Mark Zuckerberg chooses “Portfolios of the Poor” for A Year of Books

Collins jacketMark Zuckerberg is spending a year reading books and is inviting others to join him. The latest pick for A Year of Books, just announced, is Portfolios of the Poor by Daryl Collins, Jonathan Morduch, Stuart Rutherford, and Orlanda Ruthven. Over 250 families in Bangladesh, India, and South Africa participated in this unprecedented study of the financial practices of the world’s poor. In selecting a story of life very bottom of the global economic order, Zuckerberg seems to suggest the particular importance of empathy for entrepreneurs and those in leadership positions.

“It’s mind-blowing that almost half the world — almost 3 billion people — live on $2.50 a day or less. More than one billion people live on $1 a day or less. This book explains how these families invest their money to best support themselves. I hope reading this provides some insight into ways we can all work to support them better as well,” he wrote on his personal Facebook page.

So far there have been 17 books chosen, and this is the third Princeton University Press title to make the list. Rational Ritual by Michael Chwe, and The Muqaddimah by Ibn Khaldun were chosen earlier this year.

Congratulations to the authors!

You can find more information on the website for Portfolios of the Poor here. A sample chapter is available here.

Martin Sandbu talks euro scapegoating and his new book “Europe’s Orphan” with the Financial Times

Has the euro  been wrongfully scapegoated for the eurozone’s economic crisis? In his new book, Europe’s Orphan: The Future of the Euro and the Politics of Debt, leading economist Martin Sandbu says that it has, arguing that the problems lie not with the euro itself, but with decisions made by policymakers. Sandbu was recently interviewed by Martin Wolf, Financial Times chief economics commentator. You can watch the video here:

Introducing the new video trailer for PHISHING FOR PHOOLS by Robert Shiller & George Akerlof

Phishing for Phools jacketDo you have a weakness? Of course you do. Which means, according to Nobel Prize-winning economists George Akerlof and Robert Shiller, you have probably been “phished” for a “phool.”

We tend to think of phishing as the invisible malevolence that led our grandparents to wire money to Nigeria, or inspired us to click on a Valentine’s day link that promised, “someone loves you,” and then promptly crashed our hard drive. But more generally understood, “phishing” is inseparable from the market economy of everyday life. As long as there is profit to be made, psychological weaknesses will be exploited. For example, overly optimistic information results in false conclusions and untenable purchases in houses and cars. Health clubs offer overpriced contracts to well-intentioned, but not terribly athletic athletes. Credit cards feed dramatic levels of debt. And phishing occurs in financial markets as well: Think of the legacy of mischief at work in the financial crises from accounting fraud through junk bonds and the marketing of derivatives.

Ever since Adam Smith, the central teaching of economics has been that the invisible hand of free markets provides us with material well-being. In Phishing for Phools, Akerlof and Shiller challenge this insight, arguing that markets are far from being essentially benign and don’t always create the greater good. In fact, markets are inherently filled with tricks and traps.

We are thrilled to introduce this new video trailer in which Robert Shiller talks about his new book with George Akerlof, Phishing for Phools:

 

PHISHING FOR PHOOLS and CLIMATE SHOCK included in the long list for FT & McKinsey Business Book of the Year Award

Climate ShockPhishing for Phools jacketThe long list for the FT & McKinsey Business Book of the Year Award has been published, and we’re thrilled to see that two Princeton University Press titles have been included. Nobel Prize winners George Akerlof and Robert Shiller’s new book on on economic trickery, Phishing for Phools, and Gernot Wagner and Martin Weitzman’s examination of the global crisis of climate change, Climate Shock have both been listed in the top 15. Other titles appearing include Ashlee Vance’s biography of Elon Musk, Martin Ford’s study of jobs and automation, The Rise of the Robots, and Anne-Marie Slaughter’s take on how to narrow the gender gap, Unfinished Business.

Read more about this year’s long listed titles and the other books recognized during the award’s 11-year history here.

The shortlist of up to six finalists will be published on September 22nd.  The £30,000 prize will be awarded on November 17th in New York.

Find sample chapters of Climate Shock and Phishing for Phools here and here respectively.

