In the fall of 2007, when the U.S. economy first seemed in peril, I began answering reader queries here on the Business Desk. I still do so, but this page has expanded to include posts from eminent economists, "far-flung correspondents," and a variety of voices that have intriguing and/or useful things to say about economics, broadly defined. Please feel encouraged to respond to any and all of them.
This week, we are running guest posts from some of our favorite economists about the best economics book they've read in recent months.
Robert Shiller: I have two books here, that came out in the last couple months with similar titles. There is some overlap between the books, but each offers what seems to me to be a very important perspective for our times, that may resonate especially well in this financial crisis:
Psychology research has shown that our personal identity -- a sense of who we are and to what group we belong -- is a powerful shaper of our behavior. But until now, this research has had minimal impact on economics. Reading this book gives deep perspective on how economic theories should be revised. The book addresses fundamentally important issues such as worker and executive compensation, corporate social responsibility, the effectiveness of our educational institutions, and the economic conditions associated with gender and race. This book just stands out for the enormous importance of its message: We have to get past the "efficient markets" theories of our economies and find a more human way of thinking about economic problems .
This book is a reminder that our economy functions as it does not just because of a profit motive, or because of regulations, but also because, fundamentally, people believe in what they are doing and have a personal sense of integrity. Our milk is safe to drink (and is not contaminated with bacteria or other pollutants) not primarily because some regulator is imposing penalties on milk producers who do it wrong, but because all those workers from the cow to the supermarket just know that somebody will drink this milk, and intrinsically want to do their job right. That is the underappreciated side of our capitalist economy. I think this little book would be an excellent morale-building giveaway from corporations to their employees or clients.
Robert Shilleris the Arthur M. Okun Professor of Economics at Yale University and co-author, with George Akerlof, of last year'sAnimal Spirits.