Sunday, March 20, 2016

Economic Theory Is Dead. Here's What Will Replace It.

From Einstein to Darwin

By David Sloan Wilson

Everyone seems to agree that the economics profession had a near death experience in 2008 and either needs to be or has been reborn in a different incarnation, The most optimistic assessments claim that a revolution is already underway based on two developments; 1) A greater emphasis on empirical research; and 2) a different conception of theory.

A thoughtful essay by the economic blogger Noah Smith titled "The Death of Theory" covers the first development. According to his numbers, the proportion of theory papers in the economic literature peaked between 1973 and 1993 and has been declining ever since. He describes the behavioral economics movement as a meteor that hit "the economic dinosaurs", by which he means the neoclassical paradigm. He concludes by speculating that humanity is reaching "the end of a big Theory Wave" for all topics.Whatever can be gained by big theory has already been realized, so it only remains to dive into the data.

No comments: