Economyths: Ten Ways Economics Gets It Wrong - Hardcover

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David Orrell is an applied mathematician and author of popular science books. He studies mathematics at the University of Alberta, and obtained his Ph.D. from Oxford University on the prediction of nonlinear systems. His work in applied mathematics and complex systems research has since led him to diverse areas such as weather forecasting, economics, and cancer biology.

His books Apollo's Arrow: The Science of Prediction and the Future of Everything (published in the US as The Future of Everything: The Science of Prediction), and The Other Side of the Coin: The Emerging Vision of Economics and Our Place in The World, have appeared on local and national bestseller lists in Canada. He has also published scientific research papers for peer-reviewed journals on topics ranging from systems biology (in Nature Genetics) to systems economics (International Journal of Forecasting).

Orrell has been a guest on national shows including Coast to Coast AM, NPR, BBC radio, and CBC TV, and his work has been featured in print media such as New Scientist, World Finance,   Adbuster, and the Financial Times. He lives in Oxford, England, with his wife and daughter. Keep up with David online at www.davidorrel.com and www.facebook.com/economyths

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"This is without doubt the best book I've read this year, and probably one of the most important books I've ever read This ought to be a real game changer of a book. Read it."
Brain Clegg, author of Before the Big Bang: The Prehistory of Our Universe, writing at popularscience.co.uk

From the failure of wealth to make us happier, to the world's catastrophic blindness in the lead-up to the credit crunch, Economyths reveals ten ways in which economics has failed us all.

Forecasters predicted a prosperous year in 2008 for financial markets in one influential survey the average prediction was for an eleven percent gain. But by the end of the year major economies were plunging into the worst recession since the Great Depression. In 2010, they still haven t fully recovered.

An even bigger casualty was the credibility of economics, which for decades has claimed that the economy is a rational, stable, efficient machine, governed by well-understood laws. If all this were true, how could the world's most brilliant and talented financial prognosticators get it so wrong? Why couldn t our elaborate economic theories predict or prevent this enormous financial crisis from happening?

Mathematician David Orrell explores these provocative questions and more. Tracing the history of economics from its roots in ancient Greece to the financial centres of London and New York, he reveals ten distinct ways in which it is mistaken and proposes intriguing, and sometimes controversial, new alternatives.

An unapologetic critic of economic theory, Orrell explains how the economy is the result of complex ad unpredictable processes; how risk models go astray; why the economy is not rational or fair; why until very recently no woman had ever won the Nobel Prize for economics; why financial crashes are less Black Swans than part of the landscape; and finally, how new ideas in mathematics, psychology, and environmentalism are helping to reinvent economics.

Orrell deftly translates the arcane language of economic theory into a relevant, contrarian, and compelling exploration of the emotional subject of money. Economyths is a fascinating and elegantly written inquiry into the flaws in our conventional economic models, how they got us into so much trouble, and alternatives that could revolutionize the way we think about the economy.

Aus dem Klappentext

From the Introduction:

The main problem with our economic system is not that it is hard to predict, but that, despite its enormous productivity and creativity, it appears to be in a state of ill health. The economy is unfair, unstable, and unsustainable. But theory has no way of dealing with these issues.

The economy if unfair. Economic theory is supposed to be about optimizing the allocation of resources. However, the reality is that the rich really do get richer. In 2009 one hedge fund manager earned over $2 billion, while over a billion people earned less than $1 a day. That s a strange way to allocate resources.

The economy is unstable. According to theory, the invisible hand should keep asset prices at gold, and hard currencies are subject to enormous gyrations. In later 2007 the price of oil surged to over $140 a barrel, then plunged to under $40, all in the space of a few months. Oil is often called the lifeblood of the economy, but our blood supply is much better regulated. For a while it seemed the economy was having a cardiac event.

The economy is unsustainable. According to theory, the economy can grow forever without encountering limits. The reality is that we are bumping up against hard constraints due to things life over-crowding, climate change, and environmental degradation. As environmentalists point out, never-ending growth is the philosophy of a cancer cell.

Together, these problems far exceed the importance of an event like the credit crunch. The debt that the global economy is building up with the environment, or the debt of rich countries to poor countries, is of much greater concern than the debt of banks to governments or shareholders. Indeed, it may turn out that this crisis was a blessing in disguise, if it provides the impetus for us to rethink our approach to money.