Mark Blyth: Why People Continue to Believe Stupid Economic Ideas

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by Jesse

If you want to read a more rigorous analysis of a where economic principles go wrong, read Benoit Mandelbrot’s The Misbehaviour of Markets in which he discusses modern risk models and the efficient market hypothesis that emanate from Fama, Black, Merton and Scholes.

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Blyth says that people believe dumb ideas because they don’t have anything better.

I think they do so because the professionals are strongly motivated to believe them, and often rewarded to persuade the great mass of people who don’t know any better to believe them as well.

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How else can we explain the renaissance of economic trickle down theory, which seems to reappear in every new era of economic control frauds and chicanery, and is as great a canard as the natural efficiency of unregulated markets.

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