Economics: increasingly irrelevant?

**An air of excitement, perhaps optimism filled the Ramphal foyer minutes before the Warwick Economics Summit was due to start. Thousands of miles travelled by students and speakers alike, months of preparation and anticipation for what is guaranteed to be one of the best academic events on any campus.**

By Sunday afternoon, however, these students wouldn’t have been blamed for questioning the credibility of the subject that has long enticed them. Behold, the three-day economics onslaught.

Little time was wasted before the bashing began. First up: behavioural economist Rory Sutherland and his discussion on how assumptions – “deranged” assumptions, to be precise – of perfect rationality are ill-fitted to a world full of illogical behaviour. The reasoning is that decisions, he argues, are made heuristically. In other words, humans are not born with perfect rationality; we learn instead by trial and error, using ‘a rule-of-thumb’ as we go. As he acknowledged, spotting the flaws of economic models is one thing, but redesigning them is a different matter altogether: “it is simply impossible to predict human behaviour 100%”, not helped by the fact that “emotion has no numerical expression”, meaning economic models, it seems, are destined for inaccuracy.

‘A physicist, a chemist, and an economist are shipwrecked on a desert island with only a can of beans to eat and no way to open it. The economist: “the solution is simple. First, we assume we have a can opener…”‘. Jokes like these, which manifest the flaws of economics, will not be subsiding any time soon.

Star-speaker Vince Cable commenced with an ironic tone, enlightening listeners on how Warwick University used to be ‘anti-business’ in the 1960s with students actually boycotting Warwick Business School. How times have changed. And the same could be said for the global economy – so much so that Cable argued John Keynes’ theories of economic crises are outdated in relation to the 2008 financial crisis. The Lib Dem instead argues for ‘a collective explanation’, drawing on the theories of major economists Keynes, Minsky and Friedman. Likewise, the economics schools we have “grown up with” are apparently “irrelevant” to today’s more complex economic shocks. Yet, he did concede that economics has “a lot to teach us”, before ending on the issue of the global shortage of, not economists, but engineers. Too late to change degree?

Lastly, a deeply engaging talk from Saudi Arabian Reem Asaad; perhaps what you’d expect from the 3rd most powerful Arab in the world. The talk was centralised on the subjugating role and position of women in the Arab world, mostly due to the failure of economic mechanisms to overcome strong political barriers. Overall, only one in ten women are employed, representing an extortionate waste of resources and deep oppression in these countries. Yet, unlike the previous two talks, a sense of optimism was offered. Of a survey asking Arabian women what would encourage them to work in the retail sector, over a third believed an awareness campaign would make the greatest difference. With the powerful tool of social media under our belts, Reem doesn’t believe it will be too long before women realise the gains they desire, and deserve.

If one message came out of this year’s economics summit, it was that the study of economics is still too much of an ideal, failing to integrate into the real world. Whilst providing an interesting weekend, it perhaps didn’t leave the room full of potential future economists feeling completely optimistic about their future. Whether or not next year’s summit will offer some more buoyancy is anyone’s guess.