Last updated on June 17, 2015
This post is part of a continuing series on The Books that Have Shaped My Thinking.
It’s the summer, so I have time to read, both for work and for pleasure, and I have time to read books instead of just journal articles and blog posts. This made me realize that while a lot of my thinking has been shaped by things that I have read in journal articles (economics is an article-based field) and in blog posts (there is no better means of spreading important ideas quickly), a large part of my thinking has been shaped by books, which often contain more exciting ideas than journal articles–because they face less strict of a review process, books can be more daring in their claims, and thus have more chances of causing you to change how you view the world.
So I decided to write this series of posts on books that shaped my thinking. I talked about development books two weeks ago; I talked about food and agriculture books last week; this week I will talk about food and agriculture. Some recommendations are very general; others are eminently personal. I just hope you can find one or two that will also shape your own thinking. I’m sure I am forgetting a lot of important books I have read and which have also shaped my thinking, but I made this list by taking quick look at the bookshelves in my office. Conversely, some of the books in this list also appeared in my previous post on The Books that Have Shaped My Thinking.
Pranab Bardhan, The Economic Theory of Agrarian Institutions. This one was in my development list. There was a time when development economists took theory seriously, and this book came out of that time. This book is a bit uneven (it’s an edited volume), but the introductory chapter by Joe Stiglitz is probably the single, most important statement ever made about peasants in developing countries being rational. In short: Whenever you find yourself thinking that some behavior you observe in a developing country is stupid, think again. People behave the way they do because they are rational. and If you think they are stupid, it’s because you have failed to recognize a fundamental feature of their economic environment as crucial in how you model their behavior.
Pranab Bardhan and Chris Udry, Development Microeconomics. This was also in my development list. This book is getting on in age (it was published in 1999), and it should be supplemented with more recent papers, but as far as concise statements of theory that underlies the study economic underdevelopment at a micro level, it does not get better. In the PhD-level course we co-teach on development microeconomics, Paul Glewwe and I still use this book as the core text. If you are a development student, I encourage you to read and digest the contents of this book. The field of development has been largely a-theoretical for the past 10 years. Something tells me this is changing and we will see the return of theory, because people are starting to care a lot more about the mechanisms through which stuff works or not. Another such book is Kaushik Basu’s Analytical Development Economics, which I enjoyed going through when I took Kaushik’s course in grad school, but which is a bit narrower.
Gerard Debreu, A Theory of Value. I never liked general equilibrium theory. I think the whole thing is too contrived and unrealistic, and when I learned about it in grad school, I knew I was never going to actually use that knowledge–especially in the form taught to us via Mas-Colell et al.’s textbook (see below). But Debreu’s book is the most concise and elegant statement of the fundamentals of general equilibrium modeling I have seen. It seems weird to write the following, but here goes: This book, which borders on applied math, practically reads like a novel.
Patrick Bolton and Mathias Dewatripont, Contract Theory. I became an agricultural and applied economist because I wanted to study the economics of agrarian contracts, and I developed an interest in contract theory as an undergrad at the Université de Montréal. The years while I was writing my dissertation (finally!) saw textbooks on contract theory come out–prior to that, you had to read the foundational papers, which I did when doing fieldwork for my dissertation in Madagascar. I am not a fan of Salanié’s textbook on contract theory, and I don’t like the notation in Laffont and Martimort (2004). Bolton and Dewatripont hit just the right balance for me. (And yes, there seems to be a distinct appeal to contract theory for francophones; Salanié, Laffont, and Martimort are all French; Bolton and Dewatripont are Walloon–French-speaking Belgians).
Robert Ellickson, Order without Law. This one was also in my development list. Life in developing countries is often dictated by social norms which we are not familiar with. How do social norms emerge and evolve? Ellickson makes the case that social norms arise to maximize welfare and minimize transaction costs, and that they evolve for the same reasons. He builds his case masterfully and illustrates it with a case study of the cattle ranchers of Shasta County, California. Because Ellikcson is a legal scholar, he writes wonderfully, and this practically reads like a novel.
Marcel Fafchamps, Market Institutions in sub-Saharan Africa. Also in my development list. What enables agents to trade with each other in a setting where legal enforcement is often not an option? What institutions develop to sustain transactions in those settings? What is the role of traders? Marcel Fafchamps develops a simple theoretical framework to answer those questions, and he then discusses the evidence. Again, don’t let the title fool you: This is about much more than Africa, as the model and conclusions apply to most if not all developing countries.
Drew Fudenberg and Jean Tirole, Game Theory. The book we used to learn game theory in grad school was horrendous. This is really the Bible of game theory, and it is where I gained 95% of my understanding of game theory.
Jack Hirshleifer and John G. Riley, The Analytics of Uncertainty and Information. This book is not as well-known as Fudenberg and Tirole for game theory, but it accomplishes the same purpose for risk and uncertainty, which Mas-Colell et al. don’t cover very well. A lot of what I have learned about risk and uncertainty modeling comes from reading this book. There are more modern treatments, including Gollier’s The Economics of Risk and Time as well as Gilboa’s The Theory of Decision under Uncertainty. Unfortunately, both Gollier and Gilboa’s books have been sitting on my bookshelf for a long time, entirely unread.
Andreu Mas-Colell, Michael D. Whinston, and Jerry R. Green, Microeconomic Theory. The–THE–Bible of microeconomic theory. I understand there might be better books out there now, but this is where I learned it all. The exposition is as elegant as can be. My copy has been highlighted, annotated, and beat up, but in a bad case of Stockholm syndrome, I went from hating micro theory to absolutely loving the beauty and elegance of it once I was done going through this book. (And go through this book we did during my first year of grad school; and then we had to take a four-hour exam on all its contents at the end of the year to merely qualify as doctoral students!)
Nancy Stokey and Robert Lucas, Recursive Methods in Economic Dynamics. In my dissertation, I needed to develop a dynamic principal-agent model to account for reverse share tenancy in Madagascar. So I took a half-semester of dynamic programming as part of Cornell’s macro sequence and learned just about enough about dynamic programming to be dangerous. Unfortunately, the model I developed in my dissertation was relegated to an appendix in my 2012 Land Economics article–one of those cases where I wish I’d had the courage to stand up to the reviewer who said “get rid of this” by insisting on having the model in the paper instead of in an appendix.
Knut Sydsaeter and Peter Hammond, Essential Mathematics for Economic Analysis. I can’t find the actual text we used when I was an undergraduate, but it was by those two. A lot of people swear by Chiang’s text, which is really getting on in age. At Cornell, people swore by Simon and Blume, for obvious reason. But the book by Sydsaeter and Hammond is where I learned how to do math like an economist should.
Hal Varian, Microeconomic Analysis. The production chapters of Mas-Colell et al. are okay at best, so much so that when I took the micro sequence in 2001-2002, we actually learned production theory from Varian’s text, which offers a much better treatment. This book is not as good as Mas-Colell et al.’s, but I list it given that that’s where I learned the theory of the firm, which has guided a good amount of my thinking over the years.