Despite general agreement on the academic theory behind economics, the implementation of those findings into society usually leads to disagreement. There are simply too many variables within a society to achieve a consensus. So with the unpredictable nature of individuals, how can economists even begin to predict the results of their theories?
Milton Friedman reflects on his process, “What we insist on is that you’re not able to predict random, irrational behavior. And therefore, the only kind of behavior that you can hope to predict is behavior that has some regularity. One individual may behave any way at all. But we’re not really concerned with individual behavior. That’s the role of the psychologist or of the physician. We’re concerned with group behavior. And if I take a lot of people many of them may behave in all sorts of crazy ways. But the group as a whole, the common tendency, the thing that’s going to come out of it is something which will be as if it were rational behavior.”
Find out more about why economic theories differ so much with economists Milton Friedman and Walter Heller in the latest episode of the Free To Choose Media Podcast.