Ten Ways That Economics Gets it Wrong
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From the inability of wealth to make us happier, to our catastrophic blindness to the credit crunch, "Economyths" reveals ten ways in which economics has failed us all. Forecasters predicted a prosperous year in 2008 for financial markets – in one influential survey the average prediction was for an eleven per cent gain. But by the end of the year, the Standard and Poor's 500 index – a key economic barometer – was down 38 per cent, and major economies were plunging into recession. Even the Queen asked – Why did no one see it coming? An even bigger casualty was the credibility of economics, which for decades has claimed that the economy is a rational, stable, efficient machine, governed by well-understood laws. Mathematician David Orrell traces the history of this idea from its roots in ancient Greece to the financial centres of London and New York, shows how it is mistaken, and proposes new alternatives. "Economyths" explains how the economy is the result of complex and unpredictable processes; how risk models go astray; why the economy is not rational or fair; why no woman (until 2009) had ever won the Nobel Prize for economics; why financial crashes are less Black Swans than part of the landscape; and, finally, how new ideas in mathematics, psychology, and environmentalism are helping to reinvent economics.
David Orrell is an applied mathematician and author of popular science books. He studied mathematics at the University of Alberta, and obtained his doctorate from Oxford University on the prediction of nonlinear systems. His work in applied mathematics and complex systems research has since led him to diverse areas such as weather forecasting, economics, and cancer biology. His work has been featured in the New Scientist, the Financial Times and on BBC Radio.
A must read for understanding the roots of the financial crisis, the severe limitations of the field of economics and what needs to be done to improve our ability to avoid future crises.Spyros Makridakis, author of ‘Dance With Chance’
This is without doubt the best book I've read this year, and probably one of the most important books I've ever read…. Orrell exposes the rotten heart of economics… There are other books talking on economics, but I've not come across another that explains it so well for the layperson, takes in the credit crunch, totally destroys the validity of economics as we know it and should be required reading for every politician and banker. No, make that every voter in the land. This ought to be a real game changer of a book. Read it.Brian Clegg, Popular Science
The author dissects ten fundamental misunderstandings … Orrell manages to convincingly explain the relevance of these myths and make them understandable, even for laymen, in a wider context.Handelsblatt