BookBook Reviews Reviews

Essays on economics nomic thought. In the second part, he The essays in the fifth and sixth parts lays out the methodology of the “art of of the book provide a critique of the edu- The Lost Art of Economics: Essays on economics,” and, using monetary policy cational institution of graduate educa- Economics and the Economics as the example, shows how academic tion in economics, and a speculative sce- Profession. By David Colander. economists are too far into the realm of nario of what the profession, and thus Northampton, MA, Edward Elgar, abstract theory to provide many useful the graduate curriculum, may look like in 2003, 224 pp., $30/paperback. policy ideas for applied problems. He the year 2050. The author proposes a argues that the theoretical models second track of economics education Few students of economics have man- should be separated from applied policy that will appeal to the generalist aged to avoid the question of whether questions because, in the complex real inductivist student—one in which for- their chosen field qualifies as a true sci- world, one cannot really test the hypoth- mal abstract theorem-and-proof is ence. In this thought-provoking collec- eses of the abstract model. Instead, the deemphasized, and more weight is given tion of essays, David Colander, a pro- model should serve as a general guide, to interpreting and understanding the fessor of economics at Middlebury Col- because “the question in applied policy basic theory of economics and doing lege in Vermont, addresses this question economics concerns whether the theory technical work at a more practical level. with well-written, and often entertaining fits the application, not whether the Interestingly, this appears to already be prose. A self-described “economic gad- theory is true.” happening in other fields; some univer- fly” and “slightly out of sync” econo- Taking this basic premise, he de- sities are now offering a professional mist, he steps back from the theories, scribes in the third part of his essay col- science master’s degree, combining natu- practices, and educational establishment lection how it can be used to better edu- ral and physical sciences with finance of the field to critique how this “science” cate and interest students in econom- and business courses for students who is taught and done. He argues that, in ics. Particularly at the introductory (or will need both in a practical career (Wall the real world where economic policies principles courses) level, he decries the Street Journal, Aug. 3, 2004). The au- are implemented, successful economic attempt to combine the basic theories of thor predicts that, by 2050, economists analysis must account for institutions economic behavior with modeling tech- will have abandoned positivism and will as they exist. It must consider the com- niques as denying justice to both; it be addressing more complex and spe- plex aspects of the economy and eco- makes for economic stories that are prob- cific problems with more emphasis on nomic behavior that cannot be easily ably uninteresting to students. In his computational simulation—making use quantified, or derived from a simplified, fourth section are two more personal of new computation horsepower to mine codified theoretical model. In short, he essays, one of which details his own data for patterns and to create data by argues for the practice of economics as story as an economics student and in- simulation, but also combining this with an art, where theoretical models provide duction into the profession. The sec- more general, intuitive insight and background and elements of judgment, ond essay provides suggestions for knowledge of economic institutions in intuitive thought, and even some ad hoc making a living within the academic the real world. empirics enter into the process before world of economics as one with his policy prescriptions are drawn. iconoclastic views. While these essays —Mary Kokoski The author organizes his essays into may be of interest mainly to those who Division of Price and Index Number six parts. In the first part he presents are Ph.D students and academic econo- Research, Milton Friedman’s Theory of Positive mists, they do reveal the faults of a rigid Bureau of Labor Statistics Economics as the foundation for the “publish-or-perish” institutional struc- current methodological approach of the ture that may discourage innovative economics field. Under this approach thinking (a problem not necessarily theoretical models are constructed, unique to economics as a scholarly field). Publications received based on (necessarily) simplified as- He argues that this structure has encour- sumptions, and the (presumably observ- aged economists to pursue problems and Economic and social statistics able, or testable) economic implications policy issues that more easily yield to Aldy, Joseph E. and W. Kip Viscusi, Age are then derived from these models. He quantification rather than those that are Variations in Workers’ Value of Statisti- argues that, ironically, Friedman himself more important to address and thus— cal Life. Cambridge, MA, National Bu- reau of Economic Research, Inc., 2003, was mainly more of a practitioner of eco- econometrics has ascended from the role 51 pp. (Working Paper 10199) $10 per nomics as an art, and that this has been of toolkit to the final arbiter of which is- copy, plus $10 for postage and handling lost to the literature on history of eco- sues an economist will choose to study. outside the United States.

