The Assumptions Economists Make - Tapa dura

Not a history of economic thinkers, this is an examination of their prevailing assumptions, from Adam Smith to the present. Schlefer asserts that macroeconomic models failed to guide government policy before 2008 because economists got their neoclassical theory wrong, and he blames the economic troubles of 2008 and beyond on the instability of private financial markets. He disputes factors such as supply and demand, technology, and unionization as causes of the current recession, noting that many believed the "supply of better-educated workers increasing relative to lower-skilled workers would cause their pay premium to fall" when just the opposite happened. -- Joanna B. Conrad Library Journal 20120215 A lucid, plain-spoken account of the major economic models, which [Schlefer] introduces in chronological order, creating a kind of intellectual history of macroeconomics. He explains what the models assume, what they actually demonstrate--and where they fall short. -- Binyamin Applebaum New York Times blog 20120416 Fascinating...[Schlefer's] book is a tough critique of economics, but a deeply informed and sympathetic one. -- Justin Fox Harvard Business Review blog This book is an impressive and informative analysis of the economics literature--and it presents some useful insights about how a more eclectic, catholic approach might allow economics to progress more convincingly into the future. -- Michelle Baddeley Times Higher Education 20120419 The Assumptions Economists Make is a valuable book for readers who like to argue, reflect, and advance knowledge. -- A. R. Sanderson Choice 20120901

Economists make confident assertions in op-ed columns and on cable news - so why are their explanations often at odds with equally confident assertions from other economists? And why are all economic predictions so rarely borne out? Harnessing his frustration with these contradictions, Jonathan Schlefer set out to investigate how economists arrive at their opinions. While economists cloak their views in the aura of science, what they actually do is make assumptions about the world, use those assumptions to build imaginary economies (known as models), and from those models generate conclusions. Their models can be useful or dangerous, and it is surprisingly difficult to tell which is which. Schlefer arms us with an understanding of rival assumptions and models reaching back to Adam Smith and forward to cutting-edge theorists today. Although abstract, mathematical thinking characterizes economists' work, Schlefer reminds us that economists are unavoidably human. They fall prey to fads and enthusiasms and subscribe to ideologies that shape their assumptions, sometimes in problematic ways. Schlefer takes up current controversies such as income inequality and the financial crisis, for which he holds economists in large part accountable. Although theorists won international acclaim for creating models that demonstrated the inherent instability of markets, ostensibly practical economists ignored those accepted theories and instead relied on their blind faith in the invisible hand of unregulated enterprise. Schlefer explains how the politics of economics allowed them to do so. "The Assumptions Economists Make" renders the behavior of economists much more comprehensible, if not less irrational.