TY - JOUR
T1 - The Financial Crisis and the Systemic Failure of the Academics Profession
AU - Colander, David
AU - Goldberg, Michael
AU - Haas, Armin
AU - Juselius, Katarina
AU - Kirman, Alan
AU - Lux, Thomas
AU - Sloth, Birgitte
PY - 2009
Y1 - 2009
N2 - Economists not only failed to anticipate the financial crisis; they may have contributed to it-with risk and derivatives models that, through spurious precision and untested theoretical assumptions, encouraged policy makers and market participants to see more stability and risk sharing than was actually present. Moreover, once the crisis occurred, it was met with incomprehension by most economists because of models that, on the one hand, downplay the possibility that economic actors may exhibit highly interactive behavior; and, on the other, assume that any homogeneity will involve economic actors sharing the economist's own putatively correct model of the economy, so that error can stem only from an exogenous shock. The financial crisis presents both an ethical and an intellectual challenge to economics, and an opportunity to reform its study by grounding it more solidly in reality.
AB - Economists not only failed to anticipate the financial crisis; they may have contributed to it-with risk and derivatives models that, through spurious precision and untested theoretical assumptions, encouraged policy makers and market participants to see more stability and risk sharing than was actually present. Moreover, once the crisis occurred, it was met with incomprehension by most economists because of models that, on the one hand, downplay the possibility that economic actors may exhibit highly interactive behavior; and, on the other, assume that any homogeneity will involve economic actors sharing the economist's own putatively correct model of the economy, so that error can stem only from an exogenous shock. The financial crisis presents both an ethical and an intellectual challenge to economics, and an opportunity to reform its study by grounding it more solidly in reality.
KW - Faculty of Social Sciences
KW - political philosophy
KW - political theory
U2 - 10.1080/08913810902934109
DO - 10.1080/08913810902934109
M3 - Journal article
SN - 0891-3811
VL - 21
SP - 249
EP - 267
JO - Critical Review
JF - Critical Review
IS - 2-3
ER -