An overview of the topics covered by the best books on economics

We’ve compiled a list of the topics that we consider as ‘must-reads’ if you’re a novice or amateur economist or student looking to reach a reasonable degree of knowledge about economics in a short space of time.

Macroeconomics versus microeconomics

Economists explain the observable behaviour of the world through simplified models.

When explaining the economic decisions of individual consumers or firms, economists use models from the microeconomics framework. When analysing the actions and reactions of global-scale events, involving entire countries, governments, and workforces, this is dealt with by macroeconomics.

While there are universal economic principles which apply to both areas of economics, you will find that for a given scenario, the tools and relationships from one area will be a better fit for the solution you are trying to derive.

Therefore, beyond the initial ‘econ 101’ quick guides for students, economics modules choose either a macroeconomic textbook or microeconomics textbook as the study text.

Macroeconomics includes the study of inflation, interest rates and government policy. Government policy is divided into fiscal policy (that which affects spending or taxation), or monetary policy (which affects the supply of money).

Many countries have devolved responsibility for monetary policy to semi-independent bodies known as central banks. A central banker is said to be ‘Dovish’ if they are comfortable lowering interest rates, or ‘Hawkish’ if they are quick to raise interest rates.

The objective of macroeconomic policy is to maximise the gross domestic product (known as GDP) of a country, while keeping unemployment and inflation rates low. Intuitively, a country with a booming economy, plenty of jobs for those who want one, and stable prices should enjoy a peaceful and prosperous period where individuals notice increases in their standard of living.

Microeconomics includes interesting topics about human psychology and why people make decisions. These include behavioural economics and game theory. It also focuses on the production of capital goods and employment of labour. Labour unions, productivity and wage levels all come into play when painting a picture of the environment of an individual firms

Economic history

Economics isn’t just the study of charts, relationships and mathematical equations. It’s also about cause and effect, history. If you are interested in studying the chain of events that have led to seismic changes to our financial world, you’ll like economic history. Here are some of the economic disasters which economic authors frequently explore:

• The Great Depression (1929 – 1933)
• The Financial Crisis (2008 – 2011)
• The South Sea Bubble (1720)

Competing economic ideology

While economics is considered a ‘social science’, it isn’t as objective and neutral as physical sciences such as physics and biology.

Economists rarely stop at the point where they have identified a cause-and-effect relationship or quantified the relationship between two variables. They often take a further step to recommend or advocate for specific policies, regulation (or lack thereof) or individual actions to achieve a positive goal.

This is because the field of economics is intrinsically linked to the pursuit of prosperity, the eradication of hunger & deprivation in a world of scarcity. It’s an idealistic and hopeful pursuit. This is where the science of economics is passed through a filter of politics and ideology.

Opinions differ dramatically about how economics principles should be put into practise for the benefit of society, because of fundamental disagreements over the following questions:

• How much should governments regulate or otherwise intervene in the private lives of their citizens?
• How much should choice be restricted or taxed to achieve a socialist objective?
• How can inequality be minimised, without removing the economic incentives to work and be productive?

These questions do not have a right or wrong answer. They cannot be simply ‘solved’ through experiment or trial and error. That is because they involve moral judgements, and the trading off of one persons needs against another.

Therefore, despite the maturity of economic theory, countries still embark upon fundamentally different policy choices. You’ll see this divergence of opinion reflected in the economics books you read. Some will attempt to explain a range of ideologies, while others might be written to advocate for a specific ideology.

The major economic ideologies are:

Capitalism – The idea that free markets should be left alone to efficiently allocate resources to those who need it, without intervention.

Socialism – The idea that central governments should play a role in redistributing wealth from the rich to the poor to balance the wealth inequality which accrues in a capitalist society

Communism – The philosophy that capitalism will always lead to unfair outcomes, and therefore the laws and structure of society should incorporate equal rights to goods and services.

Liberalism – The idea that individuals should be free to make the economic choices they want, free from forced payments for services not required (taxes) or protection from more dangerous outcomes.

These are concepts covered by the classic economics authors such as John Maynard Keynes and Adam Smith. They weren’t Nobel prize winners (As the prize didn’t exist in their careers), but they wrote bestsellers which you can now pickup for a very low RRP.

Changes in society

The best economics books sometimes chose to feature a specific trend or change which the author feels is worthy of more attention.

Economic trends such as consumerism, globalism, and economic nationalism impact us all.

Consumerism – The simple ethos that economic progress takes the form of consumers being able to consume more. High quantity, higher quality, and greater variety of goods. Societal progress can be measured by asking the question – can we afford more ‘stuff’ now than we used to?

Globalisation – The increasingly interconnected nature of international business. From international supply chains, to converging consumer trends. The world is increasingly beginning to look like a large country, rather than independent factions. This brings both opportunity and challenges.

Economic nationalism – A reaction to globalisation. Economic nationalism, intricately linked to protectionism, is the sense of civic pride and defensiveness exhibited by politicians and governments which only looks out for its own citizens. Economic nationalism could entitle a country to act in a way that benefits its own citizens, even if this is to the detriment to the rest of the wider world.

Classic economics principles

Supply and demand: The study of how the quantity of a good consumed is affected by changes to prices, demand or supply. This is a universal principle found in most economics books that will help any economics student better understand the economic reality of many of the transactions we make on a daily basis.

Market competition

The topic of market competition looks at why the market for some goods and services functions much better for the consumer than others.

Why do pubs & cafes continuously struggle to make a profit, while big tech companies can enjoy profit margins of up to 70%?

Concepts such as networking effects, market concentration, price elasticity and substitution effects all come into play.

This also leads into the topic of monopolies and monopsonies – markets with a dominant (or single) supplier or buyer respectively. These extreme but real markets serve as an excellent way for economists to test and demonstrate market competition principles.

Development finance & emerging markets

After studying and monitoring the development and maturity of the richest economies in the world over centuries, the economics field has plenty to say about how this knowledge could be used to help accelerate the development of less economically developed countries.

In principle, frontier or emerging economies should be able to ‘learn the lessons’ of the G8 economies to catch-up.

Many economics books cover these topics specifically, emerging markets, development finance and rapid economic development. Organisations such as the World Bank, the United Nations Development Programme exist to allocate capital to targeted projects in developing countries, with the aim of improving quality of life.