When it comes to explaining economics to the general public, nothing beats Basic Economics by Thomas Sowell. This being said, here comes a funny example of how mathematical models sometimes fail to work in practice, from the much thinner Undercover Economist (pages 154-155 of the paperback edition): in 1990, New Zealand auctioned off radio spectrum using a method recommended by academics called the Vickrey auction, where the highest bidder wins but only pays the second-highest bid. In theory nobody finds out what the highest bid was, but in New Zealand this was disclosed, and because of the failure to entice a sufficient number of serious bidders (i.e., bidders willing to bet lots of money), "a bidder who had offered NZ$100,000 for a license only had to pay NZ$6." There are plenty of research papers at http://scholar.google.com referring to this embarrassing incident; it has been argued that the mistake was not to set a minimum price for the bid. My favorite sentence is: "The theorists knew that, on average, Vickrey auctions make just as much money as other auctions because, by not demanding payment of the highest bid, they encourage all bidders to offer more." On average! On average! That in my opinion is the single greatest difficulty in applying academic work to industry: academics love averages (expected revenue, expected cost, etc) while practitioners only have one chance to get it right. As a result they should not accept any formula coming from a risk-neutral framework - when they have to justify using averages theorists invoke the "law of large numbers" in a situation where the decision-maker will repeat his decision many times, which clearly wasn't the case in New Zealand. (Call me old-fashioned but when something is sold, it is sold!) And yet practitioners let themselves be impressed by academics' pretty formulas without understanding the underlying assumptions... Managers and politicians should become more math-savvy, if only to be able to question the numbers they are presented. Otherwise they run the risk of covering themselves with ridicule, as happened with the New Zealand government.