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Sunday, January 11, 2009


This article lies behind a NY Times firewall:
Challenging the Crowd in Whispers, Not Shouts

It discusses how new ideas, in this case economics, have to overcome the obstacle of the groupthink wall.
... And why didn’t a consensus of economists at universities and other institutions warn that a crisis was on the way?

The field of social psychology provides a possible answer. In his classic 1972 book, “Groupthink,” Irving L. Janis, the Yale psychologist, explained how panels of experts could make colossal mistakes. People on these panels, he said, are forever worrying about their personal relevance and effectiveness, and feel that if they deviate too far from the consensus, they will not be given a serious role. They self-censor personal doubts about the emerging group consensus if they cannot express these doubts in a formal way that conforms with apparent assumptions held by the group.
Pretty sad. I think groupthink mixed with superstitious economic theorizing have lead us down this path.
"In 585BC, long before Jesus, the Greek philosopher Thales of Mellitus concluded that every observable effect must have a physical cause. The discovery of causality is now taken to mark the birth of science, and Thales is immortalized as its father. But causality also means the death of superstition." -- Robert Park, 2009


Professor Anonymous Anonymous said...

It might be even simpler than groupthink. Most economists are employed by financial institutions.

“It's difficult to get a man to understand something if his salary depends on him not understanding it.”—Upton Sinclair.

Here in NZ, independent economists (i.e., those not employed by banks) started saying in 2005 that the house-price-to-average-wage ratio was drifting further and further above historical norms, and savings rates were at record lows. They predicted it would all end in tears, when everyone woke up from their trance.

The moral: don't listen to "experts" on a salary from the industry.

1:38 PM  

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