IDEAS home Printed from https://ideas.repec.org/a/bpj/capsoc/v4y2009i2n1.html
   My bibliography  Save this article

Excessive Ambitions

Author

Listed:
  • Elster Jon

    (Collège de France and Columbia University)

Abstract

The current financial crisis has brought out a fatal flaw in the foundations of the economic theories that guided economic agents and regulators: the unwarranted claim to precision and robustness. In this article I try to diagnose this flaw and discuss possible remedies. I argue that actual agents are intrinsically less sophisticated than the models assume they are, and that the various proposals to sustain the models by appealing to "as-if rationality" all fail. I next consider behavioral economics as an alternative to the standard models, claiming that while they may allow for successful retrodiction, they do not hold out much promise for prediction. I also discuss the use of statistical models, arguing that they are subject to so many traps and pitfalls that only a handful of elite practitioners can be trusted to use them well. Finally, I offer some speculations to explain the persistence in the economic profession and elsewhere of these useless or harmful models.

Suggested Citation

  • Elster Jon, 2009. "Excessive Ambitions," Capitalism and Society, De Gruyter, vol. 4(2), pages 1-33, October.
    • Handle: RePEc:bpj:capsoc:v:4:y:2009:i:2:n:1
    DOI: 10.2202/1932-0213.1055
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1932-0213.1055
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1932-0213.1055?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kallåk Anundsen , André & Sigurd Holmsen Krogh, Tord & Nymoen, Ragnar & Vislie, Jon, 2011. "Overdeterminacy and endogenous cycles: Trygve Haavelmo’s business cycle model and its implications for monetary policy," Memorandum 03/2011, Oslo University, Department of Economics.
    2. repec:zbw:rwirep:0531 is not listed on IDEAS
    3. Beckert, Jens, 2011. "Imagined futures. Fictionality in economic action," MPIfG Discussion Paper 11/8, Max Planck Institute for the Study of Societies.
    4. Dagsvik, John K, 2017. "Invariance Axioms and Functional Form Restrictions in Structural Models," Memorandum 08/2017, Oslo University, Department of Economics.
    5. Christian List & Adrian Vermeule, 2014. "Independence and interdependence: Lessons from the hive," Rationality and Society, , vol. 26(2), pages 170-207, May.
    6. Pühringer, Stephan, 2016. "Still the queens of social sciences? (Post-)Crisis power balances of "public economists" in Germany," Working Paper Series Ök-22, Cusanus Hochschule für Gesellschaftsgestaltung, Institut für Ökonomie.
    7. Mohun, Simon & Veneziani, Roberto, 2010. "Reorienting economics?," MPRA Paper 30448, University Library of Munich, Germany.
    8. Stavros A. DRAKOPOULOS, 2016. "Economic crisis, economic methodology and the scientific ideal of physics," The Journal of Philosophical Economics, Bucharest Academy of Economic Studies, The Journal of Philosophical Economics, vol. 10(1), pages 28-57, November.
    9. Stavros, Drakopoulos, 2021. "The Relation of Neoclassical Economics to other Disciplines: The case of Physics and Psychology," MPRA Paper 106597, University Library of Munich, Germany.
    10. Holmlund, Bertil, 2014. "What do labor market institutions do?," Labour Economics, Elsevier, vol. 30(C), pages 62-69.
    11. aus dem Moore, Nils, 2014. "Shifting the Burden of Corporate Taxes: Heterogeneity in Direct Wage Incidence," Ruhr Economic Papers 531, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    12. Attila Havas, 2015. "The persistent high-tech myth in the EC policy circles - Implications for the EU10 countries," CERS-IE WORKING PAPERS 1517, Institute of Economics, Centre for Economic and Regional Studies.
    13. Jakob Kapeller & Stephan Puehringer & Christian Grimm, 2022. "Paradigms and policies: the state of economics in the German-speaking countries," Review of International Political Economy, Taylor & Francis Journals, vol. 29(4), pages 1183-1210, July.
    14. David Dequech, 2016. "Some Institutions (Social Norms And Conventions) Of Contemporary Mainstream Economics, Macroeconomics, And Financial Economics," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 006, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    15. Brian Buh, 2021. "Measuring the Effect of Employment uncertainty on Fertility in Europe (A literature review)," VID Working Papers 2103, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna.
    16. Dagsvik, John K., 2018. "Invariance axioms and functional form restrictions in structural models," Mathematical Social Sciences, Elsevier, vol. 91(C), pages 85-95.
    17. Nils aus dem Moore, 2014. "Shifting the Burden of Corporate Taxes: Heterogeneity in Direct Wage Incidence," Ruhr Economic Papers 0531, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:capsoc:v:4:y:2009:i:2:n:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.