Derivative markets have grown spectacularly in size in recent decades. While most books on derivatives discuss how they work, this book discusses the extent to which derivative markets perform socially useful economic functions. It looks at the contributions of derivatives to overall economic well-being by examining both the beneficial and adverse effects of derivatives trading from the perspectives of economic theory, empirical evidence, and recent economic history. Aiming to present the concepts in a fair, non-ideological, non-mathematical and simple manner, and with the authors' own synthesis, it draws on economic insights from relevant work in other disciplines, particularly sociology and law. The book also presents new theoretical ideas and recommendations towards a pragmatic and practical approach for policy-makers. The ultimate objective is to provide a basic conceptual framework which will help its readers form a judgment on whether, when and how derivatives are beneficial or harmful to the economy.