72 Monthly Labor Review February 2005 Clark, Robert L., Richard V. Burkhauser, Lazear, Edward P. and Paul Oyer, Internal New Century. Cambridge, MA, The MIT Marilyn Moon, Joseph F. Quinn, and and External Labor Markets: A Person- Press, 2003, 565 pp., $39.95/cloth. Timothy M. Smeeding, The Economics nel Economics Approach. Cambridge, Kugler, Adriana D., The Effect of Job Secu- of an Aging Society. Malden, MA , MA, National Bureau of Economic Re- Blackwell Publishing, 2004, 362 pp., search, Inc., 2003, 50 pp. (Working Paper rity Regulations on Labor Market Flex- $34.95/paperback. 10192) $10 per copy, plus $10 for post- ibility: Evidence from the Colombian age and handling outside the United States. Labor Market Reform. Cambridge, MA, Collins, William J. and Robert A. Margo, National Bureau of Economic Research, The Labor Market Effects of the 1960s Niederle, Muriel and Alvin E. Roth, Market Inc., 2004, 65 pp. (Working Paper 10215) Riots. Cambridge, MA, National Bureau Culture: How Norms Governing Explod- $10 per copy, plus $10 for postage and of Economic Research, Inc., 2004, 36 pp. ing Offers Can Affect Market Perfor- handling outside the United States. (Working Paper 10243) $10 per copy, mance. Cambridge, MA, National Bureau plus $10 for postage and handling out- of Economic Research, Inc., 2004, 57 pp. Labor and economic history side the United States. (Working Paper 10256) $10 per copy, plus $10 for postage and handling out- Galenson, David W., A Portrait of the Artist Dietzenbacher, Erik and Michael L. Lahr, side the United States. as a Young or Old Innovator: Measur- eds., Wassily Leontief and Input-Output ing the Careers of Modern Novelists. Economics. New York, Cambridge Uni- Education Cambridge, MA, National Bureau of Eco- versity Press, 2004, 396 pp., $80/hard- nomic Research, Inc., 2004, 78 pp. cover. Hanushek, Eric A., Some Simple Analytics of (Working Paper 10213) $10 per copy, School Quality. Cambridge, MA, National plus $10 for postage and handling out- Jacobs, Eva E., ed., Handbook of U.S. Labor Bureau of Economic Research, Inc., 2004, side the United States. Statistics: Employment, Earnings, Prices, 27 pp. (Working Paper 10229) $10 per Productivity, and Other Labor Data, Sev- copy, plus $10 for postage and handling Hardwick, M. Jeffrey, Mall Maker: Victor enth Edition, 2004. Lanham, MD, Bernan outside the United States. Gruen, Architect of an American Dream. Press, 2004, 471 pp., $147/hardcover. Philadelphia, University of Pennsylva- nia Press, 2004, 288 pp., $29.95/cloth. Leopold, Ronald S., A Year in the Life of a Industrial relations Million American Workers. New York, McCann Jr., Charles Robert, ed., The Elgar MetLife Group Disability, 2003, 214 pp., Aitchison, Will, The FMLA: Understanding Dictionary of Economic Quotations. softcover. the Family and Medical Leave Act. Port- Northampton, MA, Edward Elgar Publish- land, OR, Labor Relations Information ing, 2003, 315 pp., $150/hardback. Wright, Daniel B., First Steps in Statistics. System Publications, 2003, 320 pp., Nicholson, Philip Yale, Labor’s Story in the Thousand Oaks, CA, Sage Publications, $39.95/paperback. 