New Old School library · Money module

Books for understanding money

24 books for the Money module: fables and novels that tell an idea better than an explanation, and popular science on how we decide with money. Each one comes with its verdict, the module lesson it connects to, and the books it talks to.

Solid the evidence backs itPartly right right in partPromises more than it proves Literature and history not judged by studies

If you are a student

Short stories, two practical books to start managing your money and one to read closely.

  1. Aesop's Fables
  2. The Miser
  3. Pequeño cerdo capitalista
  4. The Psychology of Money
  5. Rich Dad Poor Dad

If you teach

Why we decide badly with money, and how to use it in class.

  1. Misbehaving
  2. Nudge
  3. Poor Economics
  4. The Merchant of Venice
  5. Los comuneros (in Spanish only)

If you support a student at home

Saving without heroics, distrusting easy promises and not confusing money with happiness.

  1. Pequeño cerdo capitalista
  2. Extraordinary Popular Delusions and the Madness of Crowds
  3. The Good Life
  4. The Richest Man in Babylon

Test yourself · retrieval practice

Myth or evidence?

Ten ideas about money and how we handle it. Decide before you see the answer: trying to recall and getting it wrong helps you learn more than reading the answer. The page remembers your answers in this browser and asks you again, days later, what you got wrong.

Verdict board · tap a book

How well does each book hold up?

Each verdict keeps the book's central idea. For popular science books, also the study that judges it; fables and novels are not judged by studies, but by what they help you understand. The full reviews are in Spanish.

What to read for each lesson

The books for each lesson in the module

The module's lessons in order, with the books that shed light on them. Tap a book to go to it.

Where to keep your money
Simple interest
First salary and social security

Timeline · tap a book

Nearly three thousand years of stories about money

The books by the decade they were published, colored by their verdict. Tap one and the board and the map show it.

Map of connections

How the books talk to each other

Each line is a connection in the library. Tap a book to see which others it talks to and why. Grey dots are books on other topics.

The books

The 24 books, one by one

Stories that teach about money

Fables, poems, plays and novels that tell an idea from the module better than an explanation

s. VI a. C. (según la tradición)Literature and history

Aesop's Fables

Author
Esopo (atribuidas)
Lessons
Saving and goals, Investing, the basics

Connects with

The promise: Save in time, and do not destroy what produces.

The Ant and the Grasshopper is the Saving and goals lesson told to a child; the Goose That Laid the Golden Eggs, the idea of not destroying what produces, central to Investing, the basics.

Read the full review (in Spanish)

s. VIII a. C. (según la tradición)Literature and history

The Odyssey

Author
Homero
Lessons
Saving and goals

Connects with

  • Robinson Crusoe · Two castaways far from home. Ulysses gets through with cunning; Robinson, with work and accounts.

The promise: Tie yourself to the mast before temptation.

Ulysses has himself tied up to hear the sirens without being lost. It is the oldest image of a commitment device, the idea behind saving automatically.

Read the full review (in Spanish)

hacia 1596-1598Literature and history

The Merchant of Venice

Author
William Shakespeare
Lessons
Good debt and bad debt, The real cost of a loan

Connects with

  • David Copperfield · Two debtors. Antonio pledges his own body as collateral; Micawber ends up in debtors' prison.

The promise: What you lose if a loan is not repaid.

It is the most famous story about the collateral of a loan. It helps to talk about reading the terms before signing, and about when a debt stops being a help.

Read the full review (in Spanish)

1668Literature and history

The Miser

Author
Molière
Lessons
Simple interest, Percentages in real life, The real cost of a loan, Need or want?

Connects with

  • The Merchant of Venice · Two comedies about moneylenders. Shylock asks for a pound of flesh as collateral; Harpagon hides 25 % interest behind 5 %.
  • The Richest Man in Babylon · Mathon, Clason's moneylender, lends with care; Harpagon lends with tricks. Two opposite portraits of the same trade.

The promise: An "honest" interest rate can hide an abusive one.

Harpagon lends at 5.56 %, then adds 20 % and pays part of the loan in worthless junk. With the sums in the scene, the loan costs about 50 % a year. It is a lesson in fine print.

Read the full review (in Spanish)

1719Literature and history

Robinson Crusoe

Author
Daniel Defoe
Lessons
Need or want?, Budget

Connects with

  • Steppenwolf · Two men alone. Robinson's solitude is forced on him by a shipwreck; Harry Haller chooses his.

The promise: The value of things depends on what you can do with them.

