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Where is Economics going?

This question was posed to eight of the world's top young economists, and here are their responses compiled:


Personally, I think economics as a discipline will transform in the following three ways:

According to Paul Krugman, the United States and the Eurozone are in a depression right now! Keynes described in the 1930s that depression is ' a chronic condition of subnormal activity for a considerable period without any marked tendency either towards recovery or towards complete collapse'. It will take some time for countries and governments to realise that cutting government projects, reining in fiscal spending or enforcing fiscal austerity are not going to result in growth. The fallacy at play here is that if governments cut back on their spending, it will mean that more funds will be available for the private sector to consume and invest with. However, one of the fundamental rules of Keynesian economics is forgotten here: one person's spending is another's income. Demand is simply too low in the economy when both the private and public sector reduce spending at the same time.

Ideas such as rational irrationality, where an individual may make a decision based on available information that is rational from his or her perspective but the eventual outcome on society turns out to be irrational when everyone makes that same decision, will be examined in greater detail. There will also be a greater reliance on empirical data rather than theoretical models and the mathematical elegance of their proofs. This means that issues such as information constraints and cognitive biases associated with decision making will be gradually brought into the forefront of economics research.

You Should Probably Study Rationality


The largest mental gains I made in the shortest period of time were from studying rationality.

I was amazed to discover a couple years ago that there were people who regularly studied and discussed how to think, how to get correct and accurate beliefs about how the world works, how to understand how your mind works, and to get at the real reasons people make decisions.

The whole rationality thing is as addictive as crack-cocaine for me. I love it. The difference from crack, though, is you grow stronger and smarter the more you dive in.

Our minds are funny. We humans, we're "adaptation exercisers, not fitness maximizers" -

Fifty thousand years ago, the taste buds of Homo sapiens directed their bearers to the scarcest, most critical food resources - sugar and fat. Calories, in a word. Today, the context of a taste bud's function has changed, but the taste buds themselves have not. Calories, far from being scarce (in First World countries), are actively harmful. Micronutrients that were reliably abundant in leaves and nuts are absent from bread, but our taste buds don't complain. A scoop of ice cream is a superstimulus, containing more sugar, fat, and salt than anything in the ancestral environment.

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