5 Books to Shape Your Economic Thinking
As we enter a new year, it’s worth pausing to reflect on the literary contributions shaping how scholars and practitioners understand economic life today. Stone Center Director Steven Durlauf has curated five books that span topics from how economists collect and interpret data to the role of China’s gaokao in shaping opportunity. His selections invite readers to engage with industry critiques, fresh perspectives on contemporary debates, and, most importantly, to grapple with the questions we must confront to build a more just economy.
1. Price Setting by Truman Bewley
Truman Bewley’s Price Setting examines the determinants of pricing goods and how they respond differently across the business cycle, drawing on conversations with hundreds of businesspeople. Acting as a “bookend” to his 1999 publication Why Wages Don’t Fall During a Recession, this work provides “invaluable interview-based information” for understanding the economy and why market power isn’t the sole factor guaranteeing price stability. Durlauf notes this as “remarkable work from one of the leading figures in mathematical economics.”
2. The Measure of Progress: Counting What Really Matters by Diane Coyle
When the government uses statistics to inform decisions that impact American lives, it’s imperative to consider where those numbers come from and what exactly they measure. In The Measure of Progress, Diane Coyle offers what Durlauf calls a “superbly written diagnosis of the limits to standard economic measurements, in particular GDP, with important recommendations on how to use asset valuation to capture the value of time and the environment.” In the book, Coyle argues that as the economy has shifted into the digital age and scarcity has moved from supply to demand, our traditional tools have struggled to capture new economic realities. Coyle urges readers to rethink the categories and assumptions that underpin these measures, making the case for a new framework capable of guiding more equitable and sustainable growth.
3. On Natural Capital: The Value of the World Around Us by Partha Dasgupta
Renowned economist Sir Partha Dasgupta frames the existential challenge of climate change as an economic imperative in his newest book, On Natural Capital, releasing January 20th, 2026. Durlauf had the privilege of reading the final draft in 2025 and calls this a “career summarizing work by one of the great minds in the economics profession, addressing deeply and comprehensively how nature and the environments must be integrated into economic models and measurement.” Rather than treating environmental concerns as external to economic analysis, Dasgupta argues they must be central to how we understand value, growth, and sustainability.
4. Two Paths to Prosperity: Culture and Institutions in Europe and China, 1000-2000 by Avner Grief, Joel Mokyr, & Guido Tabellini
Avner Greif, Joel Mokyr, and Guido Tabellini trace the evolution of economic and political structures in Europe and China from the 11th century through the modern era. Durlauf describes this work as “self-recommending,” noting that both the topic and authors make this an essential read. The book makes key distinctions between corporation-based and kinship-based organizing principles in the two cultures, outlining how these civilizations followed largely different trajectories over their development. Understanding these divergent institutional paths offers crucial insight into how cultural and political structures shape long-term economic outcomes. The book’s sweeping arguments about institutional foundations will likely “create disagreement and controversy,” which, as Durlauf notes, is exactly what a book like this should do.
5. The Highest Exam: How the Gaokao Shapes China by Ruixue Jia, Hongbin Li, & Claire Cousineau
Ruixue Jia, Hongbin Li, and Claire Cousineau examine China’s college entrance exam–the Gaokao–and how it shapes educational opportunity and social mobility in the world’s most populous nation. Durlauf expects the book to become a “standard reference” with “many messages for understanding and evaluating meritocracy.” The authors show how the exam’s meritocratic design emphasizes individual ability while leaving little room to account for the socioeconomic inequalities that underlie performance. This tension illustrates how high‑stakes assessment systems can expand opportunity for some while reinforcing existing disparities for others.