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Modern Principles of Economics
From the See the Invisible Hand. Understand Your World . That's the tagline of Modern Principles and our teaching philosophy. Nobel laureate Vernon Smith put it this
At the heart of economics is a scientific mystery… a scientific mystery as deep, fundamental and inspiring as that of the expanding universe or the forces that bind matter… How is order produced from freedom of choice? We want students to be inspired by this mystery and by how economists have begun to solve it. Thus, we show how markets interconnect and respond in surprising ways to changes in resources and preferences. Consider, for example, how markets respond to a reduction in the supply of oil. Of course, the price of oil increases giving consumers an incentive to use less and suppliers an incentive to discover more. But an increase in the price of oil also encourages Brazilian sugar cane farmers to devote more of their production to ethanol and less to sugar thereby driving up the price of sugar. An increase in the price of sugar means a reduction in the quantity of candy demanded. So one way the market responds to a reduction in the supply of oil is by encouraging consumers to eat less candy! In analyses like this, we teach students to see the invisible hand and in so doing to understand their world. Similarly, we offer a unique and simple proof of the amazing invisible hand theorem that without any central direction competitive markets allocate production across firms in a way that minimizes aggregate costs! To understand their world students must understand when self-interest promotes the social interest and when it does not. Thus, Modern Principles has in-depth analyses of externalities, public goods, and ethical issues with market incomes and trade. Moreover, we always discuss economic theory in the context of real world problems such as the decline of the ocean fisheries, climate change, and the shortage of human organs for transplant.
At the heart of economics is a scientific mystery… a scientific mystery as deep, fundamental and inspiring as that of the expanding universe or the forces that bind matter… How is order produced from freedom of choice? We want students to be inspired by this mystery and by how economists have begun to solve it. Thus, we show how markets interconnect and respond in surprising ways to changes in resources and preferences. Consider, for example, how markets respond to a reduction in the supply of oil. Of course, the price of oil increases giving consumers an incentive to use less and suppliers an incentive to discover more. But an increase in the price of oil also encourages Brazilian sugar cane farmers to devote more of their production to ethanol and less to sugar thereby driving up the price of sugar. An increase in the price of sugar means a reduction in the quantity of candy demanded. So one way the market responds to a reduction in the supply of oil is by encouraging consumers to eat less candy! In analyses like this, we teach students to see the invisible hand and in so doing to understand their world. Similarly, we offer a unique and simple proof of the amazing invisible hand theorem that without any central direction competitive markets allocate production across firms in a way that minimizes aggregate costs! To understand their world students must understand when self-interest promotes the social interest and when it does not. Thus, Modern Principles has in-depth analyses of externalities, public goods, and ethical issues with market incomes and trade. Moreover, we always discuss economic theory in the context of real world problems such as the decline of the ocean fisheries, climate change, and the shortage of human organs for transplant.
944 pages, Hardcover
First published November 15, 2007
37 people are currently reading
715 people want to read
About the author
Tyler Cowen
100 books851 followersTyler Cowen (born January 21, 1962) occupies the Holbert C. Harris Chair of economics as a professor at George Mason University and is co-author, with Alex Tabarrok, of the popular economics blog Marginal Revolution. He currently writes the "Economic Scene" column for the New York Times and writes for such magazines as The New Republic and The Wilson Quarterly.
Cowen's primary research interest is the economics of culture. He has written books on fame (What Price Fame?), art (In Praise of Commercial Culture), and cultural trade (Creative Destruction: How Globalization is Changing the World's Cultures). In Markets and Cultural Voices, he relays how globalization is changing the world of three Mexican amate painters. Cowen argues that free markets change culture for the better, allowing them to evolve into something more people want. Other books include Public Goods and Market Failures, The Theory of Market Failure, Explorations in the New Monetary Economics, Risk and Business Cycles, Economic Welfare, and New Theories of Market Failure.
Cowen's primary research interest is the economics of culture. He has written books on fame (What Price Fame?), art (In Praise of Commercial Culture), and cultural trade (Creative Destruction: How Globalization is Changing the World's Cultures). In Markets and Cultural Voices, he relays how globalization is changing the world of three Mexican amate painters. Cowen argues that free markets change culture for the better, allowing them to evolve into something more people want. Other books include Public Goods and Market Failures, The Theory of Market Failure, Explorations in the New Monetary Economics, Risk and Business Cycles, Economic Welfare, and New Theories of Market Failure.
