The other day I came across an interesting article in The Guardian. It was titled, rather unorthodoxly: “Old economics is based on false ‘laws of physics’ – new economics can save us”.
Its author, Kate Raworth, writer of the “Doughnut Economics – Seven Ways to Think Like a 21st Century Economist” book, has received a fair amount of praise for the plasticity of her thinking and her ability to flip traditional points of view.
Starting from a reflection around raising inequality in the world’s most prosperous economies and the gigantic –and growing– overall ecological footprint, Raworth goes on to argue that many predecessors betrayed themselves in their quest to formulate physics-like laws to govern the discipline or economics.
She takes a shot at related ‘laws’, named after economists like Kuznets, or Grossman and Krueger, to conclude that there is one appealing notion ripe for ditching: that as a natural consequence of economic growth things will get worse but then they will necessarily get better.
Reading the article I connected the dots with the brilliant latest book from Michael Lewis: “The Undoing Project”. A captivating account of the fruitful, and at times tormentous, lifelong relationship between two astonishing minds: those belonging to (Nobel Prize laureate) Daniel Kahneman and (prematurely deceased) Amos Tversky.
Kahneman and Tversky flipped perspectives too around the very core of classical economic theory, and specially the rationality and utility assumptions. Their relentless effort to study the human mind in practice, focusing on judgment and decision-making errors, shed brand new light on how economists view their profession and understood the basic methodological tools at their disposal.
With their obvious differences, the double notion of shamelessly recognizing complexity and subsequently embracing experimentation join these two remarkable bodies of work at the hip.