“WHAT ECONOMISTS DON’T KNOW AND PERHAPS CAN’T.”

“WHAT ECONOMISTS DON’T KNOW AND PERHAPS CAN’T.” The caption for this post is taken from the title of this article by Professor Edward Glaeser. I posted here about the pessimism that I learned in the sixties about what economists can find out (because nature doesn’t run very good experiments.) Professor Glaeser is relatively optimistic about what economists know and can learn about microeconomic issues, pointing out that “Our knowledge of microeconomic policies comes from repetition and randomization.” The randomization studies are relatively new. (He mentions Professor Esther Duflo’s randomization work that I posted on here.) In contrast, Professor Glaeser is pessimistic about what we can learn about macroeconomics, concluding: “It is a great tragedy that the most important area of economic decision-making is also the area where we will always know the least.” His reasons (which are similar to the ones I gave here) are that “Recessions aren’t that common, and there are too many moving parts. Times change….”