2.10

• No Two Economists Ever Agree:

  • Distinction between positive (fact-based) and normative (value-based) economics.
• • Even if economists agree on the facts, disagreements arise over recommendations due to differing value judgments.
  • Disagreements can also occur in positive economics due to varying interpretations of data and research methods.
• Economics Models Too Simplistic:

  • Economic models simplify reality to help analyze complex issues.
  • Critics argue that models are too simple and don’t reflect real-world complexities.
  • Milton Friedman defends models, stating that the question should be whether the models explain behavior well enough to provide useful insights.
• Humans Aren't Always Motivated by Economic Incentives:

  • Economists assume individuals make decisions based on economic incentives.
  • Critics argue that other social factors like psychology, politics, and attitudes influence decisions as well.
• Actions of Human Beings Cannot be Reduced to Scientific Laws:

  • Physicists can model molecular behavior, but human behavior is too complex and influenced by randomness.
  • While averages of behavior may show patterns, individuals behave differently in the same situations.
  • This makes creating laws for human behavior difficult and less reliable.
• Popular Criticisms of Economics

  • No Two Economists Agree: Disagreements are common due to different assumptions and judgments.
  • Models Are Unrealistic: They oversimplify but help focus on core elements of a problem.
  • Humans & Economics: Human behavior is complex and can't be entirely reduced to laws, but models can predict trends.