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 . . . . . . . . . . . .

Wednesday, March 23, 2005

What Do Economists Do?

Phil Miller, at Market Power, has a great link to this summary of economists' methodology [his link is to the New Economist, which in turn links to Stumbling and Mumbling]. It helps explain why "there's no such thing as a suave economist." With the possible exception of Paul Davenport.

1. Economics is the study of trade-offs, of costs. ...Politicians, of course, hate the idea of trade-offs and costs.

2. Economists love counter-intuitive ideas. ...This leads to us stressing paradoxical notions – like the notion that outsourcing can be a good thing. Good politicians, by contrast, prefer sound-bites that corroborate the public’s prejudices.

3. Economists are like photographers - we love simple models. In particular ...we’ve loved models that yield bold, controversial but testable predictions.

4. Economists start from assumptions – or better still axioms – and see where they lead. ...Sometimes, though, they can lead to trouble.

5. Economists have a simple, brutal view of human nature – everyone’s rational (though not knowledgeable) and out for themselves. This makes us comfortable with conflict and argument, and uncomfortable about building alliances.

All absolutely true.
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