Economists Need to Learn a Messier Kind of Math
The elegant equations they love just aren't that good at capturing reality.
Optimizing?
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People aren’t rational calculating machines. So why do models of the economy -- models that inform policy in some of the world’s largest and wealthiest countries -- still assume that they are? It might be no more than a matter of taste.
Economists love the rigor and tidiness of mathematical equations. But building a model with them requires making a lot of simplifying assumptions -- for example, that people make optimal decisions based on a perfect understanding of all constraints and possible outcomes, and that economies tend toward equilibrium. Unfortunately, those assumptions are so flawed that the models have failed to recognize the possibility of crucial events, such as the last global recession.