For most people, the word "economics" might evoke the image of some bespectacled aged men debating furiously about a new policy introduced by the government. In reality, however, the nature of economics is quite complex and diverse, as it involves studying human behavior and the choices people make. Owing to the ambiguity of the subject, the majority of the population fails to grasp its principles, not willing to learn more than the instinctive basics. Conventional economics taught today in business schools and economic institutions largely deal with neoclassical theories, which attempts to understand the economy through modelling individual agents. The fact that neoclassical economics relies heavily on mathematical equations and assumptions explains why it doesn’t accurately represent human behaviour. No wonder, economists using this mainstream method failed to foresee the 2008 financial crisis that shook the world.
While neoclassical economics is academically superior, its quantitative metrics have little relevance today. With the growing economic instability, evidence of climate change and technological advancements, modern-day economists need to focus more on real-world evidence than theories. However, in the midst of increasing questions on the role of economists today, one thing is for certain-economic theories backed with substantial evidence is necessary for a society’s economic progression.
A huge part of the problem lies in the curriculum of economic schools, which is monopolized by obsolete and age-old theories. The gap between the standardized version of modules and the real-world makes all the difference, posing the question, “Are economists useless?” Well as contradictory it sounds, the answer to this question is no. Affected by sustained economic and socio-political crisis, the world requires an economist more than ever today. Economists are necessary for the stable economic growth of a society while ensuring low inflation and high employment.
The reason why economists are often wrong with their predictions is due to the unpredictability in the human element of the subject. It does not allow to have a paint-by-numbers perspective. The economist then acts as a guiding light to understand human economic behavior in a specific social as well as political backdrop.
Ironically, recent shifts in the economic world might give non-economists an opportunity to put the blame on people who hold an economics degree. However, they often forget the fundamental of economics; it is not a science. Irrespective of the mathematical modules included in its framework, it still falls under the category of social sciences. Just how human-behaviour is unpredictable, economics involves a lot of estimates and assumptions which may depart from real-world behaviour. Also, the future is uncertain as it involves numerous variables therefore making it nearly impossible for anyone let alone economists to deduce it all. This results in economists receiving a lot of flak from the laypersons.
Also, the scepticism by non-economists is often caused by the exclusivity of the economists as the latter fails to make the domain less academic and free of complicated jargons. At the same time, non-economists must understand the multi-dimensional world of economics and how the economists are utilizing their knowledge to help resolve the obstacles faced by an economy.
Having said that, modern day economists need to go beyond numbers, bringing in a paradigm shift in their approaches. Rather than mathematizing human behaviour, they should focus more on the emotional and psychological metrics. In fact, in near future, factors such as happiness index, emotional wellbeing and quality of life are expected to be key determinants while making economic policies. As rightly said by veteran journalist and author Larry Elliott, economics cannot be reduced to mere mathematical modules created by rationally thinking people.
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