Economics laid bare.(Book Talk; Naked Economics: Undressing the Dismal Science)(Book Review)

Naked Economics: Undressing the Dismal Science

By Charles Wheelan

W. W. Norton, 288 pages, $25.95

When I Tell people I work in the Federal Reserve System, they often joke, "Great. Can you print me some money?" And then comes the serious part: "I don't really know much about economics. It seems like a foreign language to me."

This is unfortunate, but understandable. Economics has become highly mathematical. Even Milton Friedman, whose work did much to establish economics as a "positive science," admits that he has trouble keeping up with the increasingly quantitative literature. In an interview with Reason magazine, he described the new techniques as "all different from ours. I'm not an expert in them anymore; I really couldn't deal with this material on the level on which they are dealing with it, although I can understand the thrust of what they're doing."

Mathematical techniques have helped us understand the world in a way that would not have been possible otherwise. But it must be remembered that statistical manipulation is not at the heart of economics--a point Charles Wheelan makes in Naked Economics: Undressing the Dismal Science. "I offer only one promise in this book: There will be no graphs, no charts, and no equations. These tools have their place in economics" he writes. "But at bottom, the most important ideas in economics are intuitive. They derive their power from bringing logic and rigor to bear on everyday problems."

Wheelan does an especially good job of explaining the most fundamental idea in all of economics: Resources are limited and people try to make the most of what they have. Writing ha the sometimes-cheeky style of The Economist, where he used to work as the magazine's midwest correspondent, Wheelan notes, "However large our paychecks, we can spend them on a staggering array of goods and services. When you bought dais book, you implicitly decided not to spend that money somewhere else. (Even if you shoplifted the book, you could have stuffed a Scott Turow novel in your jacket instead, which is flattering in its own kind of way.)"