One of the weak underbellies of neoclassical theory is of course the fact that, despite all efforts to estimate ‘revealed preference’, neoclassical economists have never succeeded in consistently estimating their core variables like ‘utility’, ‘the natural rate of interest’, ‘natural unemployment’ and the like. There is nothing neoclassical even close, or far, to the CRC handbook of chemistry and physics, the Diagnostic and statistical manual of mental disorders or, when it comes to macro-economics, the System of National Accounts. And no, that’s not a neoclassical manual. Economic statistics are chartalist to the bone (it’s about flows and stocks of state-defined money, not about utility), have a totally different concept of unemployment than the one embedded in neoclassical macro DSGE models, are estimated following a bottom up approach, i.e. based upon agent based data and do not assume rationality or ergodicity (the economic phrase for predestination). Gary Becker did not succeed in improving this situation. This does not directly disqualify him as an economist but the fact that he, despite this fact, continued to push and glorify his method is weird. He tried to use the concept of ‘utility’ to explain all kinds of behaviour but as he could not estimate ‘utility’ – he failed. Neoclassicals do use data – but have to take recourse to results of other branches of science and economics to be able to do this. There is no independent body of neoclassical empirics.
Real-World Economics Review Blog
Gary Becker, a one trick pony?Merijn Knibbe
