Twin Peaks

Twin Peaks and Parallel Universes...


"In 1996, David Colander of Middlebury College, in Vermont, expressed his dissatisfaction with decades of economics by invoking a lofty analogy. He felt macroeconomists had clawed their way up a mountain, only to discover, when they broke through the clouds, that a neighboring mountain would have taken them higher...

     Mr. Colander's analogy does not imply that economists are getting nowhere: they can make progress up their chosen peak, even if other, higher mountains beckon. Mainstream models of the macroeconomy, for example, are more sophisticated than they were, allowing for different kinds of shocks, better statistical testing and a variety of dramatis personae beyond the economic Everyman of yore ( Homo Economicus). This progress is the result of hard theoretical work in response to successive rounds of criticism. The critics, who don't think the climb is worth the effort, may not always appreciate quite how far the leading economists have ascended...

     The twin peaks image has a further, unsettling, implication. To get from one peak to the other, economists will have to lose a lot of altitude first. To tackle questions in a fresh way, they may have to set aside many of their favorite techniques and methods. This prospect probably explains a lot of the resistance to new economic thinking. Economists tend to cling to whatever assumptions are required to use the techniques they favor."

Hat Tip ~ The Economist Magazine

Hat Tip ~ Complexity and The Art of Public Policy, David Colander & Roland Kupers