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August 2nd, 2017

Critique of academic economics


Photo source: Wikimedia Commons, Jeremy Barande

Photo license: CC BY-SA 3.0


This post is a collection of quotes critiquing academic economics. There are 64 quotes divided into 10 sections.


A. Academic economics did not predict the 2008 financial crisis (7)

B. Academic economics devalues things it can't codify (8)

C. Non-academic analysis is sometimes more accurate (5)

D. Academic economics should focus more on economic history (8)

E. Academic economics should focus more on current events (10)

F. Academic economics provides an outline to a complicated reality (8)

G. Academic economics often forgets that every economy is unique (4)

H. Academic economics focuses too much on general theories (5)

I. Academic economics uses esoteric language (5)

J. Academic economics overrates mathematical models (4)


A. Academic economics did not predict the 2008 financial crisis


George Akerlof (Nobel Prize 2001)

1. "There's actually a signal that such a black hole does exist because there wasn't anything in the economics profession that was detailing what was going to happen when we got into the great recession." (AEA Webcast. Publishing and Promotion in Economics: The Curse of the Top Five)


Michael Lewis

2. "[Michael] Burry said, 'I was in a state of perpetual disbelief. I would have thought that someone would have recognized what was coming before June 2007. If it really took that June remit data to cause a sudden realization, well, it makes me wonder what a 'Wall Street analyst' does all day." (The Big Short)


Lars Peter Hansen (Nobel Prize 2013)

3. "I believe that the recent financial crisis exposed gaps in our knowledge." (AEA Webcast. Publishing and Promotion in Economics: The Curse of the Top Five)


Alan Jay Levonovitz

4. "Unlike engineers and chemists, economists cannot point to concrete objects (cell phones and plastic) to justify their high valuation. They can't even point to the predictive power of their theories. They failed to predict the 2008 crisis." (The New Astrology, Aeon)


Robert Johnson

5. "In 2009, Jeffrey Sachs said to me 'I feel ashamed to be an economist because I didn't know what a credit default swap was and it proved to be very important.'" (How the Economics of the Economics Profession Resists New Thinking. YouTube)


Jean-Claude Trichet

6. "Macro models failed to predict the crisis and seemed incapable of explaining what was happening to the economy in a convincing manner." (Reflections on the nature of monetary policy, non-standard measures and finance theory)


Jean Tirole (Nobel Prize 2014)

7. "Failure to foresee or prevent the financial crisis is a sore reminder of hubris. True enough, we are to work on most of its ingredients but like a virus that keeps mutating, new dangers emerged when we thought we understood and avoided existing ones." (Nobel Banquet 2014 - Speech by Jean Tirole. YouTube)


B. Academic economics devalues things it can't codify


Peter Radford

8. "Economists have limited their options by reducing their subject to that set of issues most easily modeled according to the disciplines' self referential code of modeling." (Why Mainstream Economic Models Make Little Sense)


James Heckman (Nobel Prize 2000)

9. "Economics... is vulnerable in the following sense that if evidence is presented in anecdotal form or they say this is just descriptive, that is a killer in a lot of top journals." (How the Economics of the Economics Profession Resists New Thinking. YouTube)


George Akerlof (Nobel Prize 2001)

10. "What I'm most worried about is what we don't see. I'm worried about the analysis that is never seen, that never becomes a paper and it doesn't become a paper because it can't be a paper. It can't become a paper because that's not what a paper in economics is all about." (AEA Webcast. Publishing and Promotion in Economics: The Curse of the Top Five)


Paul Ormerod

11. "Much of this knowledge is held at decentralized levels in tacit form which is hard or even impossible to codify." (The future of economics uses the science of real life social networks)


Rob Johnson

12. "The tribal practice of what constitutes valid evidence and not can influence what people will study and leave aside." (How the Economics of the Economics Profession Resists New Thinking. YouTube)


Anma Silim

13. "The lack of narrative around innovation is one of conventional economic theory's greatest flaws." (What is New Economic Thinking?)


