Justin Wolpers at Freakonomics is optimistic on the long-term health of macroeconomic modeling… if it captures psychology of behavior and differences between individuals (i.e., behavioral economics and segmentation).
As a whole, the economics profession has become more empirically grounded. New large datasets offer the prospect of truly understanding individual behavior in a way that paying lip service to “micro-founded models” doesn’t. Many are engaged in the tricky business of writing more psychologically grounded models that are closely tied to real human behavior. Computational advances allow us now to take differences in people, and how they respond, far more seriously.
(Note: this entry originally appeared at consumerology.com)
