Thought Experiments in Economics

To an outsider, contemporary economics might seem like one big thought experiment. The perennial joke about three scientists stranded on a desert island, with only a can of food, and the economist naively offering the supposition of a can opener, captures well the proclivity of economists to enter into an imaginary world. Current economic discourse consists mostly of models, which in turn invoke stylized abstractions, idealizations, and ceteris paribus conditions. Moreover, economists privilege the inner working of the human mind. The reason markets purportedly work is because we can extrapolate to other minds and impute a similar instrumental rationality. For these reasons, one might expect enthusiastic appeals to the laboratory of the mind. I will argue here, however, that thought experiments, as distinct from models, are uncommon in economics, past or present. Paul Krugman (2011) has reached a similar verdict, although his definition of a thought experiment is broader than mine. ¹