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The Prize in Economic Sciences 2017

nobelprize.org

81–82 of 82 posts

Re: The Prize in Economic Sciences 2017

#81
post #21

While I love the behavioral economists (esp. Kahnemann and Tversky), a lot of psychologists have told economists for a long time that assuming basic rationality as a starting point was a fundamental error in the field. Taking it as an axiom has led to all sorts of misguided efforts and wasted time. From the article: "That's the point: It's obvious to anyone who pays any attention at all to himself or his fellow human…

Physicists assume things are spheres and use that to solve a bunch of problems. It's important to know 'why' economists use this abstraction for modeling before patently dismissing it. Economists notice that on average, people in the aggregate tend to behave rationally sometimes. Scrutiny should be applied to the assumptions, but it can still help explain economic systems.

It just isn't enough to point out factors are forgotten. If that were the case you could point out that as soon as a chaotic system is involved (like a human presumably is) every prediction goes out of the window if anything resembling a long time frame is assumed. Or you could point out unsolved problems with natural and real numbers that affect pretty much every single science. But for all sciences there's specific issues present as well. Stating these things is at best philosophy, at worst clickbait.

It is not enough to name such a factor. One must point out and quantify, firstly, what is wrong, and secondly, how to integrate and model it within the field. When you've done that you still need to campaign for it to be included in the theory and textbooks and so on.

Every science has it's known unknowns. Things that obviously matter but aren't in the theory because that's too hard, unknown, doesn't matter enough for the results or even just because important people aren't convinced it is important.

Re: The Prize in Economic Sciences 2017

#82

Excellent pick! Applied "nudge theory," or "libertarian paternalism," is proving to be the panacea for massive social change. From NYC's decision to offer free lunches for all public school students. To the design of recycle bins in Amsterdam. Simple yet intuitive communication of the optimality of rational choosing, without penalizing too harshly our irrational tendencies. I think the next logical extension of neuro…

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