What Mark Thies (UCLA) wrote about the strengths and weaknesses of models is well-known among economists. We have the advantage, however, in that the implications of not adjusting in a market are felt much more quickly, and the standard sorts of shifts ("demand increases...") are not novel and so participants have some idea of how to adjust. Of course, for those economists interested in institutions (such as myself), it's much harder to build convincing models, or to test the ones we have. So we too spend time looking at the real world via case studies (my work in the auto industry) and the stories we spin tend to be "rich" (lots of non-economic elements).

>Date: Wed, 14 Jun 1995 15:10:29 -0700 (PDT) From: Michael Thies

>....Anyone who interprets new
>institutionalist hypotheses about the consequences of a change as basic as the
rules by which politicains get elected as implying immediate adjustment is
expecting too much; anyone who MAKES new institutionalist predictions about
immediate adjustment is just plain silly. So while current goings on are not a
proper test of predictions about long-term effects, Curtis is dead right: there
is no substitute for actually taking a look.

>It might sound like a cop out: empirical tests do not corroborate our
theoretically-derived predictions so we simply claim that the observed behavior
is "out-of-equilibrium." I prefer to think about it as identifying the strengths
and weaknesses of a particular approach to social science.

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Michael J. Smitka
Associate Professor of Economics
Washington and Lee University
Lexington, Virginia 24450 USA
(703) 463 - 8625 Tel & Voicemail
(703) 463 - 8639 Fax
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