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Wednesday, May 18, 2011

Books that should be read before starting a Ph.D. in economics

Suppose a young person is going to start a Ph.D. in economics. What essential readings would you recommend prior to this?

In my opinion, the Ph.D. in economics involves a heavy emphasis on tools. But the story isn't told, about why we are building these tools. The intuition isn't built, about the world out there that we seek to model. I always joke that economics students who are clueless about reality are like a child studying projectile motion without having ever thrown something into the air.

So I thought it's useful to pick a set of books that touch on the great themes of the world, often going into troublesome terrain that the models aren't very good at, so as to lay a foundation of background knowledge and historical knowledge which can pave the way to usefully assimilating what's taught in the economics Ph.D. Of course, they should be books that are fun to read and un-putdownable.

Here's my suggested compact checklist of books worth reading. Please do suggest books, and disagree with this list, in the comments to this post.
  1. The evolution of cooperation, by Robert M. Axelrod
  2. Good capitalism, bad capitalism, and the economics of growth and prosperity by William J. Baumol, Robert E. Litan and Carl J. Schramm
  3. A splendid exchange: How trade shaped the world by William J. Bernstein
  4. The elusive quest for growth by William Russell Easterly
  5. Invisible engines: How software platforms drive innovation and transform industries by David S. Evans, Andrei Hagiu and Richard Schmalensee
  6. The ascent of money by Niall Ferguson
  7. Economic gangsters: Corruption, violence and the poverty of nations by Raymond Fisman and Edward Miguel
  8. Capitalism and freedom by Milton Friedman
  9. The great crash of 1929 by John Kenneth Galbraith
  10. The age of uncertainty by John Kenneth Galbraith
  11. Exit, voice, loyalty by Albert O. Hirschman
  12. Development, geography and economic theory by Paul Krugman
  13. More money than God: Hedge funds and the making of a new elite by Sebastian Mallaby
  14. Reinventing the bazaar: A natural history of markets by John McMillan
  15. Readings in applied microeconomics: The power of the market edited by Craig Newmark
  16. From the corn laws to free trade: Interests, ideas and institutions in historical perspective by Cheryl Schonhardt-Bailey
  17. Seeing like a State by James C. Scott
  18. The company of strangers by Paul Seabright
  19. Information rules: A strategic guide to the network economy by Carl Shapiro and Hal R. Varian


  1. Excellent list, Ajay - and it has some recommendations that I'm going to add to my collection right away.
    I'd say adding the Wealth of Nations is always a good idea, while Faultlines by Raghuram Rajan is a recent, relevant addition.
    And here's something from deep left field: "The Little Book of Economics" by Greg Ip. I think it should be on there for two reasons:
    1) It explains how economics works in the real world, something that you can lose sight of very quickly indeed in the PhD Land
    2)Economists (and PhD's in particular) need to learn how to write in a version of English that remains accessible to a layman. Not all the time, perhaps, but at least some of the time!

    I'm a PhD student, by the way, so that list is a very welcome gift indeed!

  2. How about "New Ideas from Dead Economists : An Introduction to Modern Economic Thought by Buchholz, Todd G." ?

  3. Hey, saying a hello to you after a couple of decades since we last interacted ... :)

  4. I was half expecting that the books I loved, adored wouldn't be here, as preparing for PhD is normally a very "serious" job.

    But boy was I surprised, when I saw, Niall Ferguson's tour de force: Ascent of Money.

    Friedman's : Capitalism and Freedom is an equal must have, must read.

    A very "hatke" book, with a huge amount of focus on speculation,and yet the phenomenon of "voting with feet", destruction of institutions under socialistic principles etc, can be gleaned from Jim Rogers Investment Biker.


