Making Economics More Useful: How Technological Eclecticism Could Help
Applied Economics, 2020
20 Pages Posted: 6 Sep 2017 Last revised: 14 Feb 2020
Date Written: January 31, 2020
Keynes thought it would be “splendid” if economists became more like dentists. Disciplinary economics has instead become more like physics in focusing on concise, universal propositions verified through decisive tests. This focus, I argue, limits the practical utility of the discipline because universal propositions form only a part of new policy recipes. I further suggest that, as in engineering and medicine, developing economic recipes requires eclectic combinations of suggestive tests and judgment. Additionally, I offer a detailed example of how a simulation model can help evaluate new policy combinations that affect the screening of loan applications.
Keywords: economic methodology, simulations, banking, regulations
JEL Classification: B40, G21, G38
Suggested Citation: Suggested Citation