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Displaying 1 - 10 of 10 reviews
January 2, 2025
I've read the econ blogosphere for a decade, 10 popularizations of econ including 2 comic books, listened to hundreds of hours of econ podcasts, and yet never sat down and actually read an econ textbook. Big mistake! I should've started with a textbook! Don't be like me, start here.
So well written and fun.
So well written and fun.
January 10, 2023
One million Anki cards later...
Surprised how easily understandable this was. The book really tries to break down issues and explain it without assuming much knowledge. It uses a lot of examples, errs towards explains things twice, and uses a lot of graphs. Feel like I can understand some of my favorite newsletter better now.
This one from the exercises made me laugh:
(Also surprised how few people seem to have read it, looking at the number of reviews here?)
Surprised how easily understandable this was. The book really tries to break down issues and explain it without assuming much knowledge. It uses a lot of examples, errs towards explains things twice, and uses a lot of graphs. Feel like I can understand some of my favorite newsletter better now.
This one from the exercises made me laugh:
Bell-bottom jeans insist on coming back every few years, and their ugliness creates external costs for all who see them. Therefore, bell-bottom jeans should be taxed heavily.
(Also surprised how few people seem to have read it, looking at the number of reviews here?)
July 24, 2023
Economics makes me want to cream
October 12, 2024
This is an Econ 101 text. It's written for a US audience. The writing is engaging, and the examples are very interesting. I wanted an introduction to economics, and a text-book seemed like a good idea. Unfortunately, there's lots of math. I'm looking for something to read, not work through. This preference may harm my ability to understand books with economics themes. We will see.
October 24, 2022
Quite possible, the best intro to econ book out there. I've read Mankiw before these, and I think the writing in this one is superior. Also, there were a few new ideas that I didn't find in Mankiw. Overall, I think the authors introduce topics in a way thats relatively simpler to grasp.
July 8, 2022
Awesome introduction to economics!!!
October 19, 2023
helped me through many sleepless nights...
October 26, 2023
was mandatory…
war halt ein sachbuch, hat aber den context gut erklärt - bsp waren 🔝
war halt ein sachbuch, hat aber den context gut erklärt - bsp waren 🔝
November 1, 2025
A must-read to people who want to be introduced to basic echonomic concepts and its functions.
August 31, 2024
I remember a classic mid-teen putdown during arguments about politics: “Dude, just read an economics textbook”
That wasn't normally backed up with a recommendation for an excellent intro-level textbook.
And I certainly hadn't read one. I remember reading lots of books about economics, about why we need new heterodox methods, why ‘neoclassical’ assumptions are wrong, all of ‘capitalism’ needs rethinking, or whatever. But they were more like commentaries on the field of economics — not guides to its content. So I remember feeling faintly embarrassed that I still didn't exactly know how to read a supply-demand graph, or what exactly is the difference between fiscal and monetary policy, etc. I still figured that learning the econ basics would be like learning computer science for software engineering: either you pick it up through experience, or it's too academic to practically matter.
This was wrong and I should have read this book earlier. It is very clearly written, and written so that you could find it halfway enjoyable to read cover-to-cover, not just as reference material for a class.
That wasn't normally backed up with a recommendation for an excellent intro-level textbook.
And I certainly hadn't read one. I remember reading lots of books about economics, about why we need new heterodox methods, why ‘neoclassical’ assumptions are wrong, all of ‘capitalism’ needs rethinking, or whatever. But they were more like commentaries on the field of economics — not guides to its content. So I remember feeling faintly embarrassed that I still didn't exactly know how to read a supply-demand graph, or what exactly is the difference between fiscal and monetary policy, etc. I still figured that learning the econ basics would be like learning computer science for software engineering: either you pick it up through experience, or it's too academic to practically matter.
This was wrong and I should have read this book earlier. It is very clearly written, and written so that you could find it halfway enjoyable to read cover-to-cover, not just as reference material for a class.
Displaying 1 - 10 of 10 reviews