How We Misunderstand Economics

And Why It Matters
This is the first book to explain why people misunderstand economics. From the cognitive shortcuts we use to make sense of complex information, to the metaphors we rely on and their effect on our thinking, this important book lays bare not only the psychological traits that distort our ability to understand such a vital topic, but also what this means for policy makers, and civil society more widely.

Praise & Reviews

“This book is a must read for economists playing an active role in the public debate. It explains why so many relevant economic messages are lost in translation

Widespread misunderstandings arise, according to Leiser and Shemesh, because laypeople are socially encouraged to have a view on complex economic issues, and are over-confident in their capacity to address these issues based on a combination of anecdotes, naive theories, and misleading metaphors.

Identifying the cognitive traits that make people perceptions diverge from the way of thinking of economists is a first indispensable step towards finding ways to bridge the communication gap between economists and the general public"

Tito Boeri, Economics, Bocconi University, Italy

President, INPS, Italy Social Security and Pension Authority

 

"For decades economists have tidily cultivated their own scientific gardens and forgotten that complex socio-economic issues may be effectively tackled with better knowledge of human beings on top of sophisticated equations. A plea for a multidisciplinary approach, this book is a much-needed attempt to foster dialogue and bridge the cognitive segmentation of social sciences."

Elsa Fornero, Professor of Economics, Turin, Italy

Former Minister of Labor and Social Affairs (Monti Government)

 

“This engagingly written book takes us above and beyond traditional judgment and decision-making studies and the heuristics and biases of behavioral economics to explore how people develop explanatory models and concepts in the domain of economics.

It contains many fascinating insights into the challenges laypeople have in understanding seemingly simple but deeply complex phenomena and economic entities (e.g. money), as well as offering a bold new direction for research into a topic where greater lay understanding has enormous social policy consequences.”

– Frank Keil, Psychology, Yale University, USA

“In recent years, many economists have used psychology to understand the economy better. In their enlightening new book, Leiser and Shemesh use psychology to explain why most people understand economics so poorly.

Economics insights often butt against deep-rooted ways of thinking about the world.  And even when the lessons of economics are intuitive, economists’ rhetoric is not.

How We Misunderstand Economics and Why It Matters is a great book for anyone who wants to understand the economy – or explain it to others.”

– Bryan Caplan, Economics, George Mason University, USA

“Economic ignorance is still quite often considered as a peccadillo.
This mistaken estimate is not only regrettable but has fatal consequences for individual and societal wellbeing – as attested by a series of recent disastrous decisions at the personal, national and global level.

The book by Leiser and Shemesh is an excellent example of how profound, rigorous and multidisciplinary research can shed light into the black box of everyday economic reasoning.
It stimulates fresh and inspiring ideas on how we can tackle the problem of economic illiteracy, and thus ought to become compulsory reading for all those concerned with the education of
economically well-informed and mature citizens.”

– Carmela Aprea, Business and Economics Education

University of Mannheim, Germany

An easily accessible and inspiring starting point especially for economists who want to learn what psychology has to offer

A better understanding of how laypeople perceive ... the economic environment in which they act helps us to develop more adequate models – both in micro- and macroeconomics.
These models can help us ... design better policies.
[The book explains] why voters often oppose policies that economists consider helpful and/or support policies not considered helpful.”

Ivo Bischoff, Economics, Kassel University, Germany

Book review for the Journal of Behavioral and Experimental Economics

 

“Given the broad implications of faulty reasoning in the economic sphere for individuals
as well as for society, this book is a must read for laypeople, policy makers, government officials as well as students.

(...) This is a scholarly work with over 500 references, well-grounded in academic theory and empirical work. At the same time, it is a highly enjoyable read, (...)  sprinkled with vignettes, scenarios, narratives, and cartoons."

– Esther Greenglass, York University

Book Review for the Journal of Economic Psychology

Order The Book

Click a retailer below

Meet the Authors

Prof. David Leiser

Prof. Leiser is a renowned specialist in Economic Psychology. He studies human understanding, with an emphasis on investigating how non-economists understand economic issues.

Yhonatan Shemesh, MA

Yhonatan Shemesh focuses his research on the ways the human evolutionary cognitive endowment affects how people think and act in the modern world.

Contact Us

We’d love to hear from you or read your reactions to the book.

To contact us, please write to dleiser@bgu.ac.il or use the following form.

We’ll get back to you shortly