On the island, a knife is worth more than all the coins from the ship. And when he is desperate, Robinson writes his evils and his goods in two columns, like a balance sheet.

Read the full review (in Spanish)

1849-1850Literature and history

David Copperfield

Author
Charles Dickens
Lessons
Income and expenses, Budget

Connects with

  • Robinson Crusoe · Two ways of keeping accounts, Micawber's rule and Robinson's list of evils and goods.

The promise: Spend a little less than what comes in.

Micawber sums up the Budget lesson in two sentences, the difference between happiness and misery lies in spending a little less or a little more than you earn. He says it on leaving debtors' prison.

Read the full review (in Spanish)

1961Literature and history

No One Writes to the Colonel

Author
Gabriel García Márquez
Lessons
First salary and social security

Connects with

  • David Copperfield · Poverty with dignity. The colonel and Micawber keep up appearances even though they have nothing to do it with.

The promise: What a person lives on when they can no longer work.

A colonel waits for years for a pension that never arrives. It is the best short novel, and a Colombian one, for understanding social security.

Read the full review (in Spanish)

The history of money and markets

Where accounting, trade and bubbles come from

1202Literature and history

Liber Abaci

Author
Leonardo de Pisa (Fibonacci)
Lessons
The real cost of a loan

Connects with

The promise: The numbers we do our sums with today.

It helped Europe leave Roman numerals behind, and it shows that the mathematics of credit is more than 800 years old.

Read the full review (in Spanish)

1755Literature and history

Essay on the Nature of Trade in General

Author
Richard Cantillon
Lessons
Starting a business with numbers, Inflation

Connects with

The promise: The entrepreneur buys at a certain price to sell at an uncertain one.

It defines the entrepreneur as the one who takes on risk, and explains why, when new money is created, those who receive it last pay higher prices.

Read the full review (in Spanish)

1841Literature and history

Extraordinary Popular Delusions and the Madness of Crowds

Author
Charles Mackay
Lessons
Scams and pyramid schemes, Investing, the basics, Inflation

The promise: Everyone buys because everyone buys.

Bubbles and pyramid schemes have repeated the same pattern for centuries. The story of John Law, who printed banknotes without control, also works for Inflation.

Read the full review (in Spanish)

1938Literature and history

Los comuneros (in Spanish only)

Author
Germán Arciniegas
Lessons
Basic taxes, Percentages in real life

Connects with

  • No One Writes to the Colonel · Two Colombian stories about what the state owes people, a tax nobody was consulted on and a pension that never arrives.
  • Essay on the Nature of Trade in General · Cantillon explains how a change in money and prices hits some people first and others later; in Socorro, the new taxes hit first those who sold at the market.

The promise: A tax nobody was consulted on made a people rise up.

In 1781 the comuneros demanded that the sales tax be charged at only 2 % and not on food. It works for Basic taxes, although historians dispute its claim that the revolt led to independence.

Read the full review (in Spanish)

2008Literature and history

The Ascent of Money

Author
Niall Ferguson
Lessons
Where to keep your money, Compound interest, Inflation, Insurance, Investing, the basics, Good debt and bad debt

Connects with

The promise: Finance is a great tool, crises included.

It tells the origin of banks, bonds and insurance with stories such as the Scottish widows' fund of 1744. It pays little attention to the losers and was finished before the 2008 crash.

Read the full review (in Spanish)

How we decide with money

Predictable mistakes, and how to design better decisions

2011Partly right

Thinking, Fast and Slow

Author
Daniel Kahneman
Lessons
Scams and pyramid schemes, Investing, the basics, The real cost of a loan, Insurance

Connects with

  • The Art of Thinking Clearly · Dobelli lists thinking errors; Kahneman explains where they come from, with the theory of two systems.
  • Nudge · Kahneman describes how the mind goes wrong; Thaler and Sunstein, how to design decisions so those errors weigh less.
  • Extraordinary Popular Delusions and the Madness of Crowds · The bubbles Mackay tells about are overconfidence and social proof on the scale of a country.

The promise: We think with a fast system and a slow one.

The book offers a serious theory and much of it holds, such as the anchoring effect. But a famous experiment in chapter 4, in which reading words about old age made people walk more slowly, could not be repeated.

Doyen y otros, 2012 · doi.org/10.1371/journal.pone.0029081

Read the full review (in Spanish)

2015Partly right

Misbehaving

Author
Richard H. Thaler
Lessons
Budget, Saving and goals, Need or want?, Investing, the basics

Connects with

  • Thinking, Fast and Slow · The same story seen from two sides, Kahneman from psychology and Thaler from economics. They worked together.
  • Nudge · Misbehaving tells how the idea of nudges was born and how it reached governments.
  • Pequeño cerdo capitalista · Macías teaches you to see small daily expenses; Thaler explains why they slip away, because we do not treat all money the same, it depends on the mental drawer we put it in.

