Actually Behavioral Economists are in the business of describing how ordinary people’s behavior differs from what’s economically rational and where they (i.e., ordinary people) fail at arithmetic.
But what happens if people’s expectations are based on an unorthodox view of how the economy works {e.g., tax cuts for the rich and trickle down?} That’s a question raised by a fascinating paper released in January that finds big gaps between how most economists view the world and how ordinary people think things work.
But what happens if people’s expectations are based on an unorthodox view of how the economy works {e.g., tax cuts for the rich and trickle down?}
Intercst,
The cycle moves on making ideological promises outdated. The irony on this board is the number of people who take an economic mantra and have become outdated. Those folks politicize this board.
Then the generations move on creating shifting the priorities of the ideologies. Younger workers today want a lot more pay and benefits. There is no telling them wait. There is no telling them no. The younger folks will pick up leave and earner it elsewhere. Even with some coming down time later this year, perhaps, the labor market may remain extremely tight or only have a slight dip.
I’m unclear. Is the problem that the people don’t behave in economically rational ways? Or is the problem that the economists models don’t accurately predict what people will do?
Time to reread Daniel Kahneman’s Thinking Fast and Slow.
I’m unclear. Is the problem that the people don’t behave in economically rational ways? Or is the problem that the economists models don’t accurately predict what people will do?
The second. People and the societies they create are much too complicated to be described by some simple 19th century algorithms. Complex Systems are a step in the right direction to improve the science of economics.