A story of economics that generates more heat than light

Business Books:Call me naive, but I didn't realise that economists were held in low esteem by the general public or by practitioners of other social sciences.

But this is Diane Coyle's implication in the introduction to her new book The Soulful Science: What Economists Really Do and Why It Matters. Indeed, I have many friends who have no real interest in economics but who confess to enjoy listening to economists such as George Lee, David McWilliams and Dan McLoughlin because they make the subject enjoyable and easy to understand.

However, therein lies one of the problems with this book. Ms Coyle attempts to show that economists carry out important work and analysis which is used by governments and politicians to implement policy decisions.

However, it appears that the author is talking only about academic economists. For having followed her through various chapters and strong arguments in support of the role of economists, she scores an own goal towards the end of the book when she dismisses what she calls the public face of economics and those who are involved with it (in other words, the likes of myself and the three mentioned).

She says: "What the non-specialist sees of economics is largely the kind of macro-economic debate covered in the news programmes and newspapers, the forecasts about how much the economy will grow, what will happen to inflation or the dollar, whether the financial markets will go up or down."

She says that most of this economics is of poor quality - and the fact that the public face of economics is usually a dull but pompous middle-aged white man makes matters even worse. Well, I'm sorry to say this to Ms Coyle, but I would not describe Messrs Lee, McWilliams or McLoughlin as either dull or pompous. In fact, I would argue that if there were more economists like them, economics would not be perceived as dull or boring, or "nerdy", as the author frets about. At this point I have to declare that I would rather read a sports book or a good thriller on my weekends off than review an economics text, and given Miss Coyle's twist in the tale, so to speak, I may not be the best person to talk about her latest work.

However, there is no doubt that Diane Coyle, a former economics editor of the Irish Independent, who has a Harvard economics PhD, loves her subject and most of those who practise it.

She opens her book with what she believes is the notion that economists are seen as measuring everything in terms of money and nothing else matters but GDP. She then takes us through the impressive work and analysis of many of the world's leading economists to show us that there is more to the dismal science than just numbers.

Early on, we learn about Angus Maddison, currently professor of economics at the University of Groningen in the Netherlands, one of the world's leading economic historians. He is little known outside the profession but is nevertheless a very important individual because of his work in estimating levels of national output and growth for the whole world from the year 1000 to the present. Furthermore, he has assembled a network of researchers across the globe dedicated to collecting fundamental economic data. He calls this the "Club des Chiffrephiles" (lovers of figures).

Maddison's work indicates no acceleration in growth in the West around the year 1500. The acceleration came much later - around 1800 or 1820. This is a surprise to all of us who learnt in history lessons that the Renaissance marked a turning point for Western Europe. We also learn from his figures that China was as powerful as Europe until late in the 19th century, and therefore its current success is nothing new. We then proceed on a journey to show the work economists have done in helping to reduce world poverty and why some countries grow stronger than others.

However, while the dissemination and analysis of information by economists in this field cannot be underestimated, the two people in my view who have done most in the past 20 years or so to bring the plight of the Third World to the attention of western politicians are Bob Geldof and Bono, and the last time I looked, they were not economists.

And so on we go through various chapters in the book, of which the most intriguingly titled is "Murderous Apes and Entrepreneurs". For one moment, I thought economists were going to be bracketed with murderers, but what we have in part is a look at the work of Paul Seabright, an economist living in Toulouse whose book The Company of Strangers opens by noting that homo sapiens, the "shy, murderous ape" - violent, suspicious of strangers, habituated to hunting in small, mobile bands of relatives - has in just the past 10,000 years come to live in communities of millions, engaging in an extremely detailed and elaborate division of labour which ensures that we depend utterly on strangers for the satisfaction of our daily needs.

There is also a look at game theory, which studies choice of optimal behaviour when costs and benefits of each option depend on the choices of other individuals.

But all that this shows is that our progress in life and the success or failure of an economy is dependent or reliant on the decisions of others. Is there really anything startling in this, even to non-economists? I doubt it.

Ms Coyle concludes her book by citing some areas in which economic research has played a major part in policy decisions in the past couple of decades. These include transportation, competition policy and monetary policy. There is no doubt that economists played an important role in formulating these agendas, but they were just one cog in the wheel, and there are in my opinion more things to do in life than waste time analysing how important or how trivial an economist's work is perceived to be.

Like Diane Coyle, I believe that economists have "soul", but her latest book is not the type of light material I would recommend reading while lying on the beach. It is a book suitable for economics undergraduates. I can think of better ways of finding my soul, but then again maybe I am biased.

Alan McQuaid is chief economist at Bloxham Stockbrokers.