Robert Skidelsky

14. "Most economics students are not required to study psychology, philosophy, history or politics... They are never given the mental tools to grasp the whole picture." (Economists versus the Economy)


Gary Saul Morson, Morton Shapiro

15. "Economic models (whether mainstream, behavioral or neuro) typically leave out culture because culture cannot be quantified specified in a lab experiment or discovered in neurons." (Cents and Sensibility)


C. Non-academic analysis is sometimes more accurate


Ha-Joon Chang

16. "People that are not professional economists can have some judgements on economic issues. Sometimes their view can be better than professional economists because they may be more rooted in reality and less narrowly rooted." (Economics for Everyone RSA animate. YouTube)


Mark Skousen

17. "I've felt for some time that economics needs to be taught differently by economists who actually have had experience making a payroll or investing on Wall Street. When economics is taught by pure academics watch out." (Brainy Quote)


Muhammad Yunus

18. "I began my career as an economics professor but became frustrated because the economic theories I taught in the classroom didn't have any meaning in the lives of poor people I saw around me. I decided to turn away from the textbooks and discover the real life economics of a poor person's existence." (Brainy Quote)


James Heckman (Nobel Prize 2000)

19. "Did I need a Markov switching model to tell me about the stock market meltdown in 1987 or 2007? We had newspaper accounts. We had journalistic accounts. And I think the profession has had a real difficulty utilizing all these sources of information including observer reports. I mean literally you talk to people on the street." (How the Economics of the Economics Profession Resists New Thinking. YouTube)


James Heckman (Nobel Prize 2000)

20. "I've worked on China and trying to look at what technical change is in China. If you were to use 20 year old data sets, it's a waste of time. It's much better to actually go the sites in Shanghai and further in the interior to see what the technologies are, who is actually engaged and what kind of investment is being made. Those anecdotal accounts are things that banks do, what business school people do but it's not what a real economists does." (How the Economics of the Economics Profession Resists New Thinking. YouTube)


D. Academic economics should focus more on economic history


Paul Samuelson (Nobel Prize 1970)

21. "My notion of a fruitful economic science would be that it can help us explain and understand the course of actual economic history. A scholar who seriously addresses commentary on contemporary monthly and yearly even in this view, practicing the study of history - history in its most contemporary time phasing." (2003 interview with Paul Samuelson)


Howard Davies

22. "We all have good reason to be grateful that Ben Bernanke is an expert on the Great Depression..." (Economics in Denial)


Stanley Fischer

23. "I think I've learned as much from studying the history of central banking as I have from knowing the theory of central banking and I advise all of you who want to be central bankers to read the history books." (Humanitas: Stanley Fischer at the University of Oxford Lecture. YouTube)


William Ashley

24. "The historical method tries to free their minds at the outset of all priori theories and to see how they actually have been..." (An Introduction to English Economic History, 1888)


John Cochrane

25. "Economics should be much better at being the ark for simple lessons of economic history and experience. Alas our current professional training makes us pretty terrible at this." (Russ Roberts on Economic Humility)


James Heckman (Nobel Prize 2000)

26. "Economic history has suffered a big beating. Economic historians are typically slow to get things out. They do these large scholarly studies. The tenure clock works against them and the publication journal works against them." (How the Economics of the Economics Profession Resists New Thinking. YouTube)


Tyler Cowen

27. "Overall I find that history and theory laden observation tend to be the forms of evidence which have convinced me the most." (Can economics change your mind)


Andy Haldane

28. "Cycles in money and bank credit are familiar from centuries past and yet for perhaps a generation, the symptoms of this old virus were left untreated... The symptoms should have been all too obvious from history." (What have the economists ever done for us?)


