Economics of the Public Sector

"Joe Stiglitz is, of course, a brilliant economist but he’s not just brilliant at solving math equations, he’s really good at abstract thinking and drawing out interesting implications of topics. Joe’s was the first textbook I read which had a lot of really funky footnotes about cool little implications you might not have thought about. It was more like reading a book than a textbook. It’s still a textbook but it’s definitely inspired. For someone who’s really into the topic it was great. I think it was too confusing for someone who wasn’t, which is why I felt like I wanted to write my own textbook. Mine tries to explain the basic economics more simply but with a lot of interesting footnotes and explaining some interesting tangents. It did a good job covering public economics. The textbook really was at its prime in the mid-1980s and the government has changed a lot since then. What Paul Krugman says is that we’re now a large pension fund that happens to have an army. Much more of our field is about healthcare and government spending. Joe’s book was mostly about taxation and government transfers – a third of my book is on social insurance and government transfers. An enormous shift from taxing and spending on defence to taxing and spending on health is the main change in public economics. Joe is one of the two modern fathers of bringing rigour to studying market failures; my colleague Peter Diamond is the other one. Joe wrote a large number of articles in a wide variety of contexts. His work helped us to rigorously model markets that don’t work perfectly well and consider the implications of market failures for the economy and for government policy."