So my first impression of the Krugman article is its long. and detailed. and hits so many points that I don’t want to try and cover them because I’ll miss some and there all worth talking about.  So my plan is to focus on one and then if I read someone else have an interesting take on another I’ll come back and muse on it some more.

The idea I’m talking about is the idea that beautiful math is one of the root causes behind economists missing the boat about the whole “giant bubble” thing. I have two takes on this. First who can blame them? As economist and as humans we really, really want to understand things about how are world works. We had a model. It was complicated. Difficult. Unwieldy. We worked hard to understand it. We had a lot vested in this thing, firstly because we really wanted to understand things and secondly because we worked really hard to do so. The world wouldn’t be so unfair as to have it be wrong. I’m not sure if that makes sense to anyone but me, but suffice to say I can totally empathize with Krugman’s point about us being led astray by the model and its sexy maths.

That being said I do think Krugman’s (and my) explanation of math instead of vice being the reason economist got it wrong might be wrong. I don’t have objective evidence of this, I haven’t taken a poll of all the economist in the US. But it seems to me that the explanation “economist got it wrong because they were led astray by the beauty and intellectual rigour of the model” is itself a beautiful lie economists want to believe. At least in the circle’s of economist majors being totally concerned with only intellectual pursuits is high status behavior. Being an intellectual that ignores the world is at least on some level a positive thing to believe about yourself. It ignores other more tawdry explanations, like, not wanting to exert effort to learn and entertain a new theory, punitive backlash in the economics culture for proposing a theory that goes against the accepted view, gaining rents from the current situation and not wishing to change that.

I do think that there is/was a certain level of entrancement with the idea of being able to explain everything through models but that very concept seems flattering to the individuals involves which makes me skeptical of whether its true or not.