 

 

What does the Ancient Greek economy have to say about the current debt crisis? Josiah Ober shares his thoughts

Ober jacketJosiah Ober, author of The Rise and Fall of Classical Greece, has conducted groundbreaking research into the ancient Greek economy, showing that contrary to popular opinion, democracy and economic growth went hand in hand. But are today’s Greeks the “trained and knowledgeable democratic citizens” who built and supported the institutions that served as the foundation for Greek civilization? Ober says now is the time to stop pointing fingers and to think very seriously about the link between democracy and long-term economic stability. He recently discussed Ancient Greece’s answer to the financial crisis in The Daily Beast:

Ancient Greece’s Answer to the Financial Crisis

Greece’s real deficit? Knowledgeable citizens and accountable institutions.

The Greek debt crisis is playing out as if, as Henry Ford said, history is bunk. But if we look to history, we immediately see that the stakes are much higher and the problems are much deeper than either the current Greek leadership or the current EU leadership is willing to admit.

Just before the Greek people went to the polls to decide their future by voting in a miserably mismanaged referendum, George Katrougalos, Greece’s deputy minister for administrative reforms, announced that “The whole question has moved now from the field of economics to the field of democracy.” Meanwhile, the EU leaders, who apparently regard the Union as little more than an accounting device, seem incapable of thinking about the geo-strategic long term. But, like the United States of America, the EU is more than an accounting device. A democratic federation is an attempted solution to the problem of conjoining democracy, prosperity, and security in a dangerous, mutable world. America’s Founders knew that. Europe’s technocrats seem not to.

Read the rest here.

An excerpt from the book ran on PBS’s Making $ense blog yesterday, and Stanford ran a terrific feature on Ober’s research. His work has been cited in recent days by in Washington Post, Quartz, and New York Times articles that look to the Greek past to understand the current debt crisis.

Recently, Ober took the time to talk with us about his book and the reasons for Greece’s flourishing. You can read that interview here.

What are Wall Street’s smartest people reading? Lasse Pedersen’s EFFICIENTLY INEFFICIENT

Pedersen jacketLasse Pedersen’s new book, Efficiently Inefficient, a look at the key trading strategies used by hedge funds, just made two lists of top investment books. The Wall Street Journal included it in a list of “the books Wall Street’s smartest people think you should read this summer”, where it was recommended by Torsten Slok, ‎chief international economist at Deutsche Bank. ETF.com also gave the book a shout out, naming it one of the “must read books for serious investors”.

Lasse Pedersen, a finance professor at Copenhagen Business School and New York University’s Stern School of Business, and a principal at AQR Capital Management, is determined to show how markets really work in a world where they are neither perfectly efficient nor completely inefficient. So what exactly does he mean by the contradiction in terms “efficiently inefficient”? From ETF.com:

Imperfectly Efficient

Regarding the book’s title, Pedersen explains: “Markets cannot be perfectly efficient and always reflect all information. If they were perfect, no one would have any incentive to collect information and trade on it, and then how could markets become efficient in the first place? Markets also cannot be so inefficient that making money is very easy because, in that case, hedge funds and other active investors would have an incentive to trade more and more.”

Efficiently Inefficient includes an array of interviews with leading hedge fund managers, including Lee Ainslie, Cliff Asness, Jim Chanos, Ken Griffin, David Harding, John Paulson, Myron Scholes, and George Soros. Free problem sets are available online on Pedersen’s website. The introduction is available for download here.

Lauren Rivera, author of PEDIGREE, on the trouble with “cultural fit” in hiring

Rivera jacketLauren Rivera, associate professor of management and organizations at Northwestern University’s Kellogg School of Management and author of the new book Pedigree: How Elite Students get Elite Jobs, has an important op ed on class bias in the Sunday New York Times. In “Guess Who Doesn’t Fit in at Work” she argues that even in a hiring culture that emphasizes diversity, the idea of “cultural fit” has ‘gone rogue’, and interviewers at prestigious organizations practice a little-recognized form of discrimination in which they are “primarily interested in new hires whose hobbies, hometowns and biographies [match] their own.” From her piece:

ACROSS cultures and industries, managers strongly prize “cultural fit” — the idea that the best employees are like-minded. One recent survey found that more than 80 percent of employers worldwide named cultural fit as a top hiring priority.

