Basic Mathematics for Economists (2nd ed.)

Citation

Ooi, J.T.L. (2007), "Basic Mathematics for Economists (2nd ed.)", Journal of Property Investment & Finance, Vol. 25 No. 3, pp. 333-334. https://doi.org/10.1108/14635780710746957

Not everyone finds mathematics easy, but at least it helps if you can see the reason for having to study it (p. x).

The use of mathematics is now an integral part of economics and finance and in line with developments in the mainstream finance and economics literature, real estate theories have become more technical and mathematical over the recent years. Complex models, represented by a system of mathematical equations, are often used to capture complicated and dynamic relationships that cannot be adequately described in words alone. However, those who do not have a good grasp of basic mathematics will find the mathematical notations unfamiliar, challenging and even intimidating. A good grasp of basic mathematics is, therefore, important to understand modern real estate economics and finance theories.

Basic Mathematics for Economists will be appreciated by real estate students and practitioners who seek to build a good foundation in basic mathematics. The 530‐page book is organized into 15 chapters covering basic arithmetic, exponentials and logarithms, algebra, graphs and functions, equations, calculus, partial differentiation, constrained optimization and matrix algebra. Although it is designed primarily for students pursuing a course in economics, the mathematical techniques covered in the book are also relevant to real estate students. In addition, there is one whole chapter dedicated to the mathematics related to finance and investment decision‐making such as calculating net present value and internal rate of return on an investment.

For a technical book, the text is surprisingly readable and interesting. The learning objectives are clearly set out at the start of each chapter. The author takes considerable effort to show how the particular mathematical techniques in each topic are applicable in familiar economics contexts, such as demand elasticity, supply analysis, budget constraint, and production cost function, to motivate the students and stimulate their interest. The book is also well organized and paced, starting with revisions on elementary mathematical principles, such as arithmetical and algebraic methods. The gentle pace is increased gradually in the subsequent chapters as the basic concepts are developed further and as more advanced materials are introduced. I believe this will help to build the confidence of readers who do not have a strong background in mathematics. Every mathematical notations, theorems, and terminologies, such as Lagrange multiplier, Cobb‐Douglas production function, Cramer's rule, Euler's theorem, Hessian matrix, etc. that may astound any uninitiated reader are clearly explained by the author with clearly illustrated examples; followed by self‐test exercises for the readers to test and develop their understanding on the particular topics.

Recognizing that a sound understanding of the mathematical techniques can only be acquired through practice, the author does not provide any short cut. Students are encouraged to take out their paper, pen, calculator and spreadsheet to solve numerous exercises provided at the end of each section. The solutions for the self exercises are provided at the end of the book. Although the problem sets becomes increasing difficult as the book progresses to advanced topics, students will still find them manageable because they are usually preceded by similar examples with each steps clearly explained.

In summary, the text proves to be a useful guide to get acquainted with basic mathematic techniques frequently used in the field of real estate economics and finance. I have personally found the book a good reference to refresh my memory and to check up on specific mathematical concepts and have no hesitation recommending this book to any students aspiring to undertake serious research in real estate economics and finance. It serves as a good a supplement reading to attending a basic mathematical class. The author, Mike Rosser, is Principal Lecturer in Economics in the Business School at Coventry University.