Nobel Laureate George Akerlof Speaks on Economic Thinking

On Monday, George Akerlof, Nobel Laureate in Economics, came to speak in Science Center 101 on new methods of economic thinking. He stressed the need for the creativity of future Tri-Co economists as we move forward from the current economic crisis.

Before the crisis, Akerlof said, the prevalent mentality among economists was that “…we had reached the end of economics.” People thought economists had solved many of the major economic problems, and could turn their attention to more obscure issues.

Aklerof explained the importance of looking for new economic questions in an area where most people are not looking. He went through several notable economic results, stressing that we should not simply refine our models so as to refute surprising or unintuitive results. Rather, we should attempt to work from a different starting point: asking why the basic assumptions of economics can lead to these results.

The talk concluded with Akerlof discussing areas for further research; for example, the role of social norms in economics, systemic risk, and the role of politics and campaign finance. Akerlof answered several questions from the audience, many of which involved the notion of fairness and its place in economics. Akerlof explained that instead of just working fairness into our economic models, we first need to consider what forms a person’s notion of fairness.

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