Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Tuesday, November 09, 2004

The Two Secret Sins of Economics

Dierdre McCloskey has taken on nearly all of what passes for economics these days with her neat-o publication, "The Secret Sins of Economics." Go grab it now (it's in pdf format at that link), and read it. It is absolutely terrific. Here's a quote from it:

"Most of what appears in the best journals of economics is unscientific rubbish. I find this unspeakably sad. All my friends, my dear, dear friends in economics have been wasting their time. You can see why I'm agitated about the Two Sins [oversimplified, these are: qualitative theory with no questions about 'how much?' and quantitative tests of significance that don't include loss functions -- but read the whole piece!]. They are vigorous, difficult, demanding activities, like hard chess problems. But they are worthless as science."

And yet most of us keep committing these sins. Why? because we respond to incentives, and these incentives change ever so slowly. If McCloskey is right, though, why do such unscientific paradigms persist for so long and so pervasively? Isn't the market for economists and economic ideas fairly competitive?

link from Tyler Cowen at the Marginal Revolution.
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