Popular Economics

The popular economy is booming: the people in their profession are far from this science, tend to be aware of. And they have such an opportunity: books, articles, blogs, public lectures - anyone can choose the source of the information to his liking. Recently I had the opportunity to participate in the discussion of this phenomenon at the annual meeting of the American Economic Association (AEA) in Denver. And here's the paradox: the growth of interest in the popular economy is just at the moment when the public seems to have lost confidence in the professional economists, because none of them could not predict, or predict the onset of the crisis, the largest and most profound since the Great Depression. So why do people buy books written by professional economists? The most original answer to the question of the voiced: "Just the economy has become more interesting, it is no longer perceived as a complete and exhausted science." Nobody wants to read a book or an article which stated that the economic projections - a lot of computer models, and mere mortals without a degree in economics still do not understand. This is the truth. Of course, the model is based on a scientific approach and rationale, but sometimes they just give out disastrously wrong results. Sometimes it is useful to turn off the autopilot and think yourself, and when a crisis, no human intelligence and not do. All participants of the meeting one way or another agreed that the popular economy facilitates interaction between economists and the public. Now the success of this dialogue depends on many things. In the end, the economists have overlooked the approximation of the crisis, partly because they are dissociated ourselves from the real world.

Popular economics involves the reader or listener in the process. Of course, this means that economists need to develop new and original theory which have not yet acquired the status of doctrine among professionals. Until recently, many professional economists have been reluctant undertook the writing of books on popular science. A similar exercise was not encouraged in a narrow range and was going to minus a candidate for a degree or new job. It was believed that just such a book does not contain equations, and statistical tables, it can not be taken as a serious work worthy of the attention of a real scientist. Worse, until recently, the scientific evaluation committee of economists thought that writing a book on the popular economy, contrary to the mainstream and not repeating the conventional wisdom - is a violation of professional ethics. Imagine how doctors would have taken his colleague, advising the public methods of treatment are not tested and not approved by ad hoc bodies. They know how often a seemingly promising new technique, after thorough testing deemed unfit or even dangerous. Moreover, all proposed new treatments are carefully studied and tested, and then published in professional journals, adhering to high standards. Therefore, the introduction of new and untested ideas to the masses equate to unprofessional conduct.



For several decades before the current financial crisis economists gradually learned to similarly treat yourself and your profession. For example, after 1960, when the University of Chicago began the creation of computer tapes with systematic information about the millions of stock prices, study the properties of the stock market and, in particular, price dynamics, confirming the efficient market hypothesis, became especially popular. It was believed that the competitive forces in the heart of any market will ensure that the value of securities in the fundamental factors. All trademarks and models based on something other than the efficient market theory, is rejected as a dangerous heresy. Science has triumphed over the experts in the stock markets. At least so it seemed. The financial crisis has dealt a crushing blow to the smug academic economics. Moreover, the economists failed to predict the crisis, because their models are often denied the very possibility of its occurrence. Some believe that the economy did not take into account the "human factor", a factor that can not be reduced to a simple mathematical analysis. A handful of economists warning of a possible crisis, people seemed not only never read the professional literature, but also used their personal judgments and estimates: an intuitive comparison with the experience of past crises, the conclusions of speculative trading, price bubbles and the stability of the trust evaluation of motives of economic actors the impression of too great extent complacency and loss of vigilance by the regulators.

Some judgments have been made by economists familiar with the principles of leadership. Their views have never been published in scientific journals and have not been evaluated similar treatments in medicine. Have not yet invented the procedure, which could prove their authenticity. Of course, the economist, is largely academic, scientific papers and computer models are also needed. But, as correctly noted Edwin Seligman in 1889, "Economics - a social science, that is, it is associated with the ethics and history. This is not science and therefore can not be exclusively abstract." In my opinion, part of the processes associated with the social aspect of the economy, is dealing with people, willingness to look into their eyes, learn from them, read a letter that they send, and then to think about how close the theory to life.