The Soulful Science

The Soulful Science: What Economists Really Do and Why It Matters (Revised Edition)

Diane Coyle
Copyright Date: 2010
Edition: STU - Student edition
Pages: 304
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  • Book Info
    The Soulful Science
    Book Description:

    For many, Thomas Carlyle's put-down of economics as "the dismal science" rings true--especially in the aftermath of the crash of 2008. But Diane Coyle argues that economics today is more soulful than dismal, a more practical and human science than ever before.The Soulful Sciencedescribes the remarkable creative renaissance in economics, how economic thinking is being applied to the paradoxes of everyday life.

    This revised edition incorporates the latest developments in the field, including the rise of behavioral finance, the failure of carbon trading, and the growing trend of government bailouts. She also discusses such major debates as the relationship between economic statistics and presidential elections, the boundary between private choice and public action, and who is to blame for today's banking crisis.

    eISBN: 978-1-4008-3368-9
    Subjects: Economics, Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Acknowledgements
    (pp. vii-viii)
  4. Introduction
    (pp. 1-8)

    I want to persuade you that economics gets an unfairly bad press. Even though economists are widely criticized for either failing to predict the financial crash, or for causing it, or sometimes both, economics is nevertheless entering a new golden age. This book is about the frontiers of economic research and empirical discovery during the past fifteen or twenty years. Yet these accomplishments are not widely known.

    On the contrary, the subject frequently comes under attack, not only post-Crash and in academic journals, but constantly in newspapers and political or literary magazines. Here’s a typical example: “For the economists, money...

  5. Prologue to Part 1
    (pp. 9-10)

    The first three chapters start this book with the question that has been central to economics since Adam Smith’sThe Wealth of Nations. What makes economies grow, and why do some fail to do so? The latter part of this question has become one of the biggest global public policy issues of our time. In the rich Western countries some people have even rioted in the streets about it, while in the poor countries of the (non)developing world hundreds of millions of other people lead lives of quiet desperation.

    There are additional reasons for starting my survey of the frontiers...

  6. Part 1. The Mysteries of Wealth and Poverty
    • CHAPTER ONE The History Detectives
      (pp. 13-38)

      Newcastle-upon-Tyne, in the northeast of England, is the principal town of one of the poorest regions of the United Kingdom. It has in recent times enjoyed a bit of an economic and cultural revival. The sculptor Anthony Gormley created the massive Angel of the North, a twenty-meter-high steel and copper angel with a wingspan of fifty-eight meters standing by the side of the main road into the northeast, to symbolize this renaissance. The Baltic Centre in Newcastle, a converted dockside warehouse, is an exciting arts venue. Nearby Gateshead boasts one of the country’s biggest shopping centers. The buzz, even if...

    • CHAPTER TWO What Makes Economies Grow?
      (pp. 39-67)

      Economic growth is an unusual phenomenon—at least, growth as we normally think about it now, “modern” growth with output expanding fast enough for one generation to have living standards far beyond those of the previous generation, and with extraordinary innovations which improve our health and longevity. Growth has, after all, only a 200-year record even in the West. What’s more, about twenty poor countries have been experiencing declining output per capita, negative growth, since the 1970s. Dozens of countries, including Nigeria and Pakistan, for example, have not yet attained the level of income per capita the United States had...

    • CHAPTER THREE How to Make Poverty History
      (pp. 68-102)

      It is a testament to the adaptability of the British class system that one of the most famous knights of the realm is a foul-mouthed, unkempt former rock star. You can only wonder, listening to Sir Bob Geldof, formerly lead singer of the Boomtown Rats, father of Fifi Trixibelle and Peaches, whether he swore quite as freely while chatting with the Queen during the knighthood ceremony as he does in front of the television cameras. In 2005, Sir Bob, along with other luminaries including rock superstar Bono of U2, film producer Richard Curtis (Notting Hill,Four Weddings and a Funeral),...

  7. Prologue to Part 2
    (pp. 103-104)

    A change of gear. The first three chapters addressed the really big question in economics, looking at theories and evidence on how economies in the aggregate grow over time. Economists have made huge strides in the past twenty years on both the empirical and theoretical fronts. I want to turn in the next three chapters to the perspective of individual behavior. Here too there have been amazing discoveries in economic research. Then in part 3 I will aim to show that the microfoundations of social organization join up with the macroperspective of part 1, adding up to a very rich...

