On this week’s show, I’m talking to the political scientist Steven Rhoads, author of the influential book The Economist’s View of the World, which was recently reissued in a substantially updated edition. Steven thinks the fundamental principles of economics can help even non-economists see the world in a more rational and solution-oriented way, and I have to say, I agree!
I begin by asking Steven how a political scientist came to write a book extolling the virtues of economics—why not write one about his own discipline? After all, economists are constantly saying unpopular things that can sound a little heartless (at least if you don’t understand the reasoning). Steven explains what attracts him to economics. We get into the concept where all modern economics begins: the market. Steven asks, if, as some people suppose, only right-wing ideologues champion the efficiency of markets, why do left-wing economists like Paul Krugman and Joseph Stiglitz praise them (with qualifications)? We then approach three ideas fundamental to the study of economics: opportunity costs, incentives, and marginalism. We approach these ideas through practical problems, like why it’s sometimes necessary to make roads and public spaces less safe. (Hint: It’s not because economists are walking calculators devoid of human feeling!) We end the conversation by talking through some pressing questions where economists really should be listened to. Is it a good idea to pay out unemployment benefits to individuals indefinitely? Is it rational to rely on nuclear power when we know the dangers of radiation and nuclear catastrophes? Should individuals be able to undergo as many medical tests and procedures as they want? And, finally, are we overcounting the number of deaths caused by COVID?
If you’re wondering how to start thinking like an economist, Steven’s book and this conversation are great places to start.
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0:00 Steven’s recently reissued and updated book, The Economist’s View of the World: And the Quest for Well-Being
5:28 Why is Steven, a political scientist, interested in how economists think?
9:41 The virtue of markets
17:24 Opportunity costs explained
27:07 If everyone needs water and almost no one needs diamonds, why are diamonds more expensive than water?
35:10 Prices, incentives, and compensation
45:43 Would unlimited unemployment benefits help or harm unemployed people?
50:47 Is it rational to expand our reliance on nuclear power?
52:58 The difficulty of reducing healthcare costs
56:58 COVID’s opportunity costs
Links and Readings
Steven’s book, The Economist’s View of the World: And the Quest for Well-Being