2002, 147 pp., $23/softcover. United States. Philadelphia, Temple Uni- Hogler, Raymond, Employment Relations in versity Press, 2004, 376 pp., $74.50/ the United States: Law, Policy, and Prac- cloth; $27.95/paperback. Economic growth tice. Thousand Oaks, CA, Sage Publica- Quartey, Kojo A., A Critical Analysis of the and development tions, Inc., 2004, 301 pp., $42.95/ softcover. Contributions of Notable Black Econo- Acs, Zoltan J., Innovation and the Growth mists. Burlington, VT, Ashgate Publish- of Cities. Northampton, MA, Edward ing Company, 2003, 125 pp., $79.95/ Elgar Publishing, 2002, 264 pp., $90/hard- International economics hardback. back; $35/paperback. Balducchi, David E., Randall W. Eberts, and Christopher J. O’Leary, eds., Labor Ex- Cahuc, Pierre and André Zylberberg, Labor Labor force change Policy in the United States . Economics. Cambridge, MA, The MIT Kalamazoo, MI, W.E. Upjohn Institute for 2003 Compendium of Regulatory Impact Press, 2004, 844 pp., $90/cloth. Employment Research, 2004, 295 pp., Assessments. London, Department of Cameron, Samuel, The Economics of Sin: $45/cloth; $20/paperback. Trade and Industry, 2004, 291 pp. Rational Choice or No Choice At All? Budd, John W., Labor Relations: Striking a Northampton, MA, Edward Elgar Publish- Balance. New York, McGraw-Hill/Irwin, Labor organizations ing, 2002, 240 pp., $90/hardback. 2005, 553 pp., hardcover. Roth, Silke, Building Movement Bridges: The Colander, David, The Lost Art of Econom- Troy, Leo, The Twilight of the Old Union- Coalition of Labor Union Women. ics: Essays on Economics and the Eco- ism. New York, M.E. Sharpe, Inc., 2004, Westport, CT, Praeger Publishers, 2003, nomics Profession. Northampton, MA, 200 pp., $64.95/cloth; $24.95/paperback. 207 pp., $64.95/hardback. Edward Elgar Publishing, 2001, 203 pp., $30/paperback. Management and organization Industry and government theory Hendry, David F. and Neil R. Ericson, eds., organization Understanding Economic Forecasts. Bevan, Stephen, Sally Dench, Heather Cambridge, MA , The MIT Press, 2003, 225 Cnossen, Sijbren and Hans-Werner Sinn, Harper, and Sue Hayday, Employment pp., $17.95/paperback. Public Finance and Public Policy in the Relations Research Series No. 25. Lon-

Monthly Labor Review February 2005 73 Book Reviews

don, Department of Trade and Industry, ing Paper 10212) $10 per copy, plus $10 Care Centers. Kalamazoo, MI, W.E. 2004, 183 pp., spiral-bound. for postage and handling outside the Upjohn Institute for Employment Re- United States. search, 2004, 184 pp., $40/cloth; $17/ Carey, Dennis C. and Dayton Ogden, The paperback. Human Side of M&A: How CEOs Lever- Kremp, Elizabeth and Jacques Mairesse, age the Most Important Asset in Deal Knowledge Management, Innovation and Oyer, Paul and Scott Schaefer, Compensat- Making. New York, Oxford University Productivity: A Firm Level Exploration ing Employees Below the Executive Press, 2004, 193 pp., $27/cloth. Based on French Manufacturing CIS3 Ranks: A Comparison of Options, Re- Data. Cambridge, MA, National Bureau stricted Stock, and Cash. Cambridge, MA , Jackson, Kevin T., Building Reputational of Economic Research, Inc., 2004, 45 pp. National Bureau of Economic Research, Capital: Strategies for Integrity and Fair (Working Paper 10237) $10 per copy, Inc., 2004, 28 pp. (Working Paper Play That Improve the Bottom Line. New plus $10 for postage and handling out- 10221) $10 per copy, plus $10 for post- York, Oxford University Press, 2004, 300 side the United States. age and handling outside the United pp., $30/hardcover. States. Lerner, Josh, The New New Financial Thing: Jacoby, Sanford M., Employing Bureau- The Sources of Innovation Before and cracy: Managers, Unions, and the Trans- After State Street. Cambridge, MA, Na- Welfare programs