Tuesday, 30 December 2008

Economic worldviews

To maintain an insight into the economic news and a reliable interpretation of it, you can do one of two things:
  1. Pick someone (or a few related people) that you trust and read everything they write. Your choice may be Paul Krugman, Mark Thoma and Brad DeLong if you're broadly left-wing; or Greg Mankiw and Arnold Kling if you're rightish. Or shall I replace 'left' and 'right' with 'Neo-Keynesian' and 'Monetarist-Austrian'. This has the advantage of providing a (fairly) consistent viewpoint and lots of additional evidence to confirm that it's true.
  2. Read both, try to reconcile the differing viewpoints on the same issues and figure out which one is correct - or even if the truth is somewhere in between or outside of both.
Needless to say, the second is more challenging and perhaps leads to more accurate views - but of course there is a much higher cognitive load. And you still have to do some kind of filtering - for example do you also read all the political and sociological viewpoints as well as the economic ones? And just within economics, there are more extreme views - Marxists, libertarians and even Marxist libertarians to keep track of.

It's much more efficient to decide which worldview is correct and then ignore the others from then on. Maybe with an occasional review to make sure you are still right. But is it worth it? What level of rational ignorance can you afford?

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