The most famous book set in La Paz is Marching Powder by Rusty Young (2003), the account of Thomas McFadden, a British drug smuggler who spent years in San Pedro prison in the middle of the city. San Pedro is unusual in that inmates live in a self-governing community, buy or rent their cells, run businesses, and — for a period — hosted tourist visits arranged with the guards. McFadden became a guide; Rusty Young came as a tourist and ended up staying months to write the book. It reads like a thriller, but the prison is visible from the street and the institutional details are real. Whether you find it fascinating or troubling probably depends on your mood.
The Fat Man from La Paz (2000), edited by Rosario Santos, is an anthology of Bolivian fiction translated into English — the best single-volume introduction to Bolivian literature available outside Spanish. The stories range across the country and across the century, but several are set in La Paz and give a texture to daily life that no guidebook manages. For political context, Evo's Bolivia: Continuity and Change by Linda Farthing and Tom Kohl (2016) is the most clear-eyed account of what the Morales years actually changed and what they didn't — useful reading if you want to understand why Bolivia's politics feel so vivid to the people who live there.