Book Review, published Library Journal 2/15/12

Schlefer , Jonathan. The Assumptions Economists Make. Belknap: Harvard Univ. . ISBN 9780674052260. econ.

Magazine Section: Social Sciences

Schlefer (research associate , Harvard Business Sch.; Palace Politics: How the Ruling Party Brought Crisis to Mexico ) examines the "assumptions , models , and ideas of economists" to "shed light on today's economic questions." Not a history of economic thinkers , this is an examination of their prevailing assumptions , from Adam Smith to the present. Schlefer asserts that macroeconomic models failed to guide government policy before 2008 because economists got their neoclassical theory wrong , and he blames the economic troubles of 2008 and beyond on the instability of private financial markets. He disputes factors such as supply and demand , technology , and unionization as causes of the current recession , noting that many believed the "supply of better-educated workers increasing relative to lower-skilled workers would cause their pay premium to fall" when just the opposite happened. His analysis of these assumptions concludes with five recommendations for economists: to describe their beliefs transparently , to explain the structure of their models , to include critical factors affecting the models , to weigh conflicting models , and to explain what they do not know.

VERDICT This is not a book for the lay reader , although one of the more engaging chapters covers income inequality. Interesting but complex , it will be best understood by economists.—Joanne B. Conrad , Geneseo , NY

Library Journal , February 15 , 2012