this post was submitted on 20 May 2025
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I personally think the biggest flaw of economics is how it takes "people are rational actors" as an axiom.
The fact that so many people can be convinced to vote against their economic best interests by supporting the GOP shows how fallacious that axiom is.
It doesn't, though. Maybe it's assumed in models for simplification. Other sciences assume ideal conditions (eg, frictionless media, conservative forces, quasistatic processes in introductory physics) for simplification.
Behavioral economists have won Nobel prizes for studying departures from actor rationality. They're aware perfect rationality is a simplification.
They'd also refer to information asymmetry.
This post is specifically speaking to the cases where they use simplified models to inform policy. Not all economists are stupid and it is good that the field is improving on its weathered past. But the “science” which is taught to justify oppression, that’s still also real propaganda that is being pushed. See i.e. the Laffer curve.
When you get to the informing policy stage, much "harder" sciences like pharmacology also get the same treatment of using completely disproven crap to inform drug policy. If you look hard enough, you can almost always find a study that agrees with your wildest biases and a PhD (often even in "good standing") who stands behind it and agrees with you.
That there are 500 papers that find the exact opposite of your conclusion is not much of an issue when you're acting in bad faith and have a friendly media outlet to voice your views
That's a bit reductive, too. I recall economists arguing the Laffer curve is valid & the US is on the low tax-rate side of the optimal tax rate, and that was decades ago. They'll show the deadweight loss of taxes & also point out its regulatory uses to correct market failures.
It's also not a recent development. The field is broad and includes leftists & Marxists applying the same methods to study different problems.
Literally in page one of econ textbooks they will say “a common exception to the rational actor theory is like when people need emergency medical services.” AND THEN they just ignore that GLARING caveat for the rest lf the book. Snake oil.
Another exception is how sometimes increasing prices will increase sales rather than the other way around.
Also a lot of the time, a discount will get more attention than the price itself. Like $1000 with a 60% markdown ($400 final) might sell more than the same thing at $350 with 0% markdown.
The Udemy system
yessir! veblen goods https://www.investopedia.com/terms/v/veblen-good.asp
I love the implication that a "rational actor" would choose death over losing money
hi guyes im disabled and have cancer checks bank account awe sheit well that has been a good life can’t afford this no more😊 ta ta all
You lose money every day paying for living expenses.
Let's make deal!
Doesn't it also assume consumers have perfect information to make their choices in a market?
How informative is the advertising industry?
I've also seen that economists never account for naked greed.
Yeah, but if you start getting into the irrationality of actors, you are all the sudden studying group psychology or sociology rather than economics.
Although I have always wanted to combine network theory with economics/finance understanding...