  8. Part 2. Are Individuals Free to Choose?
    • CHAPTER FOUR What’s It All About?
      (pp. 107-127)

      Jeremy Bentham died on June 6, 1832 at the age of eighty-four. The eminent philosopher left his body to a disciple, one Southwood Smith, who dissected the corpse before an audience of Bentham’s friends at the Webb Street School of Anatomy. It was the first known example of such a bequest to science. Smith passed the preserved head and body to University College London (UCL) in 1850. Bentham’s remains are still on display there, or rather the body is displayed with a wax head, topped with a floppy hat. The real head lies locked up in the vaults as it...

    • CHAPTER FIVE Economics for Humans
      (pp. 128-155)

      What would you get if you crossed the Vulcan Mr. Spock fromStar Trekwith Hercule Poirot, the crime writer Agatha Christie’s little Belgian detective? The answer is the economist’s idea of a normal human being. Both characters are, of course, famous for their logic and rationality. Spock is contrasted with the impulsive Captain Kirk, intuitive and emotional. In the filmThe Wrath of KhanSpock sacrifices himself for the sake of the rest of the crew of the StarshipEnterprise. In a direct reference to classical utilitarianism,¹ he explains that the needs of the many outweigh the needs of...

    • CHAPTER SIX Information and Markets
      (pp. 156-184)

      Most normal people have a lot of trouble with the basic building block of neoclassical economics, the utility-maximizing, rationally calculating individual with full information, at least until it is carefully explained to them that this is only a starting point. The previous two chapters looked at the maximization of utility and the rationality postulates: at which parts of these are fundamental to economics, and at where economists themselves have been moving away from the restrictions of the neoclassical model. This chapter looks at the third area, the information postulate. It explores the importance of information to economic analysis in several...

  9. Prologue to Part 3
    (pp. 185-186)

    The first three chapters of this book looked at the central questions of economics—What makes economies grow? How can we end poverty?—through the lens of recent historical research, economic geography, and growth theory. This work has placed economies firmly in time and place, and makes it clear that growth is a collective or social process which depends on how people’s decisions affect each other. Spillovers from one person’s choices to another’s, shaped by social and political institutions, affect growth rates for better or worse. The previous few chapters have all explored the reintroduction of human nature into economics...

  10. Part 3. Nature, Markets, and Society
    • CHAPTER SEVEN Murderous Apes and Entrepreneurs
      (pp. 189-212)

      Professors of economics are hardly notorious for their violence and savagery, unless it be the verbal kind. The ivory tower is generally free from the murders and beatings which sadly characterize so many parts of the world, and economists are probably gentler and more herbivorous than many other academics, although I have no data to prove this. Toulouse is not only home to one of the great universities of the world, but is also a spectacularly civilized city, with all the benefits and few of the drawbacks of French provincial life. It has a vibrant culture, exquisite restaurants, elegant shops...

    • CHAPTER EIGHT Economy versus Society
      (pp. 213-241)

      James M. Buchanan, winner of the 1986 Nobel memorial prize in economics, liked to spend as much time as possible away from the ivory tower, preferring his log cabin in the Virginia mountains, he said in a 1995 interview. There he has a few cattle, grows vegetables, picks berries, uses a wood stove for heat. He said: “I found out something about my utility function.” (Spoken like a true economist.) “I found out that every step I took toward genuine self-sufficiency really gives me a big charge.”¹ It’s a little ironic that these sentiments should be expressed by a scholar...

    • CHAPTER NINE Why Economics Has Soul
      (pp. 242-272)

      John Kenneth Galbraith cared enough about the teaching of graduate students in economics to establish a prize for the best teacher in the department at Harvard University, where he was a professor for fifty-seven years. A committee of five students selected the winner each year, and both the winner and the selection committee were treated to a dinner at Galbraith’s Cambridge, MA, home. One year, I was a member of that selection committee. I missed the opportunity to have a conversation with the great man, mainly because I felt too short to talk to him. My fellow students, strapping young...

  11. References
    (pp. 273-288)
  12. Index
    (pp. 289-296)