MIT Video: The Evolution of Economic Science: Individual and Firm Behavior

Excerpt (Via MIT World)

“Without the right economics, we will get the wrong economic policy,” says George Akerlof, who finds fault with some “norms of economic thinking,” including the very way economists attack a problem, and publish in journals. Akerlof describes how John Maynard Keynes’ General Theory of Employment, Interest and Money was boiled down “to three easy equations” that became the basis for all macroeconomic models today. This reduction “spawned a great tragedy for which today we’re paying a great price,” because it did not address Keynes’ concern about irrational exuberance, “which explains why we get booms and busts, especially the sort that lead to economic calamities.” Akerlof worries that his profession may have evolved with certain biases and lacks the “empirical checks” to ensure “an economics that really serves the public.”

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03. February 2011 by Miguel Barbosa
Categories: Curated Readings, Finance & Investing | Leave a comment

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