The promise: People make predictable mistakes with money.

Those given a mug asked much more to sell it than others offered to buy it. It is the endowment effect; with careful training on the rules of the experiment, the gap can disappear.

Kahneman, Knetsch y Thaler, 1990 · doi.org/10.1086/261737

Read the full review (in Spanish)

2008Partly right

Nudge

Author
Richard H. Thaler y Cass R. Sunstein
Lessons
Saving and goals, Budget, Credit cards

Connects with

  • Atomic Habits · Both say surroundings matter more than willpower. Clear applies it to yourself; Thaler and Sunstein, to whoever designs other people's choices.
  • The Odyssey · Save More Tomorrow is tying yourself to the mast, committing today to save the pay raises still to come.
  • Pequeño cerdo capitalista · Saving automatically, so you do not depend on remembering or on willpower.

The promise: A well-designed nudge changes what people choose.

Default saving works very well. But after correcting for unpublished studies, the average effect of nudges almost disappears. Some work a lot and others hardly at all.

Maier y otros, 2022 · doi.org/10.1073/pnas.2200300119

Read the full review (in Spanish)

2012Solid

The Signal and the Noise

Author
Nate Silver
Lessons
Investing, the basics, Scams and pyramid schemes

Connects with

  • Algorithms to Live By · Both teach Bayes' rule and overfitting, updating what we believe with each new piece of data without mistaking noise for signal.
  • Extraordinary Popular Delusions and the Madness of Crowds · Mackay tells of the 18th-century bubbles; Silver, of the 2008 one, and why almost nobody saw it coming.
  • Thinking, Fast and Slow · Experts are wrong with great confidence. Kahneman explains why; Silver shows how to forecast better.

The promise: Forecasting better can be learned.

In a two-year forecasting tournament, training in probability, working in teams and grouping the best forecasters improved the forecasts.

Mellers y otros, 2014 · doi.org/10.1177/0956797614524255

Read the full review (in Spanish)

2020Partly right

The Psychology of Money

Author
Morgan Housel
Lessons
Compound interest, Saving and goals, Need or want?, Investing, the basics

Connects with

  • Misbehaving · Thaler studies with experiments the money mistakes that Housel tells with anecdotes.
  • The Good Life · Housel says the hardest skill is knowing when you have enough; the Harvard study shows what matters more than money in a good life.
  • Pequeño cerdo capitalista · Two widely read books on saving. Housel says wealth is what you do not spend; Macías teaches you to find that money in small daily expenses.

The promise: Getting rich depends more on behavior than on knowing finance.

It is right that exponential growth fools us, about a third of people ignore compound interest entirely. But these are essays built on anecdotes, which pick the winners.

Levy y Tasoff, 2016 · doi.org/10.1111/jeea.12149

Read the full review (in Spanish)

Saving, starting a business and living well

From the budget to your own business, and how much money matters in a good life

2011Partly right

Pequeño cerdo capitalista

Author
Sofía Macías
Lessons
Income and expenses, Budget, Saving and goals, Good debt and bad debt, Credit cards, Investing, the basics

Connects with

  • Aesop's Fables · Small daily expenses and the ant in the fable, two ways of explaining that small things, repeated, become big.
  • David Copperfield · Micawber's rule and Macías's budget say the same thing 160 years apart, spend a little less than what comes in.
  • Atomic Habits · Saving as a small, automatic habit, not as a heroic effort.

The promise: Small daily expenses eat your money.

It has support, a cost presented per day seems smaller than it is. But the book thinks of Mexico and of people with some margin, and small expenses do not explain a lack of money when income is not enough.

Gourville, 1998 · doi.org/10.1086/209517

Read the full review (in Spanish)

2011Solid

Poor Economics

Author
Abhijit V. Banerjee y Esther Duflo
Lessons
The real cost of a loan, Credit history, Insurance, Saving and goals, Where to keep your money, Compound interest, Self-employment, Starting a business with numbers

Connects with

  • The Odyssey · A savings account that does not let you withdraw money early was studied under Ulysses' name, tying yourself to the mast so as not to spend.
  • Nudge · Both show that saving depends more on how choices are designed than on willpower.
  • The Lean Startup · Two faces of entrepreneurship, the business tested in order to grow and the one started because there are no jobs.

