Here’s a presentation I gave to a recent Government Economists’ Conference in Canberra. Like some other reflections of my book launching years (only some of which have been preserved for posterity),1 it tries to describe how I go about thinking about economics.
And the thing is, I don’t really know anyone who describes their own approach similarly. Most of the people who are unsatisfied with economics as it is, and that certainly describes me, want some new paradigm to take hold. I guess I could say the same, but only by saying that the paradigm change I want is some self-reflectiveness of the discipline and an ability to get the best out of the paradigms available to it. As I intimate with my use of the image of the plane with feathered wings, a discipline like economics which cannot really mark its knowledge much to market – where falsifiction is mostly only available to prove the obvious – one of the greatest enemies is impatience. The hankering for a new paradigm for the outsiders is like the hankering for the next bit of economic theory from the insiders.
In my experience, most of the good economists can do comes from patiently looking at things, asking people on the scene and trying to find productive ways of describing the situation and finding ways to improve it. Hence my little man with the magnifying glass and the chart suggesting that ‘doing economics’ in a professional capacity is and should be mostly the act of applying ideas. There’s plenty of different ways quite simple ideas can be applied, and the task is to find a principled and productive way to do so rather than just turn up, announce that you’ve got your “economists’ hat on” (what’s with it with these hats all of a sudden?) and then uttering some econo-robo-babble like “it’s all about supply and demand” it’s all about the “incentives”. It’s not that those ideas shouldn’t be used, but, like the idea of putting wings on a plane, they’re the very beginning of the search for insight, not the end.