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The Economists’ New Clothes?

With economists struggling to derive credible explanations of macroeconomic conditions from the prevailing models, those who have long criticized the discipline for its scientific pretensions are feeling vindicated. And it remains to be seen whether economists will – or should – heed the feedback.

In this Big Picture, Mark Cliffe of ING Group points to three major lessons from the past decade that mainstream economists still have refused to accept, owing to their commitment to discredited assumptions. And Robert Skidelsky of Warwick University explains, more broadly, how economists’ quest for predictive certainty led them to double down on mathematical modeling and ignore human and historical contingencies.

Still more broadly, Cambridge’s Diane Coyle points out that all of academia – not just economics – has succumbed to an increasingly narrow-minded specialization. And Harvard’s Ricardo Hausmann rejects the notion that economics should bear the blame for outcomes that actually emanate from shortcomings in the field of public policy.

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