Addressing uncertainty in economics and the economy

Sheila Dow

Cambridge Journal of Economics, 2015, vol. 39, issue 1, 33-47

Abstract: This article explores the way society in general and economists in particular deal with fundamental uncertainty. It is argued that uncertainty is interdependent with the evolution of institutions and behaviour, including that designed to help society cope with uncertainty. Whilst some mainstream theory does address uncertainty, it employs a much narrower concept than fundamental uncertainty. Generally, in spite of the evident increase in fundamental uncertainty during the crisis, most mainstream theory ignores it. Although ignoring uncertainty can sometimes be a successful coping mechanism, it is argued that, as a blanket coping mechanism, ignoring uncertainty seriously limits the realism of theory and therefore also practice and policy. It is concluded that economists should embrace uncertainty by tailoring methodologies and theories to address it. This would provide a more fruitful basis for policy aimed at reducing uncertainty in the economy and also reducing our own uncertainty.

Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://hdl.handle.net/10.1093/cje/beu022 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:cambje:v:39:y:2015:i:1:p:33-47.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Cambridge Journal of Economics is currently edited by Jacqui Lagrue

More articles in Cambridge Journal of Economics from Cambridge Political Economy Society Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().