>> Sunday, July 17, 2016
TITLE: Who Gets What — and Why: The New Economics of Matchmaking and Market Design
AUTHOR: Alvin E Roth
PUBLISHER: Houghton Mifflin Harcourt
TYPE: Non Fiction
Most of the study of economics deals with commodity markets, where the price of a good connects sellers and buyers. But what about other kinds of “goods,” like a spot in the Yale freshman class or a position at Google? If you’ve ever sought a job or hired someone, applied to college or guided your child into a good kindergarten, asked someone out on a date or been asked out, you’ve participated in a kind of market. This is the territory of matching markets, where “sellers” and “buyers” must choose each other, and price isn’t the only factor determining who gets what.Roth is well known for his work on market design, which garnered him a Nobel Prize in Economics back in 2012. I've been following his blog for a while, so I bought his book as soon as it came out.
In Who Gets What—and Why, Nobel laureate Alvin E. Roth reveals the matching markets hidden around us and shows us how to recognize a good match and make smarter, more confident decisions.
This is a fascinating exploration of matching markets, which are the markets where things don't simply work by finding the right price at which supply equals demand. As Roth puts it, "prices don't do all the work" there (in fact, in some, prices don't do any work at all). In matching markets, both supplier and consumer have choices, and have to choose each other. It's not enough for the consumer to decide on a product, as they would in a commodities market, the supplier has to choose the consumer as well (e.g. I can't just decide to attend Oxford University, they have to accept me as well. And Oxford can't just decide I'm going to study there!).
Roth presents several such markets and explains how they work and what problems such markets might suffer from, and proposes some solutions, including several he and his colleagues have implemented in the past for markets as disparate as kidney exchanges, school placements and the hiring of new doctors.
I'd recommend this one to both professional economists and lay readers alike. There was plenty here that was new to me (I fall in the former camp), and plenty that, although familiar, I'd never thought about in quite that way before. And it sparked off some really interesting further reading. Roth writes in a way that somehow manages to be clear enough that non-economists will get it perfectly, while not feeling simplistic and condescending to those of us familiar with many of the concepts.
And it's super practical (while making it clear that there is a hell of a lot of very technical stuff behind it all). As someone who bemoans the unintelligible maths arms race that has engulfed current economics research, this was great.
MY GRADE: An A-.