I read recently about Nobel Prize winner Daniel Kahneman’s ‘theory induced blindness‘ that suggests that often our theories of how the world works, blind us to how the world really works. For some reason, I can’t find an original source for Kahneman saying this, but it seems pretty much in line with his wisdom on other matters.
So here is my list of theory induced blindness that currently damages our ability to handle problems:
- Free market economics, which suggests free markets are like gravity, a law of nature, rather than something that by definition needs rules and regulations of it isn’t a market
- Rational economic man/woman theories, which suggest we behave rationally in line with economic theory, when clearly we often don’t
- Climate change denial: to accept the data would mean accepting solutions you don’t like, so the theory is that its a liberal conspiracy
- You can fix the US deficit without raising taxes (No one that I know of thinks you can fix it without cutting spending). I guess this is a spin off from the famous Laffer curve of the Reagan era that said that cutting tax rates raised revenue.
- You can predict the Stock Market and stock picking mutual funds can do better than the market (70% don’t in a given year and the 25% that does better changes each year)
- And I am sure my examples demonstrate I suffer from this too, but I do like this slogan from a mug for Economists: