Economists Too Linear?
In an essay on nonlinear thinking, I wonder if economists spend too much time studying calculus.
economists know that many of the processes that are important in our field, such as compound interest and economic growth, are nonlinear. But the economics curriculum in graduate school is focused on training students to make linear approximations. Studying economics at a leading graduate school involves loading techniques for linear approximations into your analytical tool kit. Naturally, these are the techniques that you use when you do professional research.
…Alan Blinder’s lament about the difficulty of picking up long term trends is a result of over-reliance on linear thinking. The trend that he was talking about was a pickup in the rate of economic growth. This pickup was best anticipated by a nonlinear thinker coming from outside the economics profession — Ray Kurzweil.
For Discussion. What are the risks and rewards of trying to forecast exponential trends?