What Economists Should Do

CHAPTER 1

Introduction

Economics, as a discipline, suffers from internecine strife—competing schools of thought that have in common only one feature—a hostility to what we can call “mainstream economics.” Why this strife? The answer lies in part with what one writer has branded “folk economics.” This is the economics that has a grip on people’s thinking and that impedes any progress economists can make in improving public policy outcomes.

Paul Rubin defines folk economics as “the economic notions that naive (untrained) individuals have and the perceptions of such individuals about the economy” (Rubin 2003, 157). Folk economics derives from the “zero-sum” hypothesis, whereby one person’s economic gain is necessarily another person’s loss. Thus, ...