The Economist's View of the World: And the Quest for Well-Being

337 Pages·2021·1.762 MB·English

by  Steven E. Rhoads

Praise for the 1985 edition of The Economist’s View of the World
“Thisisamarvelousbook.Readingit,aneconomististaken
abackthatapersonoutsidethedisciplinecouldunderstanditso
thoroughly;andthen,preciselybecauseheisnotofeconomics,
offernewinsightsintoitsapplicability,andprovideabiting
critiqueofitslimitations.”
JohnBrandl,FoundingDeanoftheHubertHumphrey
InstituteofPublicAffairs,UniversityofMinnesota
“Asahardenedeconomist,Iamsaddenedbythemanifestincom-
petenceandharmfulnessofmostsurveysofthesubjectdoneby
peopleinothersocialsciences.Thus,Ireadyourbookwithouthigh
hopes,andwasreallydelightedtofindthatitnotonlyembodieda
lotofworkonandunderstandingofeconomics,butwasamost
usefulandconstructivebookaswell.Congratulationsonit.”
MancurOlson,ProfessorofEconomics,
UniversityofMaryland
“Havingjustfinishedreadingyourbook,TheEconomist’sView
oftheWorld,IwantedtotellyouhowmarvelousIthinkitis.The
wholebook,Ithink,shouldberequiredreadinginourWoodrow
WilsonSchool,asIplantourgeontherelevantparties.”
AlanS.Blinder,ProfessorofEconomics,
PrincetonUniversity
“Istillthinkit’soneofthetopteneconomicsbooksofthelast
50years.”
DavidHenderson,ProfessorofEconomicsattheNaval
PostgraduateSchoolandeditorofTheConcise
EncyclopediaofEconomics
“Thisisawiseandjudiciousbook.Rhoadspracticeswhathe
preaches;hecaresdeeplyforreasoningaboutanddiscussingvalues.
Hisownstyleisamodelofgenerosityandstylishacademicargu-
ment:clearandforcefulwithoutbeingpolemicalordeprecatory.”
StevenKelman,WeatherheadProfessorofPublic
ManagementattheJohnF.KennedySchool
ofGovernment HarvardUniversity
“Ithinkthisisaverygoodbook.Theassessmentofeconomics
strikesmeasaltogetherbalancedandfair.Afterwhattheauthor
saysinPartsIandIIaboutthegoodsenseandrationalitythe
economistbringstopublicpolicy,cuttingthroughallsortsof
sacredcowsandsentimentalities,onebeginstowonderwhat
he’sgoingtofindtosayagainsttheeconomist’sperspective.But
hedoesnotdisappointinPartIII.”
DennisWrong,ProfessorofSociology,
NewYorkUniversity
“Yourbook,TheEconomist’sViewoftheWorld,isoneofthe
verybestbooksIhaveeverread.”
AmitaiEtzioni,UniversityProfessor,
GeorgeWashingtonUniversity
“IthinkTheEconomist’sViewoftheWorldisagreatbook.I
thinkit’sextremelyimportanttoseetheeconomist’sperspec-
tive,withitsstrengthsandlimitations,inasingleplace.”
AndrewGelman,ProfessorofStatisticsandPoliticalScience,
ColumbiaUniversity
The Economist’s View of the World
35thAnniversaryEdition
Releasedin1985,StevenE.Rhoads’sclassicwasconsideredbymanytobe
among the best introductions to the economic way of thinking and its
application to public policy. Now, this anniversary edition has been
updatedandrevisedtoaccountfordevelopmentsinthediscipline,aswell
as political and economic developments – from the greater interest in
redistributing income and the ascendancy of behaviorism to the Trump
presidency.
Beginning with opportunity cost, marginalism, and economic
incentives, Rhoads then explains why mainstream economists – even
thosewelltotheleft,suchasPaulKrugman–stillvaluefreemarkets.The
bookendswithacritiqueofeconomicmethodsthatadoptastrictneutrality
betweentastesandassumethatselfishnessrulesourbehavior.Theauthor’s
critiqueofeconomicsisitsunbalancedemphasisonnarrowself-interestas
controlling motive and the route to happiness. He explains the growing
interest in virtue ethics among philosophers and positive psychologists’
findings that happiness is far more dependent on friends and family than
onincomeorwealth.
This thought-provoking tour of the economist’s mind is a must-
readbookforourtimes,providingaclear,lively,non-technicalinsightinto
howeconomiststhinkandwhytheyshouldn’tbeignored.
Steven E. Rhoads is Professor Emeritus in Politics at the University of
Virginia.HereceivedhisABinhistoryfromPrincetonUniversityin1961.
StevethenspenttimeintheUSNavy,andattheUSBureauoftheBudgetas
the Secretary of the Director’s Review. At Cornell University he studied
economics, American politics, and the history of political philosophy,
receiving his PhD in government in 1973. Steve and his wife Peggy live
justoutsideCharlottesville,Virginia.

’
The Economist s View
of the World
And the Quest for Well-Being
35thAnniversaryEdition
Steven E. Rhoads
UniversityofVirginia
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title:Theeconomist’sviewoftheworld:andthequestforwell-being/StevenERhoads,
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ny:CambridgeUniversityPress,2021.|Includesbibliographicalreferencesandindex.
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FOR MARGARET CAMPBELL RHOADS
MY
“PEGGY SUE”
WHO BROUGHT THE SUN BACK OUT

CONTENTS
Preface pagexiii
AcknowledgmentstotheFirstEdition xvi
Acknowledgments xix
Introduction 1
Part I Useful Concepts
7
1 OpportunityCost 9
12
EngineersversusEconomists
17
AreOpportunityCostsRelevantforLifesavingPrograms?
20
OpportunityCostsWhenPreservingtheNaturalEnvironment
FurtherReflections 26
2 Marginalism 28
30
HumanNeedsandMarginalism
31
HealthNeedsandtheDemandforMedicalCare
36
SettingPrioritiesandMarginalism
39
TheCostsofMarginalism
FurtherReflections 41
3 EconomicIncentives(withBrookeHenderson) 43
44
EconomicIncentivesandtheEnvironment
44
WeaknessesintheCurrentRegulatorySystem
45
ThePromisingPowerofIncentives
50
ReasonsfortheSlowAdoptionofIncentive-BasedApproaches
51
PoliticalFeasibilityofaCarbonTax
56
FloodControl
61
Congestion
FurtherReflections 62
Part II Government and Markets, Efficiency and Equity
65
4 GovernmentandtheEconomy 67
68
ConsumerSovereignty,WelfareEconomics,andUtilitarianism
EconomicEfficiency 69