"Economists and financiers spent decades building ever more sophisticated models to anticipate market behavior, yet these models did not predict the financial crisis as it approached. In fact, cutting-edge financial models contributed to it by getting behavior so wrong, helping to wipe out $50 trillion in global wealth and causing untold human suffering. ..."Where were the intellectual agenda-setters when this crisis was building?", asked Barry Eichengreen of the University of California, Berkeley. "Why did they fail to see the train wreck coming?" In The Wall Street Journal, Russ Roberts of George Mason University wondered why economics is even considered a science. Real sciences make progress. But in economics, old thinkers cycle in and out of fashion. In real sciences, evidence solves problems. Roberts asked his colleagues if they could think of any econometric study so well done that it had definitively settled a dispute. Nobody could think of one. "The bottom line is that we should expect less of economists", Roberts wrote. (New York Times, 23 March) RD
The Glasgow & Edinburgh Branches Blog. Towards a better understanding of the world, in order to change it.
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