Every time I see the word.
From the Harvard Business Review:
Economics is due for a paradigm shift. That’s the argument of British money manager George Cooper’s very interesting if less-than-felicitously titled new book, Money, Blood and Revolution: How Darwin and the Doctor of King Charles I Could Turn Economics Into a Science. It is also, to be fair, something economists have been talking about for decades. Yet it keeps not happening. Why is that?HT: Abnormal Returns
The idea of a paradigm shift comes from Thomas Kuhn’s 1962 book The Structure of Scientific Revolutions. Kuhn, a physicist turned philosopher of science, had spent a year in the late 1950s at the then-new Center for Advanced Study in the Behavioral Sciences at Stanford and been struck by how the assembled psychologists, economists, historians, sociologists, and the like often disagreed over the very fundamentals of their disciplines. Physicists, in his experience, didn’t do that. This wasn’t because they were any smarter than social scientists, Kuhn concluded. It was because they had found a paradigm within which to work. (Ethics alert: this account is shamelessly self-plagiarized from something I wrote a few years ago.)
A Kuhnian paradigm is a set of assumptions that allows scientists in a particular field to avoid time-wasting arguments over the basics and spend their days solving small but useful puzzles. Scientific assumptions are never perfect mirrors of reality, though (“all models are wrong; but some are useful”). When evidence piles up that contradicts the paradigm, a science sometimes needs to go through the painful process of a paradigm shift.
Just as Kuhn was writing this, economics was finally settling into what looked like a scientific paradigm, in which mathematical models built around rational agents trying to maximize something called utility were presumed capable of answering all the questions that needed to be answered. Financial economics adopted its own, narrower paradigm, in which the starting point was that the prices prevailing on financial markets were more or less correct (a belief that in those days went under the name Efficient Market Hypothesis, although the EMH is for the most part understood to mean something much narrower now).
The economists did this quite self-consciously — they’d all read Kuhn, or were at least familiar with his thesis, and cited him frequently in the 1960s and 1970s. The most famous assertion of the then-reigning hubris of financial economics, Michael Jensen’s “I believe there is no other proposition in economics which has more solid empirical evidence supporting it than the Efficient Market Hypothesis,”...MORE
I won't tell you about the Igor and Abnormal tic.
