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"...who believed that his field should acknowledge that people rarely behave as rationally as economic models predict." So, umm, maybe your models are bad? If
by UncleEntity 9y ago
"...who believed that his field should acknowledge that people rarely behave as rationally as economic models predict."
So, umm, maybe your models are bad?
If you base your economic model on the silly idea that all (or at least most) economic actors are inherently rational and act in their own self interest then perhaps the model will result in a different goal than planning every tiny detail of people's life like some Soviet Commissar.
I know, heresy...
- j7ake 9y agoI agree. Economists have always been able to get away with saying their models are better than data. Imagine biologists coming up with a theory of A cellular process but makes silly predictions. The biologist doesn't stand firm with their model and say "ah the cell isn't being optimal here, they are so stupid". Any real scientist would go back and rethink about their model.
- matt4077 9y agoJust like physicists know that an apple dropping from a tree will not perfectly follow Newton's laws, economists know, and have always known, that these models are idealised, and incomplete. That's why they keep handing out Nobel prizes to people finding better frameworks approximating actual human behaviour. (i. e. Kannemann 2002, and this year's)
- UncleEntity 9y agoThe difference is physicists don't try to change the behavior of apples unlike the quote that claims economic actors are irrational because they don't fit the models.