Economists Discover the Poor Behave Differently From the Rich
26th November 2013
I’m shocked, I tell you, shocked….
Praet had to state the obvious because until this year economists, in particular those who make forecasts, put their faith in models that ignored those differences. Those that the ECB and the International Monetary Fund used to predict the future relied on a “representative agent,” a single imaginary person who stands in for everyone.
Your international tax dollars at work. (Think you, the taxpayer, aren’t paying for these international organizations? Well, where do you think they get their money? It ain’t George Soros.)
The problem was that these models failed to predict the consequences of the austerity programs that several European countries adopted in 2010. It turned out that actual people didn’t behave like the imaginary proxy. Economists are learning that the poor and the wealthy respond differently to austerity and stimulus. This could present challenges to politicians. If people behave differently, then policy might have to treat them differently.
Oh, since when have politicians ever listened to reality, rather than their own tendentious fantasies?
November 26th, 2013 at 06:20
People can’t behave differently, we’re all equal after all.