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Frictionless spheres are fine in Physics 101 and Homo economicus is fine in Economics 101. Like all models, economic models too are wrong but some of them are u
by unmole 5y ago
Frictionless spheres are fine in Physics 101 and Homo economicus is fine in Economics 101. Like all models, economic models too are wrong but some of them are useful. The bulk of economics after 101 is about how the models break.
The idea that humans are not perfectly rational self-interested actors has been part of mainstream economics at least since Keynes.
- md_ 5y agoSure; Keynes coined the term "animal spirits." Yet the criticism (that economics is too modelling-based) is widely levied, e.g. see https://www.theguardian.com/commentisfree/2016/sep/19/its-time-to-junk-the-flawed-economic-models-that-make-the-world-a-dangerous-place https://www.theguardian.com/commentisfree/2016/sep/19/its-ti..., https://aeon.co/essays/economics-is-once-again-becoming-a-worldly-science https://aeon.co/essays/economics-is-once-again-becoming-a-wo.... Is it the whole story? Probably not. Like I said, I'm not an economist. But given the extreme challenges in empirically testing macroeconomic models, it should be no surprise that economists might--as somewhat irrational humans--over-rely on theoretical models.