Scott Sumner On Behavioural Economics In Introductory Economics
In a recent blog post, Scott Sumner argues against a large role for behavioural economics in introductory economics:
earlier this year).
Sumner argues in his blog post that we should focus on discouraging people from believing in eight popular myths. I don't agree with all of his choices there. For Myth #2 (Imported goods, immigrant labor, and automation all tend to increase the unemployment rate), I'd say it is arguable. For Myth #3 (Most companies have a lot of control over prices. (I.e. oil companies set prices, not “the market”), it depends what you mean by "a lot". For Myth #7 (Price gouging hurts consumers), Exhibit A is the consumer surplus.
However, one popular myth that should be discouraged is the idea that behavioural economics will (or should) entirely supplant traditional economics. There is space for both, at least until there is a durable core of theory in behavioural economics.
[HT: Marginal Revolution]