Good Economics for Hard Times

Starred review from November 4, 2019
MIT professors Banerjee and Duflo (Poor Economics), winners of the 2019 Nobel Prize in Economics, apply pragmatic, real world–tested economic ideas to such issues as global trade, immigration, prejudice, income inequality, and the feasibility of a universal basic income in this lucid and frequently surprising account. The authors’ findings often run counter to conventional wisdom, as in their conclusion that immigrants do not lower wages or steal jobs from native workers, but actually create more wealth and income as they expand local communities. Banerjee and Duflo contend that employment provides people with dignity and an identity, not just income; therefore, a universal basic income won’t solve problems stemming from the lack of well-paying and meaningful jobs. Misguided moral thinking, the authors reveal in their takedown of claims that the U.S. welfare system is rampantly abused, often gets in the way of sound economic policy. They also make the case that impoverished people make sound financial decisions more often than they’re given credit for, citing the example of a Moroccan man who prioritized buying a television over purchasing food. When the lack of entertainment in his remote village and the value of relieving his family’s boredom are taken into consideration, the authors write, the man’s decision makes sense. Banerjee and Duflo’s arguments are original and open-minded and their evidence is clearly presented. Policy makers and lay readers looking for fresh insights into contemporary economic matters will savor this illuminating book.