higher education students as a metrics of gender equality. In distant districts higher education facilities are limited to medical and pedagogical ones, overpopulated by girls. Contrary, in the capital there is much broader set of education institutions, including technical ones preferred by boys, and share of girls is naturally lower. Wrong implicit assumptions lead to wrong results, despite of all that ubersophisticated math.

Tomáš Sedláček tells that story, but on a bigger scale. Currently, we hide implicit assumptions behind sophisticated formulas of economics (which more and more is limited to econometrics). Math replaced ethics in economic debates, based on assumption that math is value-neutral. However, this is very recent development. Over centuries economic though was inseparable from ethics, moral philosophy. In this book author walk through the long history, analyzing sources as old as Gilgamesh and the Old Testament, coming to the Greek philosophers, continuing to Christian economics, and then to Enlightenment ages, and finally the Wall Street. The book is well written and easy to read. While I don’t agree with several arguments, it is thought provoking and very useful.

To my surprise, there is not much Wall Street in the book, while Crash 2008 could be a very good case study. Intricate econometrics and math models simply hide the basic assumption that property prices will rise forever. As soon as this assumption turned out be false, and prices stagnated and slightly went down, all models went crazy and market crashed. On the other hand, author pay some attention to Debt, which is a great issue going well beyond Public Debt.

Overall—nicely written, thought provoking, well referenced book.


“When Nature Helps Scientists: Natural Experiments of History” ed Jared Diamond

Human history and societies left many question open—why Haiti and the Dominican Republic, which share the very same island of Hispaniola, are so radically different in their level of development? Why expansion of Western Territories in USA in 19th century was so explosive? Is it unique? What condition level of political development in Polynesian societies? How slave trade has affected long-term development perspectives of Africa?

Social scientists find themselves in disadvantaged position, comparing to natural scientists, physicians, or chemists—they have no luxury to run a controlled laboratory experiments, often considered to be the hallmark of the scientific method. On the one hand, they often deal with past. On the other hand, even if they could design such an experiment, it would be immoral and illegal. To make things even worse, social phenomena often are hard to measure (for instance, what are the measures for “happiness”, “development” or “stability”?) and involve many variables, which affect outcome. (Back in 1987 Jared Diamond wrote an excellent article “Soft sciences are often harder than hard sciences”, where he touch upon some of the issues).

However, Mother Nature often times offers her helping hand, in the form of “natural experiments”—serendipitous situations, when systems or groups are similar in many respects, but are affected differently by a treatment, random or quasi-random. This allows comparing two systems or groups and studying influence of the treatment factor. “Natural Experiments of History” is a collection of eight comparative studies drawn from history, archeology, business studies, economics, economic history, geography, and political science.

Book is easy to read and it is extremely thought-provoking. It offers broad sample of approaches to comparative history, using range of methods—from nonquantitative to statistical, range of compared subjects—from two in development Hispaniola island case to 233 areas in India, range of temporal comparisons—from past to contemporary societies, and wide geographic coverage. Behind all cases there is one simple idea—comparative analysis of natural experiments can be applied to the messy realities of human history, politics, culture, economics and the environment.

Short summary of all chapters is available on-line. Many chapters in this book are based on research papers, which could provide additional information about research methods used.