Principles of Economics

Overview of "Principles of Economics" by N. Gregory Mankiw

Introduction and Publication History

• Author and Publisher: The book "Principles of Economics" is written by N. Gregory Mankiw, a Harvard economics professor. It was first published in 1997 and has since become a standard introductory economics textbook in American economics departments.
• Editions and Sales: As of 2024, the book has ten editions and has sold over a million copies, generating at least $42 million for Mankiw. The current publisher is Cengage, which claims it is the "most popular economics textbook".

Key Themes and Principles

• Ten Principles of Economics: The book introduces ten fundamental principles of economics that Mankiw considers essential for understanding economic wisdom. These principles are:
  1. People face trade-offs.
  2. The cost of something is what you give up to get it.
  3. Rational people think at the margin.
  4. People respond to incentives.
  5. Trade can make everyone better off.
  6. Markets are usually a good way to organize economic activity.
  7. Governments can sometimes improve market outcomes.
  8. A country’s standard of living depends on its ability to produce goods and services.
  9. Prices rise when the government prints too much money.
  10. Society faces a short-run trade-off between inflation and unemployment.

Content Structure

• Foundations and Microeconomics: The book is divided into two main sections: Foundations and Microeconomics (Chapters 1–23) and Macroeconomics (Chapters 24–38).
• Chapters Overview: The chapters cover a wide range of topics including supply and demand, elasticities, externalities, types of goods, industrial organization, monopolies, GDP, unemployment, long-term growth, money growth and inflation, and the theory of aggregate supply and demand.

Critical Reception

• Positive Reception: The book is widely used and respected for its clear and reader-oriented introduction to economics. It is praised for making complex economic concepts accessible to students.
• Negative Reception: Some critics argue that the book presents a narrow and biased view of economics, failing to acknowledge other schools of economic thought. For example, Nishanth Bala criticizes the book for its lack of diversity in economic perspectives and what he sees as indoctrination of young students with a particular worldview.

Additional Notes

• Royalties and Charity: Mankiw has faced criticism about the high price of the textbook. In response, he has decided to donate the textbook royalties from his students to charity.

In summary, "Principles of Economics" by N. Gregory Mankiw is a comprehensive and widely used introductory economics textbook that presents ten fundamental principles of economics. While it has received positive reviews for its clarity and accessibility, it has also faced criticism for its perceived narrowness and lack of diversity in economic perspectives.