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December 11, 2013



Economists as autistic? Yeah, I'll go with that ! A wonderful adjective to use for them.

Luis Enrique

this reminds of Alex Tabarrok's post on "lay away" plans


everybody weighed into him providing all manner of behavioural explanations why such things exist. But of course there's something true and useful about the observation these layaway schemes make no sense, and you can be better off in a real sense by not using them, if you can summon the requisite self discipline. I think the same about vouchers - economists aren't wrong to say that cash has some advantages over vouchers, despite vouchers having advantages if you want to give a gift both giver and receiver feel happy about.

Luis Enrique

also: it's asking an awful lot of economics to be able to predict expressions of idiosyncratic behavioural and social factors. I mean, I realise that when expressions of idiosyncratic behavioural and social factors are important in context, then you've got no choice other than to try and think about them, otherwise what happens in your model (or theory) won't resemble what happens in reality (will be "wrong"). Yet it's still sometimes useful to understand the logic of a situation shorn of idiosyncratic behavioural and social factors, so long as you realise what you're doing and remain aware of what's missing from your model and have the intellectual flexibility to move between thinking about model and reality.

sometimes I feel (plenty of) economists actually do have the requisite awareness and intellectual flexibility, and their critics wrongly accuse them of thinking model and reality are the same thing.


@Luis Enrique

As always, the problem is that until said economists who have the requisite awareness:

a) start lowering the status of those who don't in the discipline

b) start fixing the policy advice "the profession" gives out on a regular basis

economists will justly remain objects of criticism.


Layaways, credit and vouchers have been in the retailer's armoury for years, they are a natural result of the retailers' excellent understanding of human behaviour and how to flog stuff.

So why would economists not have predicted these products? Stuck with a gradgrindian homo economicus rationalist mathematical model I suppose they might not. But surely successful economists look beyond their dusty ledgers and incorporate what is a real human need - vouchers/layaways etc - into their models. What is worrying is that such models are totally post-facto, they have little or no useful predictive power. Which begs the question 'are there any economic laws that have useful predictive value'.

Luis Enrique


what does "predicting" these products even mean? Any fool can observe them and propose plausible explanations for their existence and mathematically minded economists could embody these explanations in a model (and of course a great many such models exist).

But are economists supposed to have somehow started with a general model of human behaviour and markets which when you crunched through it would somehow churn out the result - or prediction - that vouchers will exist, without you having started from supposing their existence?

A more realistic hope might be that economists have models in which such things make sense. I don't know but I suspect such models already exist on the "research frontier"

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