What economists do

Excerpts from a beautiful 20-year old essay by Robert Lucas, it's very short and do read the whole thing:

Economists have an image of practicality and worldliness not shared by physicists and poets. Some economists have earned this image. Others-- myself and many of my colleagues here at Chicago--have not. I'm not sure whether you will take this as a confession or a boast, but we are basically story-tellers, creators of make-believe economic systems. [...]

Well, that is why honest people can disagree. I don't know what one can do about it, except keep trying to tell better and better stories, to provide the raw material for better and more instructive analogies. How else can we free ourselves from the limits of historical experience so as to discover ways in which our society can operate better than it has in the past?

In any case, that is what economists do. We are storytellers, operating much of the time in worlds of make believe. We do not find the realm of imagination and ideas is an alternative to, or a retreat from, practical reality. On the contrary, it is the only way we have found to think seriously about reality.

In a way, there is nothing more to this method than maintaining the conviction (which I know you have after four years at Chicago) that imagination and ideas matter. I hope you can do this in the years that follow. It is fun and interesting and, really, there is no practical alternative.

HT to Yet another sheep.

by datacharmer | Monday, December 10, 2007
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