The promise: Poverty is understood through experiments, not grand theories.

Its experiments hold up. In the Philippines, an account that did not allow withdrawing money early raised the savings of those who got it. Deaton warns that what works in one place does not always carry over to another.

Ashraf, Karlan y Yin, 2006 · doi.org/10.1162/qjec.2006.121.2.635

Read the full review (in Spanish)

2011Partly right

The Lean Startup

Author
Eric Ries
Lessons
Starting a business with numbers, Self-employment

Connects with

  • Designing Your Life · The same idea applied to different things, testing small before deciding. Ries with a business, Burnett and Evans with your own life.
  • The Signal and the Noise · Both ask you to treat what you believe as a hypothesis and change your mind when the data says so.
  • Pequeño cerdo capitalista · Macías teaches you to look after your own money; Ries, not to spend it on a business before knowing if anyone wants it.

The promise: Test a business idea before investing in it.

In a trial with 116 startups assigned at random, those who learned to test hypotheses performed better. The method grew out of Silicon Valley anecdotes and does not work equally for every business.

Camuffo y otros, 2020 · doi.org/10.1287/mnsc.2018.3249

Read the full review (in Spanish)

2023Partly right

The Good Life

Author
Robert Waldinger y Marc Schulz
Lessons
Need or want?

Connects with

  • Man's Search for Meaning · Frankl held on by thinking of his wife; 85 years of data say relationships are what matters most in a good life.
  • Nonviolent Communication · Waldinger says relationships are cared for like health; Rosenberg gives a concrete way to do it when there is conflict.
  • Pequeño cerdo capitalista · Money does matter for well-being, but it does not replace friends. A good pair for the Need or want? lesson.

The promise: Relationships matter more than money in a good life.

Relationships are associated with more health and happiness, although that does not prove they cause them. And money does matter, well-being keeps rising with income for most people.

Killingsworth, Kahneman y Mellers, 2023 · doi.org/10.1073/pnas.2208661120

Read the full review (in Spanish)

The most read, read closely

Very popular money books, to separate what holds up from what does not

1926-1955Partly right

The Richest Man in Babylon

Author
George S. Clason
Lessons
Saving and goals, Budget, Compound interest, Good debt and bad debt, Scams and pyramid schemes

Connects with

  • Aesop's Fables · Two books of parables about saving, Aesop's ant and Clason's Arkad, who keeps one of every ten coins.
  • Nudge · Clason asks you to pay yourself first; studies of automatic saving show why it works.
  • Rich Dad Poor Dad · Two widely read money parables, written by people who profited from selling what they recommend.

The promise: Keep one of every ten coins you earn.

Saving first and automatically has support, although 10 % is not a magic number. But it asks you to hand your money to "men wise in its handling", which suited the companies that gave out the pamphlets.

Madrian y Shea, 2001 · doi.org/10.1162/003355301753265543

Read the full review (in Spanish)

1997Promises more than it proves

Rich Dad Poor Dad

Author
Robert T. Kiyosaki con Sharon L. Lechter
Lessons
Income and expenses, Good debt and bad debt, Investing, the basics, Scams and pyramid schemes

Connects with

  • Pequeño cerdo capitalista · Two money books widely read in Latin America. Macías teaches you to keep accounts; Kiyosaki sells a formula for getting rich. Comparing them is a good lesson.
  • The Art of Thinking Clearly · An inspiring story and a "rich dad" nobody has been able to identify. Dobelli teaches you to distrust exactly that kind of tale.

The promise: School does not teach money, and the formula is buying assets.

Teaching finance helps, but little. Across 201 studies, the effect on behavior was very small and faded over time. And nobody has been able to identify the "rich dad".

Fernandes, Lynch y Netemeyer, 2014 · doi.org/10.1287/mnsc.2013.1849

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1997Promises more than it proves

Banker to the Poor

Author
Muhammad Yunus con Alan Jolis
Lessons
The real cost of a loan, Credit history, Good debt and bad debt, Starting a business with numbers

Connects with

  • Poor Economics · Yunus promises that microcredit will end poverty; Banerjee and Duflo tell of the experiments that put it to the test.
  • The Merchant of Venice · Two ways of securing a loan, Shylock's pound of flesh and the pressure of a group of neighbors.

The promise: Microcredit can lift people out of poverty.

Lending to the poor without collateral does work. But six experiments on four continents found modestly positive effects, not transformative ones.

Banerjee, Karlan y Zinman, 2015 · doi.org/10.1257/app.20140287

Read the full review (in Spanish)