THe Blog

February 03, 2016

Economics Rules: The Rights and Wrongs of the Dismal Science

 

 

Vivek Dehejia weighs in on Dani Rodrik's new book: 

 

Dani Rodrik's "Economics Rules: The Rights and Wrongs of the Dismal Science" (Norton, 2015) is a fun and instructive little book on the use -- and mis-use -- of economic models by economists, policy makers, and policy advocates, but most especially academic and think tank economists, which are the book's principal target (and target audience). Rodrik's starting premise is that economists go wrong when they assume that a single, universal model -- along the lines of the natural sciences -- can be applied to every problem; rather, what is needed, he argues, is a series of different models, each suited to a specific set of circumstances. What is lost in generality is gained in terms of context-relevant specificity, and prevents, he believes, economists from mis-applying their models and coming up with wrong and potentially even dangerous policy implications. A good economic model, for Rodrik, is a stylized schema which elucidates the essential causal mechanisms that the economist believes connect causes and outcomes. Somewhat akin to economist Deirdre McCloskey, who has written extensively on the rhetoric of economics, Rodrik sees economic models as fables, which crystallize a "moral" -- or, in this case, a causal story. This book will be of great interest not only to teachers of economics, but practitioners of economic policy analysis, in universities and think tanks alike. It will also be of interest to the general reader who has a basic familiarity with, and interest in, the problems of economics.

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