INCENTIVES AND THE ECONOMIC POINT OF VIEW: THE CASE OF POPULAR ECONOMICS

Matthew McCaffrey

Review of Social and Economic Issues, 2014, vol. 1, issue 1, 72-87

Abstract: This paper critically examines some underlying assumptions of the “popular” economics writing of recent years, e.g. the Freakonomics literature. I examine two problems that emerge from these writings. First, popular economics is myopic in that it views incentives as the fundamental economic concept. This focus can place misleading emphasis on only one relevant economic problem, while neglecting other important facts, such as (a) institutional arrangements that determine the pattern of incentives, and (b) economic laws that render the pattern irrelevant. Second, the literature includes hidden value judgments resulting from assumptions about incentives. As a result, economic analysis is sometimes falsely confused with ethics, or includes normative judgments not implied by economics proper. This problem in turn influences the portrayal of economics as a science.

Keywords: incentives; economic law; Freakonomics; value judgments (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (3)

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