Oliver Hart and Bengt Holmström are the winners. Congratulations, it was a well deserved honor. Kevin Bryan has a long, informative post on Holmström. I am looking forward to his forthcoming post on Hart. ADDITION: here is Kevin Bryan’s long, informative post on Hart.

Paul Romer, from whom I had the privilege to receive instruction in the first semester of my PhD studies, and who has gone on to great things, sees trouble in the way mainstream macroeconomics is done. He has been writing about this in various ways for a while, notably when he introduced the notion of “mathiness” (search for the term on this very blog to see what I had to say about it). His diagnosis about the trouble with macroeconomics, which is quite convincing to me, is here.

This essay by Alison Schrager caught my attention this morning, appropriately for Labor Day. I recommend reading it. It may also make me try to read the new book by Joel Mokyr she mentions, but perhaps this will have to wait for when new technology will give me a few more hours in a day.

Economics is criticized heavily for its simplistic modeling of human behavior and its overemphasis on the “miracles” competitive markets are supposed to perform. Judging from the typical introductory economics textbooks, I feel that there is plenty of room for an alternative presentation that puts at the center social cooperation, trust, collective goods, and the norms that support all these, before even discussing supply, demand, and the efficient allocation of resources. The presentation would then continue with standard economics topics, but with clear indications of the power AND limitations of each economic theory. Interactive examples should ideally be provided and comments by readers allowed.

I have started such a project which will be available online once completed. I will occasionally write update reports by posting on this blog.

In this post, Sumit Mishra discusses incentives. He offers links to research on incentives that show time and again that monetary incentives can backfire. Economists need to heed this advice, which they often honor on the breach. Here is a pithy quote from the last paragraph, but I do recommend reading the entire post.

Research shows that an optimal mix of monetary and non-financial incentives can be effective in designing public programmes. Non-financial rewards can help whenever paying cash doesn’t work. Identifying which one of these works remains a challenge, though.

Michael Strain says that even economists are incorrectly negative on the typical economics 101 course. To his rah-rah argument, I only have the time and inclination to say right now: the ceteris paribus (all other things constant) foundation of demand and supply, as presented in introductory economics, is false all too often, therefore “demand” and “supply” curves are meaningless. Discuss.

We do need to improve how we teach economics, and to improve economics itself. But I think more serious consideration of networks, instead of markets, and the overall economy, in some sort of general equilibrium way, along with evolutionary arguments, are much more promising avenues to get on than becoming yet more “parrots who say supply and demand all the time”, to paraphrase an epigraph I recall from an introductory textbook by Paul Samuelson, which I read several decades ago.