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The Larry Summers Problem

Summary:
The Larry Summers Problem Economists too often deceive themselves and their audiences into believing they know more than it is possible to know. As keepers of this Secret Knowledge, economists are rewarded in compensation, prestige, and influence for their expertise. At a 1991 speech at a World Bank-International Monetary Fund meeting, the famed Larry Summers told an audience, “The laws of economics, it’s often forgotten, are like the laws of engineering … There’s only one set of laws and they work everywhere.” He added, “One of the things I’ve learnt in my short time at the World Bank is that whenever anybody says, “but economics works differently here, they’re about to say something dumb” … The Larry Summers Problem arises when one assumes that being

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The Larry Summers Problem

The Larry Summers ProblemEconomists too often deceive themselves and their audiences into believing they know more than it is possible to know. As keepers of this Secret Knowledge, economists are rewarded in compensation, prestige, and influence for their expertise. At a 1991 speech at a World Bank-International Monetary Fund meeting, the famed Larry Summers told an audience, “The laws of economics, it’s often forgotten, are like the laws of engineering … There’s only one set of laws and they work everywhere.” He added, “One of the things I’ve learnt in my short time at the World Bank is that whenever anybody says, “but economics works differently here, they’re about to say something dumb” …

The Larry Summers Problem arises when one assumes that being the smartest person in the room by one’s own estimation implies being adequate to the task at hand — that knowing more means knowing enough.

Lars Pålsson Syll
Professor at Malmö University. Primary research interest - the philosophy, history and methodology of economics.

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