Our Children’s Economics: The economics profession has not had a good crisis. Queen Elizabeth II may have expected too much when she famously asked why economists had failed to foresee the disaster, but there is a widespread sense that much of their research turned out to be irrelevant. Worse still, much of the advice proffered by economists was of little use to policymakers seeking to limit the economic and financial fallout.
Will future generations do better? One of the more interesting exercises in which I engaged at the recent World Economic Forum in Davos was a collective effort to imagine the contents of a Principles of Economics textbook in 2033. There was no dearth of ideas and topics, participants argued, that existing textbooks neglected, and that should receive more attention… behavioral finance… embed[ding] analysis of recent experience in the longer-term historical record… randomized trials and field experiments… 'big data'… the likelihood that large data sets will have significantly enhanced our understanding….
Overall, however, the picture was one in which the economics of 2033 differed only marginally from the economics of today…. [N]othing in the next 20 years as transformative as Alfred Marshall’s synthesis of the 1890’s or the revolution initiated by John Maynard Keynes in the 1930’s….
This presumption… almost certainly… reflects the same error made by scholars of technology who argue that all of the radical breakthroughs have already been made…. [W]e can’t say what the next revolution in economic analysis will be, but more than a century of modern economic thinking suggests that there will be one…. The outcome will be messy. But the economics profession will also become more diverse and dynamic – and our children’s economics will be healthier as a result.