What Economics can (and can’t) do?

Superb interview of Daniel Hausman, Prof of Philosophy at Univ of Notre Dame.

He discusses variety of issues pertaining to field of economics. In the end he sums up:

G.G.: How, in conclusion, would you sum up the prospects for using economics as a scientific basis for our discussions of public policy?

D.H.: I am worried about the possibility that powerful interests can undermine the authority of science in general, and I am deeply distressed at the jejune relativism that encourages members of sects to maintain in effect, “we have our own truth.” Given how intensely economics bears on people’s interests, economists face more serious threats to their integrity than organic chemists or astronomers. In addition, as we discussed at the beginning, the questions that economists are called upon to address are very difficult to answer. So we cannot look to economists to solve our policy problems. They address only some of the relevant factors, and they often disagree.

There are cognitive limits to what can be learned about such a complicated system as a modern market economy, and there are practical and political limits to our ability to make use of what can be learned. Within these limits, economics can be of use. I fear this is faint praise.

There is little doubt too much is expected from the econ profession. What is worse is that even economists are trained to believe they can deliver on all these tall expectations. The end result is mishmash of expectations and outcomes.  One still does not understand why all these rational beings believe that they can make the world a richer place? Why not become rich yourself if things are as easy as they make it sound?

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