Young Economists on the Future of Economics
Specifically, the tools of economics will continue to evolve and become more empirical. Economic theory will become a tool we use to structure our investigation of the data. Equally, economics is not the only social science engaged in this race: our friends in political science and sociology use similar tools; computer scientists are grappling with “big data” and machine learning; and statisticians are developing new tools. Whichever field adapts best will win. I think it will be economics. And so economists will continue to broaden the substantive areas we study.
And here’s NYU economist Xavier Gabaix on an alternative to the the rational-actor model:
The most central open question in economic theory, as I see it, is how to model realistic economic agents. Traditionally, economists have relied on the rational-actor model, but it is clear that it is just a rough caricature. It has been greatly enriched by behavioral economics in the past 30 years. Still, we are far from a unified, versatile, believable alternative to the rational-actor model. I am hopeful, though, that this might be overcome—in part because of progress in the sister disciplines (psychology and neuroscience) and basic modeling, and also because empirical anomalies are forcing the economic profession to be more open-minded. Contributions by computer scientists and physicists will help inject new perspectives into economics.