Writing 5.360: book review, economics rules, 10/10

As an established economist, Rodrik gives the best account of the strength and weakness of economics. He argues that a main strength of economics comes from its reliance on math modeling. Indeed, the modeling approach provides a universal language for the profession. Models link assumptions to their implications by logic. The persuasive power of a theory, then, derives not from the status of the authors, but the cogency of its logic. This approach leaves little room for BS to hide.

Much of the critics on economics is due to  the poor understanding of modeling. Economics does not claim universal truth, a unattainable goal in the ever-changing social world. In contrast, economics offer a collection of models that apply to specific situations. As such, the conclusions are not pre-ordained. Rather, they rely on model users’ ability to apply the right tool/model for the question at hand. In other word, it is the wrong application, rather than the model itself, to blame. This is the case for applying black-shoe model indiscriminarily in financial industry, which contributed to the 2008 financial meltdown.

I may be cynical, but part of the reason that other social disciplines hate economics is because they are not mature enough to understand math. If you truly want to know the reach and limitation of economics, this book is for you.

To read:

Credible words, capacities and mechanisms
The Changing Face of Mainstream Economics
Economic Fables, by Ariel Rubinstein

2016-10-22 17.06.47 HDR

Writing 5.360: book review, economics rules, 10/10