Thursday, February 19, 2009

Economists vs. Real People

This is an old joke, but I find it both useful and amusing:

A normal person walks down the street. He sees a $100 bill laying in the street, he picks it up and continues on his merry way. An economist who sees a $100 bill laying in the street continues to walk knowing full well that the market is efficient and if it truly was a $100 bill someone would already have picked it up...

In other words: not all experts know what they are talking about; and sometimes things are really what they seem (except for when they aren't, of course...).

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Anonymous said...

The joke is based on the strongest possible misinterpretation of the efficient market hypothesis. The more reasonable interpretation is that, while you may occasionally come across large bills lying in the street, you can't make a living by walking around looking for them. You'll find a lot more pennies that aren't worth bending over for.

Shadox said...

Yes. That's why it's a joke... :-)