formation of Work in the 20th Century, tional Bureau of Economic Research, Inc., and social insurance Revised Edition. Mahwah, NJ, Lawrence 2004, 54 pp. (Working Paper 10223) $10 Erlbaum Associates Publishers, 2004, 315 per copy, plus $10 for postage and han- Benitez-Silva, Hugo, Moshe Buchinsky, and pp., $79.95/cloth; $34.50/paperback. dling outside the United States. John Rust, How Large Are the Classifi- cation Errors in the Social Security Dis- Oyer, Paul and Scott Schaefer, Why Do Some ability Award Process? Cambridge, MA, Firms Give Stock Options to All Employ- Social institutions and National Bureau of Economic Research, ees?: An Empirical Examination of Al- social change Inc., 2004, 52 pp. (Working Paper 10219) ternative Theories. Cambridge, MA, Na- $10 per copy, plus $10 for postage and Lee, Sandra S., ed., Traumatic Stress and Its tional Bureau of Economic Research, Inc., handling outside the United States. 2004, 41 pp. (Working Paper 10222) $10 Aftermath. Binghamton, NY, The per copy, plus $10 for postage and han- Haworth Press, 2004, 99 pp., $34.95/ Chetty, Raj, Consumption Commitments, dling outside the United States. hardcover; $19.95/softcover. Unemployment Durations, and Local Presser, Harriet B., Working in a 24/7 Risk Aversion. Cambridge, MA, National Schneider, Benjamin and Susan S. White, Bureau of Economic Research, Inc., 2004, Service Quality: Research Perspectives. Economy: Challenges for American 64 pp. (Working Paper 10211) $10 per Thousand Oaks, CA, Sage Publications, Families. New York, Russell Sage Foun- dation, 2003, 286 pp., $39.95/cloth. copy, plus $10 for postage and handling 2004, 200 pp., $34.95/paperback. outside the United States. Weiss, Donald H., Fair, Square & Legal, Wages and compensation Wolff, Edward N., Retirement Insecurity: The Fourth Edition. New York, AMACON Income Shortfalls Awaiting the Soon-to- (American Management Association), Appelbaum, Eileen, Annette Bernhardt, and Retire. Washington, DC, Economic Policy 2004, 384 pp., $35/hardcover. Richard J. Murnane, eds., Low-Wage Institute, 2002, 95 pp., softcover. West, Michael, Motivate Teams, Maximize America: How Employers Are Reshap- Success: Effective Strategies for Realiz- ing Opportunity in the Workplace. New York, Russell Sage Foundation, 2003, 536 Worker training ing Your Goals. San Francisco, Chronicle and development Books, 2004, 160 pp., $16.95/paperback. pp., $45/cloth. Biesebroeck, Johannes Van, Wages Equal Giloth, Robert P., ed., Workforce Develop- Productivity and technological Productivity, Fact or Fiction? Cambridge, ment Politics: Civic Capacity and Per- change MA, National Bureau of Economic Re- formance. Philadelphia, Temple Univer- search, Inc., 2003, 52 pp. (Working Pa- sity Press, 2004, 296 pp., $72.50/cloth; Bai, Chong-En and Chi-Wa Yuen, Technology per 10174) $10 per copy, plus $10 for $24.95/paperback. and the New Economy. Cambridge, MA, postage and handling outside the United Phelps, Edmund S., ed., Designing Inclusion: The MIT Press, 2003, 312 pp., $32.95/cloth. States. Tools to Raise Low-end Pay and Employ- Hall, Bronwyn H., Innovation and Diffusion. Connelly, Rachel, Deborah S. DeGraff, and ment in Private Enterprise. New York, Cambridge, MA, National Bureau of Eco- Rachel A. Willis, Kids at Work: The Value Cambridge University Press, 2004, 165 nomic Research, Inc., 2004, 33 pp. (Work- of Employer-Sponsored On-Site Child pp., $55/hardback.

74 Monthly Labor Review February 2005