Most Useful Economics Courses for Personal Application

[Ganon91]

What courses, resources, etc. would you guys recommend to a Mustachian seeking to gain a broader understanding of Economics for personal application?

[ioseftavi]

If you mean "hey I want to better understand economics so that I can make more optimal decisions with regards to my finances", I would recommend skipping the dismal science.  Entirely.  Most of what I've read in economics, both for school and in my professional life, is of little use as far as personal application.  You don't need to learn fiscal policy, price ceilings or floors, or benefits of foreign trade in order to make better personal finance decisions.

At a personal level, economics assumes that humans are all rational actors, meaning "all of our decisions make sense".  That is obviously completely untrue.  In fact, it's such a crazy assumption that pretty much everything that derives from that is (my view only) really flawed.

If you're looking for information on "What can I learn to make better decisions around my personal finances?", I would strongly, strongly suggest that you read everything you can concerning behavioral finance, which is at the intersection of psychology and personal finance.  While it's a new field, what's been written on the subject sheds a lot of light on how money screwups happen.  Also clearly shows how you can "hack" your brain so that making good financial decisions is near automatic. 

If you're interested in behavioral finance, I can recommend books.  Maybe someone else can recommend economic books for you, but again - I'd recommend skipping the subject, if you're trying to improve your own money habits.

[Cpa Cat]

I say this as someone with a Degree in Economics: It's really not all that applicable personally.

What you should be looking at is Finance and Accounting. Finance for investing. Accounting for small businesses/taxes.

In my entire degree of study, I can recall one time when I used my Econ degree to my benefit. During the Great Recession, a panicked friend was trying to get us to sell our stocks to preserve what wealth we had left. My Economics degree left me totally unpanicked about the economy.

But you know what? You get that from Finance too - in a more useful and concrete form.

Oh, also... sometimes when people on the internet talk about the gold standard, inflation, deflation, central banking, etc, you can basically just sit back and laugh because you actually understand monetary policy. But seriously... laughing at people on the internet is not -that- entertaining.

[Ynari]

If you're interested in behavioral finance, I can recommend books.  Maybe someone else can recommend economic books for you, but again - I'd recommend skipping the subject, if you're trying to improve your own money habits.

I'm interested in those book recommendations!

But, yeah, I agree that very little of "economics" is personally applicable. Of the classes I took, the ones I'd most recommend to others were tangential to the actual econ (probability just because it was interesting, and accounting/corporate finance type classes are also helpful if you want to study companies and understand stock a bit better)

A generic course in Finance can cover a lot of investment-related things (valuation, risk theory, derivatives), but I find most of those topics irrelevant unless you're planning on becoming an active trader.

[nanu]

posting to follow

[MetalCap]

Agreed with CPACat,  My Government and Econ degrees help me argue with people in their terms about international theoretical trade and taxation.  My MBA is what really helps me with personal and commercial "real life" finances and investing.

TLDR Econ=excusing insanity Finance=not being insane

[2ndTimer]

I found Tyler Cowen's "An Economist gets Lunch"  to be an interesting discussion of the various factors that impact the price of a restaurant meal.  See his explanation of why in general a Pakistani restaurant will be a better value than an equivalently priced Indian restaurant.

[ioseftavi]

If you're interested in behavioral finance, I can recommend books.  Maybe someone else can recommend economic books for you, but again - I'd recommend skipping the subject, if you're trying to improve your own money habits.

I'm interested in those book recommendations!

Books:
Nudge: Improving Decisions about Health, Wealth, and Happiness
Why Smart People Make Big Money Mistakes and How to Correct Them: Lessons from the Life-Changing Science of Behavioral Economics
The Psychology of Judgment and Decision Making
How We Know What Isn't So: The Fallibility of Human Reason in Everyday Life
Extraordinary Popular Delusions and the Madness of Crowds
Predictably Irrational

Here is my "mental model" for thinking about this:

Your networth is going to increase at a certain rate.  That rate will be a function of your income, your savings rate, and your investing discipline.  In the short run, stock market performance plays a role, but in the long run, much less so. 

