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What's wrong with economists?

This is a question not easily answered, but Noah Smith, a candidate for a Ph.D. in economics, makes a really good effort here in his Noahpinion blog. He discusses both clearly and at length the scientific deadend of deducing theories that don't fit real-world data and the equally sterile pursuit of mining data but inducing no explanatory theories. An economist--or other scientist--who does only one or only the other is stuck, which is what economics has been for a long time.  Smith points to some green shoots he hopes mean economists may be getting unstuck.

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Reader Comments (1)

Sandy sent the following comment via email:

Roger, a great starting point for economists would be to read Edward O. Wilson's books Consilience and On Human Nature. The purpose of economics seems to be in great part for predictive purposes. In order to predict, the economist must know how humans will react when humans are making choices that have economic consequences. Because humans are more difficult to study than chemicals or cells then Wilson calls the social sciences the "hard" sciences. It seems therefore that behavioral economics should be the way to go. And as Wilson says, it will be very hard going. It often seems to me though that a good salesman knows more about human reactions in many economic situations than do economists.

Thanks to the new book Thinking Fast and Slow, we know that humans have these two ways of processing information: fast and slow. As consumer lawyers we know that consumers as a general rule do not read through an entire sales contract before they sign and purchase, even with very expensive purchases. Under Alabama law the consumers are presumed to have read and understood every word of a contract signed by them. But of course we know they don't and that they rely rather on what the salesperson says. The court holds very hard and fast to this rule. The irony is that in a dispute between two large businesses the court would not hold the purchaser to that standard but rather would let the case proceed with evidence presented outside of the contract itself.

January 13, 2012 | Registered CommenterSkeptic
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