  5. i am saddened to know that phd in economics is mostly about tools.those who want to solve equations and get a thrill from cracking PDEs should go for hard sciences.econometricians just add to the pretense of knowledge.

    i would make Hayek's speech on the Pretense of Knowledge mandatory -especially for those potentianlly seeking jobs as policymakers.should keep them grounded.
    in my view,economists should only be explainers of economic phenomenon.when they try to get into policymaking -mostly with no experience of running a real life business -they are invariably displaying false knowledge.
    btw,too much JK Galbraith for my liking.why include people who dont understand the market process.these are exactly the people who we dont want graduating out of universities

  6. Thanks Ajay for this compact selection.Have only read ' Ascent of Money' from this collection.The list is excellent but sticks to the 'straight and narrow'. Freakonomics and The Black Swan are my suggestions to this list.

  7. Dsylexic:

    Even if the ideas of JK Galbraith are not agreeable his prose is a thing of beauty.


  8. Extremely useful list even for someone who is not really pursuing a Doctorate. Thank you for sharing.

  9. Hello Sir, While I am not an economist, as someone who is passionate about environment, I often wonder why no one talks about British economist E.F. Schumacher and his classic book, "Small is Beautiful". What do you think of that book? Would love to hear your thoughts.

  10. Beautiful list.

    'More money than God'...I am not sure. If I could I might replace it with 'Inside The House of Money'by Steven Drobny

  11. The Worldly Philosophers by Heilbroner

  12. Confessions of an Economic Hitman by John Perkins

  13. amar,
    i agree. galbraith is a worsmith.but i thought the purpose was to educate a PhD student on economics-the stuff that matters beyond the tools they will become masters of.
    if great prose was the real concern, i really wouldnt go beyond the classics.i'd start with chaucer and end with lewis carroll :-)

  14. also,btw. Economics in one lesson, by Henry Hazlitt. and ANY work by Bastiat.Bastiat beats Milton friedman hands down in his beautiful explanation of the "unseen" that must be accounted for when discussing effects of economic policies.bastiat has probably been the best communicator of free market economics.

  15. Nice list.

    Most of the books mentioned here can be consumed even by an inquisitive layman! It's not a PhD reading list per se.

    I've been told that the Eco PhD is a highly math intensive, technical slogathon. This perception often deters several students who like Eco (but from a relatively less rigorous math background) from even contemplating Eco PhD.

    I wonder if you can provide a reading list for such students!
    After all, Eco PhD is not about being a "public intellectual". No point being very well read in general, but unable to understand the math jargon without which all academic literature will sound Greek and Latin!

  16. Thanks for the list. I'm an engineer who has in the last year developed interest in economics. This list would give me plenty to study.

    Thanks a lot.

    Nikhil Mahen

  17. Hi Ajay,

    Would be great if you can also prepare a list of books for people who do not want to go for PhD, but, want to understand the basics on what models work and appreciate the nuances to implement in day to day business settings.


  18. Hi Ajay,
    The history of economic thought is a must read, I think. For, without having an idea of the growth of our discipline, one does not know the credibility of what one bases knowledge upon. The recommended books are
    (1) History of Economic Analysis, Joseph Schumpeter
    (2) The Wealth of Ideas, Alessandro Roncaglia

    1. Alex,

      I personally don't agree. Most of what we used to think about economics, in previous years, has proved to be wrong. Why waste time studying it?

      I'm all for studying economic history. It's really very important to have a sense of the world, from the industrial revolution onwards. Economic history is our dataset about the world - it is crucial for any economist to have a grip of the broad facts. I disagree with the economics programs which have downplayed economic history.

      But studying Marx today? No, it's a waste of time. Reading about the Cambridge/Cambridge debates today? No, it's a waste of time. I happen to know some of this stuff, by virtue of being old, and it contributes nothing to my thinking today.

    2. "Not to know what has been transacted in former times is to continue always a child" (Cicero).

    3. The distinction that I use is: It is very interesting and important to know what has been transated in former times (as in history), but it's not interesting or important to know about our mistaken attempts at figuring it out (think phlogiston, ether or epicycles).

    4. I have entered late here, but the distinction drawn here is very wise. In fact, this distinction was discussed several times by Einstein.

  19. The great crash of 1929 by John Kenneth Galbraith is a great book. Thanks for such a nice list of books. Thank You again.

  20. Any suggestions on reviving those mathematical concepts to understand economics?


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