E. Academic economics should focus more on current events


Asit Biswas, Julian Kircherr

29. "Practitioners very rarely read articles published in peer reviewed journals. We know of no senior policymaker or senior businessman who ever read regularly peer reviewed journals." (Prof, no one is reading you)


Kurt Bills

30. "Discovering various economic works, reading financial periodicals and keeping up on current events in geopolitics and economics around the world opened my eyes to many facets of how the extended order works." (Brainy Quotes)


Ha-Joon Chang

31. "People graduate without even knowing the GDP of their country." (Talks at Google. YouTube)


Asit Biswas, Julian Kircherr

32. "Professors are not shaping today's public debates or influencing policies even though they may be some of the most talented thinkers." (Prof, no one is reading you)


Robert Shiller (Nobel Prize 2013)

33. "What is the world going to look like in 50 years? I'm worried. It should be a big concern to the profession of economics." (What are the challenges for the next generation?)


Eric Beinhocker

34. "Students are providing an important pushing force rejecting curricula that paints abstract imaginary worlds and tells them little about the problems that will shape their future." (The Radical Remaking of Economics)


Joe Earle, Cahal Moran, Zach Ward Perkins

35. "The biggest economic catastrophe of our times wasn't mentioned in our lectures and what we were learning didn't have any relevance to learning it... We were memorizing and regurgitating abstract economic models for multiple choice questions." (The Econocracy)


Unlearning Economics

36. "In practice, this vision of the economy detracts attention from important social issues and can even serve to conceal outright abuses." (No, Criticizing Economics is not Regressive)


Stephen King

37. "Young economists arrive in the financial world with little or no knowledge of how the financial system operates. This is a matter of collective guilt. Economic models typically assume the financial system is a black box." (Quoted in What's the use of economics?)


Gary Saul Morson, Morton Shapiro

38. "Aristotle long ago pointed out, one needs a fundamentally different sort of reasoning inasmuch as actual cases have features no theory can anticipate. One needs judgement, wisdom and experience. In practical reasoning, one begins with a deep understanding of the specific situation and reasons from there." (Cents and Sensibility)


F. Academic economics provides an outline to a complicated reality


Alfred Marshall

39. "Nature's action is complex: and nothing is gained in the long run by pretending it is simple and trying to describe it in a series of elementary propositions." (Principles of Economics, 1890)


Joseph Stiglitz (Nobel Prize 2001)

40. "The world is so complex to try to simplify it into a few mathematical equations is an enormous achievement. The question always is, what are you leaving out? If it gets too narrow, the blinders may rule out things that are really important." (Joseph Stiglitz on what makes a good economist. YouTube)


Unlearning Economics

41. "In the realm of international trade, economists have been all too inclined to support trade deals - often quite vociferously on the basis of simple ideas like comparative advantage while ignoring the actual details of the trade details." (No, Criticizing Economics is not Regressive)


Friedrich Hayek (Nobel Prize 1974)

42. "I believe it is only microeconomics which enables us to understand the crucial functions of the market process: that it enables us to make effective use of information about thousands of facts of which nobody can have full knowledge." (Coping with Ignorance, 1978)


Jedrzej Malko

43. "The cognitive value of bringing all dimensions of social reality under one common denominator is negative. The search for any one prime mover, the true and hidden structure or some general logic of history is always harmful. The attraction of simple answers lies not in what they reveal about the world but in how much they hide from us, making life less complicated than it should be." (Jedrzej Malko Demystifies Economic Concepts in His Book 'Economics and its Discontents')


Justin Wolfers

44. "More than any other economics I know, [Deaton] understands that to get the big picture right you've got to get all the small details right too." (Why Angus Deaton Deserved the Economics Nobel Prize. New York Times)


Gary Saul Morson, Morton Shapiro

45. "Joe Mokyr's 'The Enlightened Economy: An Economic History of Britain 1700-1850' explains the rise of Britain to economic preeminence through a complex plurality of factors irreducible to any one of them." (Cents and Sensibility)


Jean-Baptiste Say

46. "It is, perhaps, a well founded objection to Mr. Ricardo, that he sometimes reasons upon abstract principles to which he gives too great a generalization." (A Treatise on Political Economy, 1832)


