Economics is a state of mind

Economics is a state of mind

By Lars Christensen, Founder & CEO Markets & Money Advisory, LC@mamoadvisory.com @MaMoMVPY @mamoadvisory 

Some of the cleverest economists I’ve ever encountered are not actually economists. In fact, some winners of the Nobel Prize in Economics have not had a formal economic education.

One of my big heroes, David Friedman, did not take a single economics class, but to me, he is certainly an economist – one of the greatest around. Another example is Gordon Tullock, who was trained as a lawyer. There is no doubt in my mind that he is one of the cleverest economists of his generation, and it is a complete mystery to me that he was never awarded the Nobel Prize in Economics. The way I perceive people’s skills as economists has nothing to do with their formal education. To me, economics is not an education. Economics is a state of mind.

Therefore, you can easily be an economist without having formal training. The corollary is that there are also people who have been able to attain the formal title of economist without reaching that higher state of mind found in a real economist. Unfortunately, I have also encountered many of this second type – economists by title, but not in mind. Many of these people are even high-ranking policymakers.

Unfortunately, many universities around the world today are not educating economists to be economists. They mainly impart technical knowledge – mathematics and econometrics – along a modicum of “soft” skills and practical applications. A shocking number of formally educated economists are incapable of explaining simple concepts such as comparative advantage or marginal utility (don’t even get me started on monetary theory). At best, they might be able to expound about VAR, ARCH or GARCH. Many, especially in Europe, are simply being drilled to become government bureaucrats.

So what is the state of mind of a real economist? If you need to have that explained, you are not one yourself, but you might still aspire to be one by figuring out what Gordon Tullock and David Friedman have in common. You could also read my favourite book on the topic – James Buchanan’s What Should Economists Do? 

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This is a slightly edited version of a blog post that first appeared on The Market Monetarist blog in 2012. 



WORLD LEADING ADVISORY SPECIALISING IN THIS TOPIC

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