When done carefully, selecting new workers this way can make organizations more productive and profitable. But cultural fit has morphed into a far more nebulous and potentially dangerous concept. It has shifted from systematic analysis of who will thrive in a given workplace to snap judgments by managers about who they’d rather hang out with. In the process, fit has become a catchall used to justify hiring people who are similar to decision makers and rejecting people who are not.

Rivera explains that “fit” can be used productively in the hiring process, but that it should emphasize behaviors associated with performance and not personal similarity. She outlines a better approach:

First, communicate a clear and consistent idea of what the organization’s culture is (and is not) to potential employees. Second, make sure the definition of cultural fit is closely aligned with business goals. Ideally, fit should be based on data-driven analysis of what types of values, traits and behaviors actually predict on-the-job success. Third, create formal procedures like checklists for measuring fit, so that assessment is not left up to the eyes (and extracurriculars) of the beholder.

Read the rest of her New York Times piece here, as well as her recent Q&A in Inside Higher Ed.

Chapter 1 is available here.

George Akerlof and Robert Shiller pose with their new book jacket

Nobel Prize winners Robert Shiller and George Akerlof got the chance to pose with the phenomenal cover for their forthcoming book, Phishing for Phools, the lead title on our Fall 2015 list (stay tuned for the posting of our new seasonal catalog!)  The drawing on the cover is an original by New Yorker cartoonist Edward Koren, and the jacket design is by our own Jason Alejandro. You can catch George talking about the book, which is a fascinating look at the central role of manipulation in economics, at this lecture at Duke University.

Akerloff and Shiller

 

Michael Chwe explains common knowledge, and why it matters to Mark Zuckerberg

Michael Chwe for UCOMM - 130321Michael Chwe, whose book, Rational Ritual: Culture, Coordination, and Common Knowledge has, in his words, “made its way out of the backwaters of course syllabi” to catch the attention of Mark Zuckerberg, had a terrific piece on the Monkey Cage blog of the Washington Post explaining exactly what common knowledge is, and why it’s so important. According to Chwe, common knowledge is generated by large scale social media platforms like Facebook, and this matters because of the many ways it can be leveraged, among them, stopping violence against women, and helping to foster collective political action.

From his piece on the Washington Post:

When Facebook’s Mark Zuckerberg chose my book “Rational Ritual” last week for his “A Year of Books” book club, I was surprised. “Rational Ritual” came out in 2001, and has somehow slowly made its way out of the backwaters of course syllabi into the elevated spheres of technology companies. This is gratifying to me, because even though it is a scholarly book published by a university press, “Rational Ritual” is essentially a popularization.

“Rational Ritual” tries to popularize the concept of “common knowledge” as defined by the philosopher David Lewis and the sociologist Morris Friedell in 1969. A fact or event is common knowledge among a group of people if everyone knows it, everyone knows that everyone knows it, everyone knows that everyone knows that everyone knows it, and so on.

When I was a graduate student in economics in the late 1980s, most people considered common knowledge as an idea of only theoretical interest. People who thought about collective action (and its flip side, political repression) were mostly interested in the problem of free riding, rather than how people communicate. But social change isn’t just about tackling incentives to free ride – it’s also a problem of coordination.

Read the rest here.

Recently, Michael Chwe, a master of interdisciplinary applications for otherwise “rarified mathematical theories” has been particularly active in exploring how game theory can help curb sexual violence. Check out his piece on the topic on the PBS Newshour blog here. His recent Q&A with Facebook Books is up here.

Math Drives Careers: Author Ignacio Palacios-Huerta

Logical thinking, analytical skills, and the ability to recognize patterns are crucial in an array of fields that overlap with mathematics, including economics. But what does math (or economics, for that matter) have to do with the world’s most popular sport? Economist Ignacio Palacios-Huerta’s recent book, Beautiful Game Theory: How Soccer Can Help Economics  made a splash during the last World Cup, showing how universal economic principles can be understood through soccer. Read on for his thoughts on why the language of modern economics, including behavioral economics, is mathematics.

The Role of Mathematics in my Life as an Economist

To describe the role of mathematics in my life as an economist, I first need to explain what, to me, Economics is all about. So let me take you to one of my favorite books, A Treatise of Human Nature, written almost 300 years ago by David Hume.