G. Academic economics often forgets that every economy is unique


Friedrich Engels

47. "The conditions under which men produce and exchange vary from country to country and within each country again from generation to generation. Political economy therefore cannot be the same for all centuries and for all historical epochs." (Anti-Duhring, 1877)


Roger Backhouse and Bradley Bateman

48. "In the past there were more course on comparative economic systems contrasting capitalism with socialism, French, Scandinavian and British models." (Wanted Worldly Philosophers. New York Times)


Ha-Joon Chang

49. "In Singapore, 90% of land is owned by government. Where is the theory that explains this economy?" (Talks at Google. YouTube)


Andrew Lo

50. "From an ecological perspective, I know it's hard to not make value judgments but as a scientist what we might want to do is first study the ecosystem, measure all of the various different species and their biomasses and look at mating rituals and behaviors. And once you actually map out all of these relationships, you can then decide what you want to do with the information." (Adaptive Markets: Financial Evolution at the Speed of Light. YouTube)


H. Academic economics focuses too much on general theories


Adam Smith

51. "I have no great faith in political arithmetic and I mean not to warrant the exactness of either of these computations." (The Wealth of Nations)


Ludwig von Mises

52. "The study of economics has been again and again led astray by the vain idea that economics must proceed according to the pattern of other sciences." (Economists dissing economics. Unlearning Economics)


Friedrich Hayek

53. "How does economics really look like when you recognize it as the prototype of a new kind of science of complex phenomena which could not employ the simple model of mechanics or physics, but had to deal with what then I described as mere pattern predictions, certain limited prediction?" (Interview with Gary North and Mark Skousen in Hayek on Hayek)


David Glasner

54. "In economics the simple predictions that can be accurately made is almost nil because economics is inherently a theory of complex social phenomena and simplifying the real world problems to which we apply the theory to allow testable prediction to be made is extremely difficult and hardly ever possible." (What is so Great about Science? How I Learned to Stop Worrying and Love Metaphysics)


Dani Rodrik

55. "The diversity of models in economics is the necessary counterpart to the flexibility of the social world." (Economics Rules)


I. Academic economics uses esoteric language


John Maynard Keynes

56. "Too large a proportion of recent mathematical economics is mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols." (Economists dissing economics. Unlearning Economics)


Roger Backhouse, Bradley Bateman

57. "Government doesn't cut an abstract entity called 'government spending'. It cuts veterans benefits, homeland security and Medicare/Medicaid." (Wanted Worldly Philosophers. New York Times)


Alfred Marshall

58. "Great mischief seems to have been done by... drawing broad artificial lines of division where nature has made none." (Principles of Economics, 1890)


Peter Radford

59. "It is always tempted, therefore, to bang such problems into bizarre shapes in order to attempt to redefine them for analysis, hence the blind spots and contortions over the recent crisis and over inequality." (Why Mainstream Economic Models Make Little Sense)


Aaron Gordon

60. "Esoteric topics rules academia. These topics get researched, presented and published and somewhat tragically, immediately dispatched into the far reaches of the JSTOR achieves." (Killing Pigs and Weed Maps: The Mostly Unread World of Academic Papers)


J. Academic economics overrates mathematical models


Mark Blaug

61. "Economists have converted the subject into a sort of social mathematics in which analytical rigor is everything and practical relevance is nothing." (Economists dissing economics. Unlearning Economics)


Tony Lawson

62. "In economics faculties, probably more than 90% of what is taught focuses or employs some form of mathematical reasoning." (Really Reorienting Modem Economics. YouTube)


Brad Voracek

63. "While today's experts hold prestigious positions, their understanding of math is often greater than their understanding of the economy. As the 2008 recession demonstrated, the majority of current experts didn't get things right." (Ending the Econocracy: The Need for Pluralism in Economics)


Milton Friedman (Nobel Prize 1976)

64. "Economics has become increasingly an arcane branch of mathematics rather than dealing with real economic problems." (Economists dissing economics. Unlearning Economics)