Publication

This paper argues that the lack of understanding surrounding the worldwide financial crisis is due to a misallocation of research efforts in economics. It traces the deeper roots of this failure to economists’ insistence on constructing models that, by design, disregard the key elements driving outcomes in real-world markets. According to the authors, the economics profession has failed in communicating the limitations, weaknesses, and even dangers of its preferred models to the public. They call for a major reorientation of focus in the research economists undertake as well as for the establishment of an ethical code.