The future of economics

Big Think has a collection of eight perspectives from young prominent economists on the future of economics. The views were highlighted with two main directions. One is more empirical work. Justin Wolfers:

Today, every interaction we have in our lives leaves behind a trail of data.  Whatever question you are interested in answering, the data to analyze it exists on someone’s hard drive, somewhere.  This background informs how I think about the future of economics.

Specifically, the tools of economics will continue to evolve and become more empirical.  Economic theory will become a tool we use to structure our investigation of the data.  Equally, economics is not the only social science engaged in this race: our friends in political science and sociology use similar tools; computer scientists are grappling with “big data” and machine learning; and statisticians are developing new tools.  Whichever field adapts best will win.  I think it will be economics.

The other? Increasing application of behavioral techniques to rationality and decision making. Peter Leeson:

If we view economics as an “engine” for understanding the world, the rationality postulate was that engine in nearly all of economics until quite recently.  The rise of behavioral economics has challenged the usefulness and, in a more subtle but radical way, the legitimacy of the rationality engine.  While only a minority of economists would describe themselves as “behavioralists,” behavioralism has affected many more by influencing the kinds of questions economists consider important to ask and influencing the kinds of answers to those questions they consider illuminating.  These influences have the potential to profoundly affect the way economics is done, and thus what economics is able offer our understanding of the world.

 

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