Related to: Eliezer's Sequences and Mainstream Academia, Intellectual insularity and productivity, I Stand by the Sequences, Why don't people like markets?
Looking at some of the more recent arguments against them showing up in discussions I've been quite disappointed, they seem betray a sort of lack of background knowledge or opinions built up from a bottom line of "markets are baaad therefore prediction markets are baaad". The casual arguments for them are lacking as well. I will say the same of other discussions on economic, since it is apparently suddenly too mind-killing or too political to talk about markets and similar things at all. We didn't use to have tribal alerts flying up in our brains discussing such matters.
The Overcoming Bias community started with an assumption of certain kinds of background knowledge, this included economics and things like game theory. In the early days of LessWrong/Overcoming Bias Eliezer did a whole sequnece on filling in people on Quantum mechanics which despite his claims to the contrary doesn't seem that vital (if still important).
We now have a different demographic that we used to. Not only that, we now have young people basically using the sequences as their primary source for education on matters of human rationality, quite different from the autodidacts exploring the literature on their own terms who where common in previous years. We've recognized this to a certain extent. We wrote a series of introductory sequences and articles to fill in such background knowledge explicitly such as Yvain's recent one on Game Theory. Also part of the reason we now have a norm of more citations that EY originally did is to give study and research aids to people. Indeed I think adding comments to old articles featuring more citations or editing those in would be wise so as to avoid misconceptions.
I think we need several sequences on economics, and a good one to start would be one systematically investigating prediction markets. To a certain extent just reading Robin Hanson's relevant posts on this topic would do much the same, but unfortunately we don't have an organized series of sequences by him (beyond the tags he uses on his articles). I still hope Karmakaiser or someone else will one day undertake a project of writing up summary articles that organize links to RH's posts into sequences so new members will read them as well.
I'd write these myself but I just don't have a good background in what works and studies influence the positions of early key LW authors on economics and its relevance to rationality. I'm also only beginning my studies in that area since my background is in the hard sciences with only some half-serious opinions formed from Moldbuggian insights and 20th century social science.
I study/teach economics for a living, this made my try to think about why it is useful (besides that it gives me a job).
How To Run A Government
Economics has a lot to say about which government policies will make people better off or worse off. This is a big reason I got interested in economics, but its not very practical for the vast majority of people, who have essentially no influence over government policy (and in fact it is economists who are famous for arguing, perhaps incorrectly, that votes don't matter).
Understand How The World Works
It's always nice to just understand more, but in particular I think some insights are likely to make you happier. For instance, you may worry about not being a good person because you are selfish, but economics argues that in market settings being selfish often helps others too. Several insights of economics make you appreciate other people more: knowing that their specialization and labor is what makes the world, and you, so rich- people of different countries, religions, et cetera cooperate to make everything from your computer to your pencil. Whenever I get annoyed at the crowd in a coffeeshop or on the subway, economics reminds me that if it weren't for the other customers, there would be no coffeeshop or subway. Learning about subjective value helps you not to look down on others so much for "bad taste" in music, books, et c.
Practical Skills
Econometrics (basically our word for data analysis) is the main practical skill of economics. It is a great tool for figuring out how the world works. I use it for academic research, but many private sector realize the value of econometrics (though they may call it analytics or data science or forecasting or something else). Another skill that only a few economists really master is mechanism design, which has been used to sell ads and spectrum and allocate kidneys, students, and medical residents.
Save Money
A lot of people get the idea that economics is about "how to make money", but anyone seeing my paychecks would realize I'm not the one to teach that. We do have some things to say about how not to throw money away though. By learning about the Efficient Markets Hypothesis and investing in broad index funds, you will avoid losing money to fund managers fees and brokerage trading costs, and avoid the possible catastrophic failure of an undiversified portfolio. Sometimes you can use efficient markets to save time as well. If I want to know whether the recent jobs numbers were better than expected, I could read a lot about it, or just look at how the stock market reacted in the 15 minutes afterward. If I want to know who is going to win the US presidential election, I could follow the news for hours and hours and make a guess, or just look on Intrade for one minute.
Act Rationally
Economics teaches a model of how "rational people" act. This helps you notice when you are departing from the model of rationality and think about doing things differently. For instance, write off sunk costs and make decisions at the margin.
All in all, I'm not sure if economics is the most useful subject to learn (what are other contenders?), but it does seem to have a fair amount of practical utility.
(crossposted)
So, I think I'm going to write a sequence called "Economics in 5 concepts," which tries to give a description of opportunity cost, prices carrying information, feedback and equilibria, specialization of labor / comparative advantage / gains from trade, and the seen and the unseen. Anything I'm missing / shouldn't write about / should consider?