[OPE] Mistaking Mathematical Beauty for Economic Truth

From: GERALD LEVY <gerald_a_levy@msn.com>
Date: Fri Sep 11 2009 - 09:55:36 EDT

It seems to me, though, that many radical economists also fell
(and continue to fall) in love with mathematical beauty and mistook
(and mistake) it for political-economic truth. The models, assumptions,
and math vary but it's also true that most radical economists weren't
able to see the _specific_ nature of this crisis coming and
were married to very general and stylized models of the economy.
 
In solidarity, Jerry

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> From: g.m.hodgson@herts.ac.uk
> To: g.m.hodgson@herts.ac.uk
> Date: Fri, 11 Sep 2009 12:31:26 +0100
> Subject: Mistaking Mathematical Beauty for Economic Truth
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> Dear Colleague
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> I have organized a web petition in support of the following words by Paul Krugman:
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> "Few economists saw our current crisis coming, but this predictive failure was the least of the
> fieldís problems. More important was the professionís blindness to the very possibility of catastrophic failures in a market economy ... the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics,
> for truth ... economists fell back in love with the old, idealized vision of an economy in which rational individuals interact in perfect markets, this time gussied up with fancy equations ... Unfortunately, this romanticized and sanitized vision of the economy
> led most economists to ignore all the things that can go wrong. They turned a blind eye to the limitations of human rationality that often lead to bubbles and busts; to the problems of institutions that run amok; to the imperfections of markets Ė
> especially financial markets
> Ė
> that can cause the economyís operating system to undergo sudden, unpredictable crashes; and to the dangers created when regulators donít believe in regulation. ... When it comes to
> the all-too-human problem of recessions and depressions, economists need to abandon the neat but wrong solution of assuming that everyone is rational and markets work perfectly." (New York Times, September 2nd, 2009.)
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> If you agree, please sign and forward to others:
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> SIGN
> "Revitalizing Economics After the Crash" ON
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> http://www.ipetitions.com/petition/revitalizing_economics?e
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> I think this is an important opportunity to make an impact, and I'd like to encourage you to add your signature. Itís not an attempt to lionize Krugman (although he deserves full credit), but to use his forceful words to help reform economics. It's free and
> takes less than a minute of your time.
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> Best wishes
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> Geoff Hodgson
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> g.m.hodgson@herts.ac.uk
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> www.geoffrey-hodgson.info
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> www.feed-charity.org
>
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Received on Fri Sep 11 09:59:19 2009

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