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Understanding economics—or the study of the production, distribution, and consumption of goods and services—is not only important for responsible citizens of the world, it’s also an important aspect of understanding and managing your finances. But it can be hard to know where to start.
Learn more about economics and how it affects your finances with our picks for the best economics books.
Best Overall: Economics in One Lesson
Henry Hazlitt’s “Economics in One Lesson” earned the top spot on our list for its no-nonsense approach to economic theory, the intersection of government and the economy, and the importance of the free market. Written in 1946, it has since sold more than a million copies, a testament to the staying power of Hazlitt’s lessons. Think anti-deficit approaches to the markets and economic liberty to name a few. An economist and journalist, Hazlitt was a founding co-president for the Foundation for Economic Education and an editor of The Freeman magazine.
Best on Microeconomics: Freakonomics
You’ve probably heard of Steven Levitt and Stephen Dubner’s runaway hit “Freakonomics.” It tackles everyday questions and explores the answers through the lens of an economist—an unconventional one, at that. While questions may sound a bit out there; think, “What’s more dangerous, a gun or a pool?” or “How much do parents really matter?” The answers tell us a lot about what incentives us as people, how we make decisions, and call into question conventional wisdom. Levitt is a professor of economics at the University of Chicago and Dubner is an award-winning journalist and radio and TV personality.
Best Psychological Take: Thinking Fast and Slow
Daniel Kahneman’s “Thinking, Fast and Slow” delves into the human mind and the two systems that power everything—one fast, one slow—and how these two systems are responsible for everything from overconfidence in the workplace to cognitive bias to how we make decisions on where to vacation next. But Kahneman takes it a step further, delving into when to trust our intuitions and when not to and how to avoid common pitfalls when making decisions in both our personal and professional lives. Kahneman is a psychologist and winner of the Nobel Prize in Economics.
Related: The Best Personal Finance Books
Best on Income Inequality: Capital in the Twenty-First Century
A New York Times and Wall Street Journal bestseller, winner of the Financial Times and a McKinsey Business Book of the Year Award, Thomas Piketty’s “Capital in the Twenty-First Century” offers an unparalleled take on the history of wealth inequality in both Europe and the United States and the havoc that such inequality can wreak. The book explains, in no uncertain detail, that when the rate of return in a country is greater than the rate of economic growth, wealth inequality will continue to flourish—and not in a good way. Piketty is a French economist and a professor at the Paris School of Economics and the London School of Economics International Inequalities Institute.
Best for Beginners: Common Sense Economics
Written by top economists James Gwartney, Richard L. Stroup, and Dwight R. Lee, “Common Sense Economics” answers any beginner’s pressing questions on the genre, from how an economy works to redistribute wealth. In addition to explaining important economic concepts like supply and demand, trade, and private ownership, this pick explains why an understanding of economics is important—and does so in clear, easy-to-understand prose.
Best on Economic History: The Road to Serfdom
First published in 1944, F. A. Hayek’s “The Road to Serfdom” has been established as something akin to the gospel in the world of economic writing. Hayek’s work served up what was then a controversial warning against state control over the production of goods. It has sold more than 400,000 copies and has been translated into more than 20 languages.
The updated version includes a foreword by Bruce Caldwell, a Hayek scholar, who adds clarification and modern takes on Hayek’s works, which have often been misinterpreted. Hayek, a recipient of the Medal of Freedom and the Nobel Memorial Prize in Economics, taught at the University of London, the University of Chicago, and the University of Freiburg.
Best on Behavioral Economics: Misbehaving: The Making of Behavioral Economics
Turning classic economic theory on its head, Richard H. Thaler’s “Misbehaving: The Making of Behavioral Economics” denounces the idea that much of economic theory is based on—the behavior of rational actors. In other words, us. According to Thaler, humans are inherently flawed and easily succumb to bias and emotional decision-making, which sets into motion a ripple effect on the economy. Using this theory, Thaler schools readers on how to avoid these emotional pitfalls and make smarter decisions. Thaler is a Professor of Economics and Behavioral Science at the University of Chicago's Graduate School of Business and a Research Associate at the National Bureau of Economic Research.
Related: The Best Stock Market Books
Best on Applied Economics: The Armchair Economist
Steven Landsburg’s “The Armchair Economist” applies real-world situations to economic theory; think: why do celebrity endorsements sell products? Or, do government deficits matter, even why do women pay more at the dry cleaners. The revised edition of this book tackles all this and more, making the economic concepts that much more understandable. Landsburg is a Professor of Economics at the University of Rochester, and the author of “More Sex Is Safer Sex,” “Fair Play,” two textbooks on economics, the "Everyday Economics" column in Slate magazine.
Best Cerebral Pick: Good Economics for Hard Times
Ever wondered why economics, well, matters? MIT economists Abhijit V. Banerjee and Esther Duflo explain just that in their book, “Good Economics for Hard Times.” It tackles the pressing economic issues of our age, from climate change to globalization to immigration and inequality, and couples it with modern economic takes that could very well be the solutions to the world’s biggest issues.
Henry Hazlitt’s “Economics in One Lesson” (view at Amazon) earned the best overall spot in part for its comprehensive take on basic economic theory, the intersection of the government and economics, and its anti-deficit position. First written in 1946, this text also has staying power, another boon.
Why Trust The Balance?
Rachel Morgan Cautero has a master's degree in journalism from New York University and more than a decade of journalism experience, most in the personal finance sector. Most recently, she was the managing editor of DailyWorth, a finance-based media destination for women. She’s been published in SmartAsset, The Balance, The Atlantic, Life & Money, Parents, WealthRocket, and Yahoo Finance. These titles were selected based on author credentials, reader reviews, and any relevant awards.