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Economics for the Common Good summary
Delve into economics with a Nobel Prize winner
28 mins
Brief summary
Economics for the Common Good by Jean Tirole offers insights on how economics can be used to address societal issues. Tirole explains how economic theory can be applied to promote common goods like environmental sustainability, education, and healthcare for all.
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Economics for the Common Good
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Our understanding of how the economy works is shaped by confirmation biases.
The way we see the world is shaped by our beliefs. We emphasize facts that confirm ideas we already hold, which is why we read newspapers that echo our own political views and seek out like-minded friends.
Economics is no different; our preexisting beliefs mold our attitudes toward the facts.
This means we often don’t make the wisest economic decisions. Instead of looking at the evidence and making decisions accordingly, we look for simple rules that we can apply to every new situation.
This approach can lead us astray because economics can be deeply counterintuitive.
Imagine an environmental NGO that campaigns against poaching. It’s just managed to intercept a consignment of ivory tusks being shipped by a group of poachers who kill endangered elephants. What should it do with the confiscated ivory?
Moral intuition tells us that the trade in illegal ivory is reprehensible, which means we should destroy it, right?
No! Economic reasoning suggests that the best option would be to do what the poachers were attempting to and sell the ivory.
But, you may ask, wouldn’t that just put the NGO in the same shoes as the poachers? Not quite. Selling the ivory would raise the needed funds that would allow the organization to continue its work in the future. Not only that, releasing the ivory onto the market would depress the value of elephant tusks by making them less scarce thus reducing the incentive of poachers to kill other elephants.
As you can see, taking a long-term perspective of the kind offered by economics changes the moral calculus involved in all sorts of decisions.
This doesn’t mean that economics is purely about cold rationality. Think of a market. At its simplest, it’s just a mechanism to allocate scarce resources; buyers and sellers meet in the marketplace to consensually exchange goods and services.
But markets aren’t the infallible mechanisms they’re sometimes perceived to be. Not every good can be bought and sold freely, and some things, like ivory, need to be more strictly regulated than others.
Imagine, for example, a market in which babies could be traded for cash by parents (the sellers) and adopters (the buyers). It’s easy enough to envisage both parties reaching a mutually beneficial agreement.
But here, economists would raise an objection. From their point of view, this exchange fails because it neglects the interests of a third party, namely the baby. This kind of market failure is the result of what economists call an externality – the cost of an exchange borne by a third party who can’t consent to the exchange.
And that’s where regulation comes in. It’s an attempt to safeguard the interests of all parties to an exchange, whether they’re those of babies, elephants or the environment.
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What is Economics for the Common Good about?
Jean Tirole’s Economics for the Common Good (2017) is a wide-ranging look at the contemporary economy, packed with plenty of insights into the theory and practice of modern-day economics. Deconstructing the supposed opposition of state and market, Tirole explores their many interconnections in fields ranging from climate change to property rights and the new digital economy.
Economics for the Common Good Review
Economics for the Common Good (2017) by Jean Tirole is a thought-provoking book that explores the intersection of economics and society, and why it matters for the common good. Here's why you should give it a read:
- Full of insights and research-backed analysis, it sheds light on the various economic challenges facing society and proposes practical solutions.
- By exploring real-world examples and case studies, the book makes economics accessible and relevant, showing how it impacts our everyday lives.
- With its emphasis on the importance of collaboration and collective action, the book offers a fresh perspective on how economics can be a force for positive change in society.
Best quote from Economics for the Common Good
In economic matters, the road to hell is paved with good intentions.
—Jean Tirole
Who should read Economics for the Common Good?
- Anyone interested in the how, what and why of economics
- Proponents of free markets and advocates of state regulation
- Anyone who’s ever wondered why climate change is so hard to tackle
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Economics for the Common Good FAQs
What is the main message of Economics for the Common Good?
Economics for the Common Good emphasizes the importance of using economics to solve societal problems and promote the well-being of all.
How long does it take to read Economics for the Common Good?
The reading time for Economics for the Common Good varies depending on the reader's speed, but it typically takes several hours. The Blinkist summary can be read in just 15 minutes.
Is Economics for the Common Good a good book? Is it worth reading?
Economics for the Common Good is worth reading as it offers valuable insights on how economics can contribute to the betterment of society.
Who is the author of Economics for the Common Good?
Jean Tirole is the author of Economics for the Common Good.
What to read after Economics for the Common Good?
If you're wondering what to read next after Economics for the Common Good, here are some recommendations we suggest:
- Good Economics for Hard Times by Abhijit V. Banerjee and Esther Duflo
- Economics: The User’s Guide by Ha-Joon Chang
- The Introvert's Way by Sophia Dembling
- Doughnut Economics by Kate Raworth
- The Shortest History of Economics by Andrew Leigh
- Economic Facts and Fallacies by Thomas Sowell
- Buffett and Munger Unscripted by Warren E. Buffett
- How Economics Explains the World by Andrew Leigh
- Deep Work by Cal Newport
- The Human Condition by Hannah Arendt