In This Review

Trillion Dollar Economists: How Economists and Their Ideas have Transformed Business
Trillion Dollar Economists: How Economists and Their Ideas have Transformed Business
By Robert Litan
Wiley, 2014, 400 pp.

“Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist,” wrote John Maynard Keynes in 1936. Litan here sets out to explain a range of ideas that originated with academic economists and that subsequently influenced both economic policy and business practices—usually for good but occasionally for ill. He includes biographical sketches of many of those economists, including such luminaries as Paul Samuelson and Milton Friedman, but also less widely known figures, such as George Dantzig, a pioneer in operations research, and Alfred Kahn, who played a major role in airline deregulation. Litan focuses largely on microeconomic issues, on which economists tend to a agree more frequently than they do on macroeconomics; for example, most economists agree that incentives matter and that it is important to get them right. The topics covered by the book range widely: financial innovations (especially derivatives), matchmaking in labor markets (and in romance), auctions, the deregulation of transportation and communications, and data mining all receive attention. Litan also explores the possibility of applying economic ideas to the challenges of traffic congestion, rising health-care expenditures, and climate change.