Part 7/10:
One of the most alarming aspects discussed relates to the real-world consequences of sticking to outdated or flawed models. Cartik argues that the insularity and complexity rewarded in academia make economists prone to endorsing callous or misguided policies. For example, some models suggest that millions of jobs need to be sacrificed to curb inflation—a harsh outlook ignoring the nuanced realities of household expenses like rent, food, and debt payments.
These models often mistakenly assume that people’s discretionary spending halts when they lose their jobs, a clear departure from observed behavior. This disconnect can lead to policies that hurt the very populations they intend to help, illustrating how abstract theories can, in practice, cause real pain.