Dani Rodrik's Economics rules: the rights and wrongs of the dismal science. New York: W. W. Norton & Company, 2015, 272 pp.

Abstract

Review of Dani Rodrik's Economics rules: the rights and wrongs of the dismal science. New York: W. W. Norton & Company, 2015, 272 pp.In this review, I focus on issues that will interest philosophers of economics (for a more general review and a chapter by chapter guide to Economics rules, see Aydinonat 2015).There is a cartoon that pictures a man in bed with an economic model. reads: do it with models! Yes, in fact they do it with models. However, it is not entirely clear what they do with them and how. Dani Rodrik's Economics rules is an attempt to what good economists do with their models and maybe more importantly what they should not do with them.Economics rules is a work in philosophy of economics, written by a prominent economist. When economists enter the domain of philosophy of economics, they commonly overlook the work of professional philosophers of economics. is of course possible that they are not aware of the work of philosophers, but an equally likely reason for their lack of consideration is that they (probably) think that they have nothing to learn from philosophers concerning the nature of economics and economic models. They are economists after all! Nevertheless, many economists fail to give a satisfactory answer to an important question: How can economic models that contain highly unrealistic assumptions help us in explaining (and understanding) real world economic phenomena? This question is more difficult than it appears and it does not lend itself to a quick and easy answer. For example, arguing that the real world is complex and that we need simplifications does not constitute a full answer, neither does using the map analogy (i.e., models are like maps; they are useful because they simplify)!Dani Rodrik's Economics rules is distinct in its attempt to provide us with a full and satisfactory answer to the aforementioned question. True, he also uses the map analogy, but he does not leave it at that. Rather, he discusses the nature and significance of economic models in detail. Providing a wide variety of examples from economic theory and policy, he develops a new account of models and argues that the diversity of economic models is the key to solving the puzzle concerning the epistemic role of highly abstract models in economics. And a pleasant surprise for my fellow philosophers of economists: Rodrik-wait for it-utilizes philosophy of economics in his account of economic models.Rodrik's main aim in the book is to explain why economics sometimes gets it right and sometimes doesn't (p. 5). On the one hand, Rodrik defends economics against popular lines of criticism of economics; on the other, he criticizes some of the practices in economics. More appropriately, he defends economics against those people-economists as well as non-economists-who, according to Rodrik, misinterpret economic models. Doing this requires an account of models that can obliterate misunderstandings shared by some economists and many critics of economics. In Rodrik's account, common misunderstandings stem from the fact that both economists and non-economists sometimes mistake a model, with the model: They overlook the fact that economics is a collection of models and assume that the they happen to be confronted with is the only concerning the question at hand. is for this reason that critics fail to see how unrealistic models can contribute to our understanding. And for the same reason, economists (and policy makers) who think that the at hand will give them all the answers concerning the real-world problem they are facing are wrong. It is a model, not the model is the motto of Economics rules. In order to fully understand what it means, we need to take a look at Rodrik's account of models.Rodrik's account of models is similar to Uskali Maki's account in some respects. Rodrik believes that economists use the method of isolation (Maki 1992; Maki 2010) and echoes Maki (2005) in arguing that models are similar to experiments:1Many assumptions that go into economic models-perfect competition, perfect information, perfect foresight-are patently untrue. …