Overview
"This is without doubt the best book I've read this year, and probably one of the most important books I've ever read … This ought to be a real game changer of a book. Read it."
—Brain Clegg, author of Before the Big Bang: The Prehistory of Our Universe, writing at popularscience.co.uk
From the failure of wealth to make us happier, to the world's catastrophic blindness in the lead-up to the credit crunch, Economyths reveals ten ways in which economics has failed us all.
Forecasters predicted a prosperous year in 2008 for financial markets—in one influential survey the average prediction was for an eleven percent gain. But by the end of the year major economies were plunging into the worst recession since the Great Depression. In 2010, they still haven’t fully recovered.
An even bigger casualty was the credibility of economics, which for decades has claimed that the economy is a rational, stable, efficient machine, governed by well-understood laws. If all this were true, how could the world's most brilliant and talented financial prognosticators get it so wrong? Why couldn’t our elaborate economic theories predict or prevent this enormous financial crisis from happening?
Mathematician David Orrell explores these provocative questions and more. Tracing the history of economics from its roots in ancient Greece to the financial centres of London and New York, he reveals ten distinct ways in which it is mistaken—and proposes intriguing, and sometimes controversial, new alternatives.
An unapologetic critic of economic theory, Orrell explains how the economy is the result of complex ad unpredictable processes; how risk models go astray; why the economy is not rational or fair; why until very recently no woman had ever won the Nobel Prize for economics; why financial crashes are less Black Swans than part of the landscape; and finally, how new ideas in mathematics, psychology, and environmentalism are helping to reinvent economics.
Orrell deftly translates the arcane language of economic theory into a relevant, contrarian, and compelling exploration of the emotional subject of money. Economyths is a fascinating and elegantly written inquiry into the flaws in our conventional economic models, how they got us into so much trouble, and alternatives that could revolutionize the way we think about the economy.
Synopsis
From the inability of wealth to make us happier, to our catastrophic blindness to the credit crunch, Economyths reveals ten ways in which economics has failed us all.Forecasters predicted a prosperous year in 2008 for financial markets - in one influential survey the average prediction was for an eleven percent gain. But by the end of the year, the Standard and Poor's 500 index - a key economic barometer - was down 38 percent, and major economies were plunging into recession. Even the Queen asked - "Why did no one see it coming?"
An even bigger casualty was the credibility of economics, which for decades has claimed that the economy is a rational, stable, efficient machine, governed by well-understood laws.
Mathematician David Orrell traces the history of this idea from its roots in ancient Greece to the financial centres of London and New York, shows how it is mistaken, and proposes new alternatives. Economyths explains how the economy is the result of complex and unpredictable processes; how risk models go astray; why the economy is not rational or fair; why no woman has ever won the Nobel Prize for economics; why financial crashes are less Black Swans than part of the landscape; and finally, how new ideas in mathematics, psychology, and environmentalism are helping to reinvent economics.