YET ANOTHER REASON TO DISTRUST
CONVENTIONAL ECONOMIC WISDOM

Economics is both called and treated as a science when, in fact, it is not. Economics, I must admit, does approach both theory and data gathering in a way that could easily be called "scientific," but the field of study is not science. Why? Economists use tons of assumptions that go virtually unquestioned by most other economists--these "scientists" posess a herd mentality. One of those assumptions is the intellectual construct called the "rational consumer:" people will generally behave in ways that they perceive as being in their best interests. Anybody that has a friend who has run up sky high credit card debt buying lots of stupid crap can tell you that many, perhaps a majority of consumers often behave in quite irrational ways.

It appears that some economists are breaking from the herd:

As the Economist reports, behavioral economics in on the rise. After almost a century of mathematical obsession, economists have finally started to accept their emotional roots. Last year, Daniel Kahneman and Vernon Smith received the Nobel Prize in economics for revealing that emotions drive most decisions made under conditions of risk or uncertainty.

I hope this new line of thinking has some payoff. Click here.

Thanks to J. Orlin Grabbe.

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