By Dani Rodrik

Economics Rules; The Rights and Wrongs of the Dismal Science
Part of the books by Dani Rodrik series:
Editions:Hardcover: $ 27.95
ISBN: 978-0-393-24641-4
Pages: 272
Paperback: $ 16.95
ISBN: 978-0-393-35341-9
Pages: 272

In the wake of the financial crisis and the Great Recession, economics seems anything but a science. In this sharp, masterfully argued book, Dani Rodrik, a leading critic from within, takes a close look at economics to examine when it falls short and when it works, to give a surprisingly upbeat account of the discipline.

Drawing on the history of the field and his deep experience as a practitioner, Rodrik argues that economics can be a powerful tool that improves the world — but only when economists abandon universal theories and focus on getting the context right. Economics Rules argues that the discipline's much-derided mathematical models are its true strength. Models are the tools that make economics a science.

Too often, however, economists mistake a model for the model that applies everywhere and at all times. In six chapters that trace his discipline from Adam Smith to present-day work on globalization, Rodrik shows how diverse situations call for different models. Each model tells a partial story about how the world works. These stories offer wide-ranging, and sometimes contradictory, lessons — just as children’s fables offer diverse morals.

Whether the question concerns the rise of global inequality, the consequences of free trade, or the value of deficit spending, Rodrik explains how using the right models can deliver valuable new insights about social reality and public policy. Beyond the science, economics requires the craft to apply suitable models to the context.

The 2008 collapse of Lehman Brothers challenged many economists' deepest assumptions about free markets. Rodrik reveals that economists' model toolkit is much richer than these free-market models. With pragmatic model selection, economists can develop successful antipoverty programs in Mexico, growth strategies in Africa, and intelligent remedies for domestic inequality.

At once a forceful critique and defense of the discipline, Economics Rules charts a path toward a more humble but more effective science.

Reviews:Martin Sandbu on Financial Times wrote:

"He demonstrates that economics, properly understood and properly practised, is innocent of many of the charges levelled against it. [...] The challenge is to choose which model applies to the situation at hand. This choice requires theoretical open-mindedness and empirical investigation and is, as Rodrik succinctly puts it, a craft not a science. That idea — that good economics is about good craftsmanship as much as anything else — is a hugely valuable contribution. Rodrik is well placed to make these arguments because he is himself a master craftsman. [...] Rodrik’s book cannot fully dispel the scepticism. In particular, he does not quite answer one question that his argument prompts: if economics itself is as ecumenical as he describes, how come economists seem so sure of their conclusions? [...] Rodrik presents survey evidence that on many policy issues (such as rent control) economists overwhelmingly swing behind one view — which suggests that they all select the same model even when many others exist. And when Rodrik rightly extols economists’ recent open-mindedness towards 'behavioural models' in which people make irrational choices, one is allowed to ask why it took them so long to accept simple truths about human nature that all non-economists take for granted. The answer is hinted at elsewhere in Rodrik’s book, when he stresses the intertwined nature of the 'positive and the normative analyses — investigations, respectively, of what is and what should be'. In setting out a defence of the best in economics, Rodrik has also provided a goal for the discipline as a whole."

Johanna Thoma on Economics & Philosophy wrote:

"This is where the book excels: In the detailed and highly readable recounting of both failures and successes of economics in recent years, and in the analysis of what went wrong and what went right in each case. The emphasis in these case studies is, however, decidedly on the failures. Indeed, the conclusions Rodrik draws about his own field are at times devastating. [...] His vision of an economics that is non-dogmatic, sensitive to context, and places a greater weight on empirical adequacy strikes me as very attractive. But in the more critical parts of the book, the reader gets the sense that this picture is more a vision of how economics ought to be, or perhaps of where it is headed, not of how it already is. Rodrik criticises his colleagues for not appreciating the diversity of economic models, and for being misguided in their model selection, with grave consequences. His rebuttal to outside critics of economics, on the other hand, is less convincing, and I suspect that many of them will see themselves strengthened by Rodrik’s critical assessment of his discipline. [...] The book ends on the note that, given how difficult it is to learn about the social world with models, economists should show humility. Yet, and despite all the book’s criticism of economics, Rodrik titled it Economics Rules. This is not just a clever trick to get his colleagues to buy it. The book in fact frequently asserts the superiority of economics, especially in the opening and concluding chapters. It claims that economics is more meritocratic than other social sciences, that the mathematical consistency of economic models and the sophisticated empirical methods economists employ make the field more rigorous than other social sciences, and that those other sciences would do well to emulate that rigour, if they don’t already do so. The sole evidence cited for the alleged lack of professional standards of some other social sciences and the humanities is the Sokal Hoax. [...] The rhetoric of superiority is not only unnecessary, but detracts from the interesting ideas and insightful analysis also found in the book."

Videos with Dani Rodrik

A 3.5 minute video in which Rodrik talks about his profession and personal motivation:

More time? Watch this lecture on Economics Rules (7 October 2015) of 1 hour 14 minutes at the London School of Economics.

Table of Contents of Economics Rules

  • INTRODUCTION - The Use and Misuse of Economic Ideas
  • CHAPTER 1 - What Models Do
  • CHAPTER 2 - The Science of Economic Modeling
  • CHAPTER 3 - Navigating among Models
  • CHAPTER 4 - Models and Theories
  • CHAPTER 5 - When Economists Go Wrong
  • CHAPTER 6 - Economics and Its Critics
  • EPILOGUE - The Twenty Commandments

About Dani Rodrik

Dani RodrikDani Rodrik (1957), say Wikipedia, "is a Turkish economist and Ford Foundation Professor of International Political Economy at the John F. Kennedy School of Government at Harvard University. He was formerly the Albert O. Hirschman Professor of the Social Sciences at the Institute for Advanced Study in Princeton, New Jersey. He has published widely in the areas of international economics, economic development, and political economy. The question of what constitutes good economic policy and why some governments are more successful than others at adopting it is at the center of his research."