Economics and Economists (May 12, 2008)
In the contemporary College of Arts and Crafts, the “Department of Economics” is the “Oakland Raiders” team. Most departments in America’s Colleges of Arts and Sciences want you to feel good. Economics should require one to think clearly. Even if you feel badly. Any question should be fair game.
The discipline today is premised on questionable assumptions that cannot be abandoned by the profession or most doctrine would need to be rejected. Or at least questioned. A person is greedy and self interested and all that, but that does not mean that she (or he) is even capable of acting in her (or his) own economic self interest. If individuals cannot or do not act in their own economic self interests, markets are not likely to behave properly or to reach equilibrium.
The area of economics known as “behavioral economics” ask how a person actually behaves. That should be the province of economics. How and why do people act or fail to act.
What could be more fun than playing with Lagrange multipliers and toying with the Slutsky equation and endeavoring to move others to a state of Pareto optimality? Economics is sexy. And economists?
Bumper sticker of the week:
An economist is someone who stands behind you in the bread line and tells you how it happened.