I studied econ as a minor and I don’t recall any of my professors ever making the pretense that it was some sort of ultimate or incontrovertible truth. In fact, I’m fairly certain that’s where I learned the expression “all models are wrong, but some are useful”.
I remember cracking open a textbook, learning about rational market actors, realizing that a lot of economics is based on the assumption that people act rationally, and decided the whole thing was bullshit.
5 years later, I realized that despite deeply flawed premises, economics as a science still has a lot of helpful models and theories and is a good thing to learn.
That’s a good point, and kinda reminds me of the Efficient Market Paradox, which basically says an efficient market is impossible since there would be no profit to be made, and hence, no point in participating. But if people drop out because of that, inefficiencies will invariably pop again, thus presenting an opportunity for those seeking to profit, which of course only ends up restoring the efficiency.
So in essence, the market is always just teetering on the edge of efficiency, never fully getting there yet never straying too far either. Perhaps there’s a corollary here (or a similar paradox) that explains why the assumption of rationality, as ridiculous as it seems at face value, is in fact also valid and reasonable.
I studied econ as a minor and I don’t recall any of my professors ever making the pretense that it was some sort of ultimate or incontrovertible truth. In fact, I’m fairly certain that’s where I learned the expression “all models are wrong, but some are useful”.
I remember cracking open a textbook, learning about rational market actors, realizing that a lot of economics is based on the assumption that people act rationally, and decided the whole thing was bullshit.
5 years later, I realized that despite deeply flawed premises, economics as a science still has a lot of helpful models and theories and is a good thing to learn.
That’s a good point, and kinda reminds me of the Efficient Market Paradox, which basically says an efficient market is impossible since there would be no profit to be made, and hence, no point in participating. But if people drop out because of that, inefficiencies will invariably pop again, thus presenting an opportunity for those seeking to profit, which of course only ends up restoring the efficiency.
So in essence, the market is always just teetering on the edge of efficiency, never fully getting there yet never straying too far either. Perhaps there’s a corollary here (or a similar paradox) that explains why the assumption of rationality, as ridiculous as it seems at face value, is in fact also valid and reasonable.