The 8 Best Economics Books of 2020
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Economics is a broad topic and if you're not an economist by profession, your knowledge of how it works might be limited to the Econ 101 class you took in high school or college. But getting to know the finer points of economics and how the economy works in tandem with things like stock market movements, interest rates, consumer pricing and housing prices is important from an investing perspective. When you're tuned in to what drives economic trends and cycles that gives you a framework for making investment or portfolio decisions. For instance, you may be better positioned to buy or sell stocks if you're able to recognize the signs of an impending economic downturn or the upward momentum that characterizes the coming of a bull market. Fortunately, you don't need to earn a degree in economics to gain that type of knowledge; you can get it from books instead. If you're looking for a few good reads to add to your collection, consider these books on economics.
Best Overall: Basic Economies: A Common Sense Guide to the Economy
If you're looking for a general overview of economics and how different economic systems work, this book is your guide. Thomas Sowell's bestseller covers the basics of capitalism, socialism, feudalism and the like with a concise explanation of the underlying principles of each. It's very much a common sense approach to high-level economic concepts explained for the everyday person.
The book is designed to reinforce the basic relationships between the entities that own or control resources and those that need or purchase them. It incorporates real-life examples along the way, offering a relatable context for how the economy operates and how it affects the people who live within it.
Best for Beginners: Economics in One Lesson
This book, first published in 1946, is a good starting point for anyone who needs a thorough but not overly technical explanation of economics and how economies work. While the book does use some dated examples, the underlying message remains relevant today. And that message is that economics is best viewed as a long game that factors in both known and unknown elements that can influence outcomes.
The book applies that principle to common scenarios that are easy to understand, such as minimum wage and government spending initiatives. It challenges the notion that economics is best interpreted as a series of short-term scenarios, events, and trends. Overall "Economics in One Lesson" is a solid choice for building your economics knowledge base if you want something that's easy to digest.
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Best for Microeconomics Enthusiasts: Freakonomics
Microeconomics is a branch of economics that focuses on single drivers of economic change and the impacts of individual decision-making. In other words, it's largely about cause-and-effect. Sounds simple enough but "Freakonomics" doesn't take the traditional approach to understanding microeconomics and its impacts on the broader economy. Instead, authors Steven Levitt and Stephen Dubner analyze the links between seemingly unrelated concepts, such as how crime rates coincide with abortion rates.
The book is a fun and thought-provoking read that's designed to spur armchair economists to take a closer look at how things that may not seem important at all can have a ripple effect where the economy is concerned. After its publication in 2005, the authors have continued expanding on their microeconomics theories in two other books, "SuperFreakonomics" and "Think Like a Freak".
Best Classic Book About Capitalism: Capitalism and Freedom by Milton Friedman
There are different approaches that tend to dominate world economies and capitalism is one of them. In a capitalist economy, or in a mixed economy that incorporates capitalist principles alongside something else, such as socialism, the markets and market transactions are the main movers and shakers of economic activity.
The idea behind capitalism is that capital goods are owned privately, by either individuals or businesses, while the public (i.e. consumers) supplies the labor to produce them. The pace at which those goods and/or services are produced is based on the laws of supply and demand.
In "Capitalism and Freedom", author Milton Friedman examines how capitalism paves the way for economic progress. He makes a strong argument for the merits of capitalism in its purest form and its role in promoting individual economic freedom.
Best Modern Read on Capitalism: Capitalism in America
Alan Greenspan served as chair of the Federal Reserve for nearly two decades before moving into the private sector as an economic consultant. His book, "Capitalism in America", co-authored with Adrian Wooldridge chronicles the evolution of capitalism in the United States over the last 400 years. There's a definite appeal for history buffs but it's also a good choice for readers who want to learn more about the context behind major events in American economic history, such as the Great Depression and more recently, the uptick in the economy following the 2016 election.
Greenspan offers his personal perspective on the current state of capitalism in America and its key strengths and weaknesses as a leading world economic power. Those points are underscored with plenty of data points and statistics to back them up but it's still highly readable, even if you're not a math nerd.
Best Psychological Take on Economics: A Crisis of Beliefs
The 2008 financial crisis took many average Americans by surprise and it serves as the starting point for "A Crisis of Beliefs". Specifically, the authors look at how the collapse of Lehman Brothers was a catalyst for government financial bailouts and ensuing recession. They hone in on how the beliefs and behaviors of individual investors, home buyers, and federal regulators played a part in moving the financial tide of those immediate months and years following the crisis.
It's really a guide to understanding risk within economies and how that risk can be minimized or amplified by the behavior of the individual players within an economy. This book is a little more complex in terms of the ideas and concepts discussed but if you're looking for an in-depth look at how psychology and behavior drive the market it's well worth your time.
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Best for Gig Economists: Gigged: The End of the Job and The Future of Work
Traditionally, the U.S. economy has been based on the idea that you go to college and get a full-time job working for a company. You might change jobs a few times over the course of your career but otherwise, you put in your 40 hours a week for 40 years, then retire. The rise of the gig economy is changing the norm about how people work and earn, a topic that Sarah Kessler explores in her book.
She puts forth the idea that the full-time job is in danger of becoming extinct as more Americans are drawn to gig work — such as freelancing or driving an Uber. Her book explores the implications of that on an individual financial level and how it may transform local economies in cities small and large, as well as the broader U.S. economy.
If you're a gig worker or thinking of becoming one, this is one to bookmark if you're curious about where gig work fits in the long-term economic outlook.
Best for Forward Thinkers: Doughnut Economics
A lot of what happens in economic policy, in the U.S. and in other countries, is a repetition of things that have been tried before. And while history often repeats itself, author Kate Raworth challenges the idea that it has to in her book, "Doughnut Economics." She offers some alternative ways to think about how to shape economic policy now and in the coming decades to benefit current and future generations.
Specifically, she highlights seven focuses for re-envisioning the economy against a backdrop of encouraging both financial and environmental sustainability on a global scale. Raworth's end goal is to promote the idea that economic prosperity and a healthy Earth don't have to be mutually exclusive of one another.
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