Quote from: jaekwon on December 26, 2013, 02:52:18 AM

Economics is a lot like physics.

Probably no theory will ever be able model the economy in its entirety, considering that the economy is grounded on our physical reality.

It's also worth considering that economics is probably less advanced than our understanding of physics. The General Theory of Economics is a lot like Newtonian physics. I suppose Hayek's theories are much more "relativistic", but we have so much more to discover.

Economics is in a way more difficult than physics because you can't throw money and scientists at the problem to create controlled experiments.

In the future we might see more advanced economic model simulators that can predict the outcome of different models. But without the advanced software or hindsight, economic theories are all educated guesses that probably don't fit reality.

The answer to future advancements in economic theory is in simulation software and grand scale experiments. Bitcoin is a grand scale experiment.

The answer to this is to look at the principles involved in human behaviour, of which I noted one: all else being equal, people make the best choice for them at the time the choice is made. Most simply: people respond to incentives.

I cannot comment on corporate economists much (I know full well why they do what they do), but I certainly know that gov't economists, academic economists, and the Paulsy Krugman-types certainly lose sight of this fact. I'm somewhat shocked that they still think they can model the aggregate outcomes of hundreds of trillions of individual decisions made every day.

Frankly, I'm not really sure why "we" (whoever that is), needs the outcome of their models.