In a recent post, Professor Gerard wonders whether “we take our models too seriously or not seriously enough.” His question was prompted by this article from the Wall Street Journal describing the many ways in which certain well-known and less well-known economists seem to be obsessed with… well, economizing. But, if that is true, is it because cheapskates are attracted to the study of economics, or because economics makes people obsessed with money? One prominent economic theorist, Ariel Rubinstein, was so concerned with what he saw as excessive emphasis on profit maximization in economics that he decided to study this question empirically. His paper, A Sceptic’s Comment on the Study of Economics, seems to confirm his fears.
I am with Rubinstein on this one, and I find it important to emphasize that economics is not about selfishness and profit maximization at the expense of anything else that’s part of the “bigger picture.” On the other hand, some more of rational thought and maximization would do many people and organizations a great deal of good…