Economics After the Crisis: Objectives and Means

Adair Turner

Book cover

A nice short book of three lectures given by Turner a few years back. Turner doesn’t present original material, but provides a nice summary of some recent research and current thought on a few important economic issues: the relationship between economic growth and well-being/happiness, what significance we should attach to inequality, the impacts of market liberalization. As Turner emphasizes in the lectures, our views on these issues may be informed by economic theory or evidence, but in the end the relevant questions are largely moral or political rather than purely economic.

The most interesting part of this book for me was Turner’s discussion of the significance of positional goods. The basic idea is that there are certain things, the supply of which cannot really be increased. An example might be beachfront property (there is only so much beach, unless you are Dubai), or access to the best schools (assuming that relative rather than absolute quality is the key consideration). Turner gives this as an example of a case where economic growth does not lead to increased happiness–since the supply is fixed, increase in demand simply leads to an increase in price with no increase in quantity. I actually think that Turner underplays the significance of this issue, if anything. The research that Elizabeth Warren did for her book “The Two-Income Trap” is relevant here. Warren showed fairly persuasively that the image of Americans overspending themselves by increasing consumption of luxuries is essentially a myth. The areas of increased spending over the ‘90s and ‘00s were overwhelmingly (1) education and (2) housing, which is of course very closely related to education, and (3) a second car, which is essentially instrumental for earning a second income to afford the former two things. Education is in many ways a positional good, so the story of the stretched middle class can largely be mapped to the arguments that Turner describes.

My Goodreads rating: 3 stars