A Theoretician's Quarrel with Theory

Reviewed by Omer Moav

Economic Tales
by Ariel Rubinstein
Kinneret, Zmora-Bitan, Dvir, 2009, 206 pages, Hebrew.

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riel Rubinstein has been promoting a rather intriguing thesis for several years now: The academic discipline of economics is of absolutely no value in trying to make sense of reality. Given that Rubinstein himself is a professor of economics, not to mention a recipient of the Israel Prize and numerous other awards for his contributions to the field, we might find his claim surprising. And yet, according to his own testimony, he customarily begins lectures by insisting that, to the best of his knowledge,
There is nothing in economic theory that has anything at all to say about the core of the topic under discussion here. I am not certain that I know what an “option” is. I attempt neither to predict the rate of inflation tomorrow nor the productivity index of industry the day after. Of course, I am aware of the fact that you invited me to speak here because I am a professor of economics who is supposed to know all this; my ignorance indeed embarrasses me.
Listening to this, one might reasonably mistake his words for false modesty. But Rubinstein isn’t trying to win over his audience by a show of humility. Rather, he’s on the attack. Indeed, after admitting his ignorance in economic matters, he explains,
You will ask why I have come here. Because as an economic theoretician, I wish to make several points about the actual message of economic theory. Specifically, I have some reservations, to say the least, as to the manner in which economic theory is exploited in the public debate about economics.
Such is the tone of Rubinstein’s Economic Tales, published in 2009. In many ways, the book reflects its author’s winsome character: This is not a dense, humorless tome of the sort academics compose, but rather a highly readable, even amusing work that combines theoretical diagnoses with personal anecdotes. Here is a pleasant yet satisfying intellectual experience—one with the occasional glimpse into Rubinstein’s life to boot—alongside jargon-free explanations of game theory, the author’s field of expertise. Indeed, it is almost too easy to forget that Rubinstein is in fact drafting an indictment against the science of economics, or more precisely—against the use of the highly influential academic discipline to adorn economists with a halo of professionalism, and to advance policies that are not to his liking. Substantiating this controversial argument is Rubinstein’s aim—and one, it soon becomes clear, at which he fails utterly.

Omer Moav is a professor of economics at the Hebrew University of Jerusalem and at Royal Holloway, University of London.

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