What Do Economists Know?

Abstract

Editor’s Introduction Originally published in Volume 39, Number 1, Spring 1995, pages 20-22. Thomas Schelling (born 1921) shared the 2005 Nobel Prize in Economic Sciences with Robert Auman for their work analyzing conflict and cooperation using methods derived from game theory. Throughout his career, Professor Schelling has been integrally involved with the problems of international arms control – from both the academic perspective as a researcher and writer, and from the practical perspective as an advisor and consultant for diplomats and policymakers. His influence during the Cold War reached into American popular culture as he was consulted by Stanley Kubrick prior to the making of his classic film, Dr. Strangelove, or How I Learned to Stop Worrying and Love the Bomb. Professor Schelling’s first paper in this journal, “Economic Reasoning and Military Science,” appeared in 1960. This short paper, prepared thirty-five years later, presents Professor Schelling’s Commencement remarks to the Department of Economics at the University of California at Berkeley (his undergraduate alma mater) ten years before he received the Nobel. As the title reflects, the author seeks to identify a few of the basic truths that economists know about the world, even though these truths may not be intuitively obvious at first glance. Professor Schelling limits himself to five such truths, and they all turn out to be accounting identities.