Improving any one of these things (income/savings rate/investment discipline) will help your rate of increase.  Making poor decisions in any of these categories will hurt your rate of increase.

There are lots and lots and lots of things which are extremely appealing to me, as a human being, that will hurt my networth's rate of increase.  A few examples:

-Attempting to market time, or getting cute with my portfolio's trading strategy in an effort to juice returns
-Selling out of the market in a downturn, or buying in after a run up
-Putting money in taxable accounts when I've still got tax-advantaged space, because I want the flexibility of withdrawing money at any time
-Trading individual stocks, particularly in an undisciplined, half-assed way, with no risk measurement or regard to what % of my net worth I'm putting at risk
-Not taking a logical, critical approach to my life's important major purchases (house, car) or cordoning off these purchases in a separate mental bucket where they needn't make financial sense
-Paying off productive, low-cost debt even though it makes no economic sense
-Maintaining huge cash balances, because I enjoy the false security of cash

These are a few examples, but there are a million others.  My job - as an investor, as a mustachian - is to learn to ignore the siren call of psychologically attractive monetary mistakes.  Alternately, if I can't train my brain to resist this shit, then I need to structure my life/budget/money in such a way that making poor decisions is extremely difficult.

Reading books like the ones above (and others, in other disciplines) has helped me out with this.  Nudge, in particular, has helped my wife and I think very critically about structuring our lives in such a way that good financial decisions are easy, not hard.

[Pedestrian]

Great list from ioseftavi above. I would add to it:

Thinking, Fast and Slow by Daniel Kahneman

[ioseftavi]

Great list from ioseftavi above. I would add to it:

Thinking, Fast and Slow by Daniel Kahneman

That's a great one as well, definitely worth a look.

[Ganon91]

Thanks all,

I now have a lot of reading to do. I greatly appreciate the book list!

[kib]

If you're interested in behavioral finance, I can recommend books.  Maybe someone else can recommend economic books for you, but again - I'd recommend skipping the subject, if you're trying to improve your own money habits.

I'm interested in those book recommendations!

Books:
Nudge: Improving Decisions about Health, Wealth, and Happiness
Why Smart People Make Big Money Mistakes and How to Correct Them: Lessons from the Life-Changing Science of Behavioral Economics
The Psychology of Judgment and Decision Making
How We Know What Isn't So: The Fallibility of Human Reason in Everyday Life
Extraordinary Popular Delusions and the Madness of Crowds
Predictably Irrational

Here is my "mental model" for thinking about this:

Your networth is going to increase at a certain rate.  That rate will be a function of your income, your savings rate, and your investing discipline.  In the short run, stock market performance plays a role, but in the long run, much less so. 

Improving any one of these things (income/savings rate/investment discipline) will help your rate of increase.  Making poor decisions in any of these categories will hurt your rate of increase.

There are lots and lots and lots of things which are extremely appealing to me, as a human being, that will hurt my networth's rate of increase.  A few examples:

-Attempting to market time, or getting cute with my portfolio's trading strategy in an effort to juice returns
-Selling out of the market in a downturn, or buying in after a run up
-Putting money in taxable accounts when I've still got tax-advantaged space, because I want the flexibility of withdrawing money at any time
-Trading individual stocks, particularly in an undisciplined, half-assed way, with no risk measurement or regard to what % of my net worth I'm putting at risk
-Not taking a logical, critical approach to my life's important major purchases (house, car) or cordoning off these purchases in a separate mental bucket where they needn't make financial sense
-Paying off productive, low-cost debt even though it makes no economic sense
-Maintaining huge cash balances, because I enjoy the false security of cash

These are a few examples, but there are a million others.  My job - as an investor, as a mustachian - is to learn to ignore the siren call of psychologically attractive monetary mistakes.  Alternately, if I can't train my brain to resist this shit, then I need to structure my life/budget/money in such a way that making poor decisions is extremely difficult.

Reading books like the ones above (and others, in other disciplines) has helped me out with this.  Nudge, in particular, has helped my wife and I think very critically about structuring our lives in such a way that good financial decisions are easy, not hard.

I just loved this.  Great thoughts that seem extremely applicable to my life!  Thank you.