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It is often opined here on Soylent that Economics isn't real science. You would expect economists to disagree with that sentiment, but it turns out that there is a growing international movement within the world of economics itself, started by a group of students, that seeks to drastically overhaul the entire field. Some choice quotes from the article, which is in fact a review of a book "which formalises and expands the case" that economics is in need of reform:
In the autumn of 2011, as the world's financial system lurched from crash to crisis, the authors of this book began, as undergraduates, to study economics. While their lectures took place at the University of Manchester the eurozone was in flames. The students' first term would last longer than the Greek government. Banks across the west were still on life support. And David Cameron was imposing on Britons year on year of swingeing spending cuts.
Yet the bushfires those teenagers saw raging each night on the news got barely a mention in the seminars they sat through, they say: the biggest economic catastrophe of our times "wasn't mentioned in our lectures and what we were learning didn't seem to have any relevance to understanding it", they write in The Econocracy. "We were memorising and regurgitating abstract economic models for multiple-choice exams."
Part of this book describes what happened next: how the economic crisis turned into a crisis of economics. It deserves a good account, since the activities of these Manchester students rank among the most startling protest movements of the decade.
After a year of being force-fed irrelevancies, say the students, they formed the Post-Crash Economics Society, with a sympathetic lecturer giving them evening classes on the events and perspectives they weren't being taught. They lobbied teachers for new modules, and when that didn't work, they mobilised hundreds of undergraduates to express their disappointment in the influential National Student Survey. The economics department ended up with the lowest score of any at the university: the professors had been told by their pupils that they could do better.
(Score: 4, Informative) by jelizondo on Sunday February 12 2017, @06:29PM
When a rational agent operating in a free market is postulated as the basis of your models you are setup for failure.
There are no rational agents nor free markets.
People buy things out of perceived need, status and other irrational feelings.
Corporations will try to rig the market every way they can: from vendor lock-in to collusion to fix prices.
Models thus fail.
(Score: 0) by Anonymous Coward on Sunday February 12 2017, @09:06PM
This has been well known for decades.
You may be interested to discover that there are a few approaches to solving this, of which the best known is probably behavioural economics.
It's pretty interesting stuff. I suggest that you look into it.
(Score: 2) by Phoenix666 on Monday February 13 2017, @02:06AM
Economists tend to treat all of that as 'demand.' Whether you demand something because it's fashionable or because you need it as a material input is irrelevant. The only thing that sort of captures the difference is elasticity of demand. The quantity of oxygen you need to breathe is inelastic, because you will pay any price to the exclusion of all other things to keep breathing. Fuzzy pink slippers would be elastic, because how much do you really need fuzzy pink slippers whose price has doubled?
The 'rational agent' concept is often misconstrued by people who picture Vulcans, and then say of course that couldn't apply to humans because we're not Vulcans. What it means is that in the long run, in the aggregate, people act in a way that they perceive is in their best interest. If they don't, if they only do things that diminish them, eventually they die and remove themselves from the population under consideration. Yes, there are individuals who have been so selfless that they have given all they have and their very lives for others. But they are quite the exception. So that's what they're talking about when they say 'rational agent,' not that people don't have emotions or act irrationally on occasion.
Washington DC delenda est.
(Score: 1, Interesting) by Anonymous Coward on Monday February 13 2017, @02:57AM
I thought the problem was that people act in their best interests in the short term even if it's not in their best long term interests.
(Score: 1) by Scruffy Beard 2 on Monday February 13 2017, @06:28PM
I have heard economists don't like it when you try to apply demand curves to the supply of economists.
That is to say, even if economics is not a science per se, it still fills a need.