Beautiful Game TheoryIn the introduction Hume writes, “‘Tis evident that all the sciences have a relation, more or less, to human nature … Even Mathematics, Natural Philosophy, and Natural Religion, are in some measure dependent on the science of Man, [which is] the only solid foundation for the other sciences”. By the science of man Hume means the understanding of all facets of human nature, including preferences, senses, passions, imagination, morality, justice, and society. This science applies wherever men are making decisions, be it running public institutions or countries, as employees in firms, or as individuals investing in education, taking risks in financial markets, or making family decisions. This science of man is thus what one may initially be tempted to call Economics for, as George Bernard Shaw puts it in my favorite definition, “Economy is the art of making the most of life”.

But of course this definition is incomplete because other social sciences (e.g., sociology, history, psychology, political science) are also concerned with human behavior. So what makes Economics “different”? Here is the difference: the difference is not the subject matter but the approach. The approach is totally different, and a very mathematical one. As such, mathematics plays a critical role in the life of any economist.

Let me elaborate. Continuing with Hume, it turns out that he also anticipated our methodological approach in modern Economics: observation and logical arguments. Which can be translated as: data and data analysis (what we call econometrics), and mathematics, for mathematics is, after all, the language of logic. So in Economics, as in physics, we write down our ideas and theories in mathematical terms to make logical arguments, and then we use more math (statistical, econometrics, etc) to check whether the data appear to be consistent with the theoretical arguments. If they are, the evidence can be said to support the theory; if they aren’t, the theory needs to be refined or discarded. Yes, lots of math and related techniques provide what is our distinct “economics approach to human behavior.” It is not the subject matter but the approach that is different, and it heavily relies on mathematics.

To economists and other social scientists, mathematics has many methodological virtues: it can lend precision to theories, can uncover inconsistencies, can generate hypothesis, can enable concision and promote intelligibility, and can sort out complex interactions, while statistical and econometric analysis can organize and carefully interpret voluminous data.

None of this is obvious when you begin studying Economics (“Why should I take all this math, statistics and econometrics? Why all this pain?”). But I think most of us soon learn to appreciate that the language of modern economics is mathematics, and that it is rightly so. And this is not math for the sake of math (as in pure mathematics), but math with a purpose: modeling human behavior.

Let me conclude by saying that since the economic approach is applicable to all human behavior, any type of data about human activity can be useful to evaluate economic theories. This includes, why not, sports data, which in many ways can be just perfect for testing economic theories: the data are abundant, the goals of the participants are clear, the outcomes are easy to observe, the stakes are high, and the subjects are professionals with experience. If a theory is “correct”, sport is a good setting to check it.

So just as data involving falling stones and apples were useful to Galileo Galilei and  Isaac Newton to test for the first time theories that were important in physics, data from sports can be useful in Economics to do exactly the same. As such in some of my contributions to Economics I have used math to develop theoretical models, and further mathematical tools applied to this type of data to test them.

Interview with Adam Levine, author of American Insecurity on MSNBC.com

Adam Levine talked with MSNBC co-host Krystall Ball on her popular vodcast Krystal Clear about his new book, American Insecurity: Why Our Economic Fears Lead to Political Inaction. Check out the first chapter of American Insecurity for free, here.


 

bookjacket American Insecurity:
Why Our Economic Fears Lead to Political Inaction

Adam Seth Levine

Author profile: Ken Elzinga

An inside look at one of the men behind the Henry Spearman Mystery trilogy.

If you haven’t picked up copies of the mysteries, check out the first chapters of each for free (linked below). You will not be disappointed.

A Deadly Indifference: A Henry Spearman Mystery
Murder at the Margin: A Henry Spearman Mystery
The Mystery of the Invisible Hand: A Henry Spearman Mystery

 


 

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A Deadly Indifference:
A Henry Spearman Mystery

Marshall Jevons

 

bookjacket

Murder at the Margin:
A Henry Spearman Mystery

Marshall Jevons
With a new foreword by Herbert Stein and a new afterword by the author
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The Mystery of the Invisible Hand:
A Henry Spearman Mystery

Marshall Jevons