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The Assumptions Economists Make

Author

Listed:
  • Schlefer, Jonathan

    (Harvard Business School)

Abstract

Economists make confident assertions in op-ed columns and on cable news—so why are their explanations often at odds with equally confident assertions from other economists? And why are all economic predictions so rarely borne out? Harnessing his frustration with these contradictions, Jonathan Schlefer set out to investigate how economists arrive at their opinions. While economists cloak their views in the aura of science, what they actually do is make assumptions about the world, use those assumptions to build imaginary economies (known as models), and from those models generate conclusions. Their models can be useful or dangerous, and it is surprisingly difficult to tell which is which. Schlefer arms us with an understanding of rival assumptions and models reaching back to Adam Smith and forward to cutting-edge theorists today. Although abstract, mathematical thinking characterizes economists’ work, Schlefer reminds us that economists are unavoidably human. They fall prey to fads and enthusiasms and subscribe to ideologies that shape their assumptions, sometimes in problematic ways. Schlefer takes up current controversies such as income inequality and the financial crisis, for which he holds economists in large part accountable. Although theorists won international acclaim for creating models that demonstrated the inherent instability of markets, ostensibly practical economists ignored those accepted theories and instead relied on their blind faith in the invisible hand of unregulated enterprise. Schlefer explains how the politics of economics allowed them to do so. The Assumptions Economists Make renders the behavior of economists much more comprehensible, if not less irrational.

Suggested Citation

  • Schlefer, Jonathan, 2012. "The Assumptions Economists Make," Economics Books, Harvard University Press, number 9780674052260, December.
  • Handle: RePEc:hup:pbooks:9780674052260
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    Cited by:

    1. Giorgio Fagiolo & Andrea Roventini, 2017. "Macroeconomic Policy in DSGE and Agent-Based Models Redux: New Developments and Challenges Ahead," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 20(1), pages 1-1.
    2. Ennuste Ülo, 2014. "Towards Special Methodological Problems of Macro-Optimal Sociocybernetic International Economic Sanctioning Coordination Modelling: Introductory Remarks on Preliminary Postulates and Conjectures," Baltic Journal of European Studies, De Gruyter Open, vol. 4(2), pages 1-9, October.
    3. Avtonomov, V., 2013. "Abstractions in Economics," Journal of the New Economic Association, New Economic Association, vol. 17(1), pages 160-162.
    4. repec:spr:eujhec:v:19:y:2018:i:1:d:10.1007_s10198-017-0916-4 is not listed on IDEAS

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    JEL classification:

    • A0 - General Economics and Teaching - - General

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