Why Are Economists Often Right Too?

On the other hands, economists are often right too. Reasons include:

• Economists offer many opinions by which one or more of them can be expected to be, at least partially, true and correct. It ever happened that two economists who say opposite things, Myrdal and Hayek, can share a Nobel Prize. What they say must be worth some truth.

• Economist study many things. Like profession in medicine, profession in economics is also highly specialized. The JEL Classification System identifies 20 economics fields that are also further divided into sub and sub-sub fields. From theory to empirical methods, from monetary economics to labour economics, from health economics to behavioral economics, and from international economics to urban and regional economics. Altogether, the works in these fields must be helpful to find some truths, either by offering answers or, importantly, posing good and challenging questions. Surely it may incur costs. One pundit ever says that “the price of being right is being wrong for a while”. In Samuelson’s famous quote: “Funeral by funeral, theory advances”.

• Economists have notion of sunk costs and opportunity costs. These notions have created some innovations, such as: EVA (Economic Value Added). In examining companies’ healthiness, the EVA approach has some advantages than standard financial ratios.

• Many fields are compatible with or have been inherent part of economics. To name a few, these include psychology, sociology, mathematics, physics, computer, biology, geography, and statistics. Gravity model in international economics comes from physics. The concept of agglomeration economies combines some notions from geography and sociology. Mathematics and statistics make possible for economics to quantify even the most abstract notions, so people can manage things better. Is’ it that right that one can’t manage well something that he/she can’t measure? With many allies in scientific world, economists' quest for truth is becoming easier.

• One of economists’ genuine talents is their ability to model the real world’s complexity. Supply-demand curve, indifferent curve, and Edgeworth Box are simple but powerful tools. People like Krugman are so good in modeling and understanding how things basically work in both mathematical and verbal, without being verbose, languages (Think of his seminal technical paper on increasing returns to scale or of his funny baby sitting coop analogy in explaining recession). Without basic understanding on how things actually work, we may go into wrong direction.