It is […] interesting to note a peculiar tendency among many economic theorists. A theorist will sweat long and hard on a problem, finally achieving a new insight previously unknown to economists. The theorist then assumes that the agents in a theoretical model act as if they also understood this new insight. In assuming that the agents in the economy intuitively grasp what it took so long to work out, the theorist is either showing uncharacteristic modesty and generosity, or is guilty of ascribing too much rationality to the agents in his model.

I have also no difficulties saying that my welfare level is positive, zero, or negative. When I am neither enjoying nor suffering, my welfare is zero. Thus, the value of my welfare is a fully cardinal quantity unique up to a proportionate transformation. I am also sure that I am not bestowed by God or evolution to have this special ability of perceiving the full cardinality (both intensity and the origin) of both my welfare and preference levels. In fact, from my daily experience, observation, and conversation, I know that all people (including ordinalist economists) have this ability, except that economists heavily brainwashed by ordinalism deny it despite actually possessing it. This denial is quite incredible. If your preference is really purely ordinal, you can only say that you prefer your present situation (A) to that plus an ant bite (B) and also prefer the latter to being bodily thrown into a pool of sulphuric acid (C). You cannot say that your preference of A over B is less than your preference of B over C. Can you really believe that!

When Robert Barro and I were at a conference together years ago, I said that the difference between our models was that he assumed that the agents in his model were as smart as he was, and I assumed they were as dumb as I am. Barro agreed.

A leader of still another type might be mentioned here, Carlyle. For economists he is one of the most important and most characteristic figures in the cultural panorama of that epoch—standing in heroic pose, hurling scorn at the materialistic littleness of his age, cracking a whip with which to flay, among other things, our Dismal Science. This is how he saw himself and how his time saw and loved to see him. Completely incapable of understanding the meaning of a theorem, overlooking the fact that all science is ‘dismal’ to the artist, he thought he had got hold of the right boy to whip. A large part of the public applauded, and so did some economists who understood no more than he did what a ‘science’ is and does.

Economic science […], if it be a science, differs from other sciences in this, that there is no inevitable advance from less to greater certainty; there is no ruthless tracking down of truth which, once unbared, shall be truth to all times to the complete confusion of any contrary doctrine.

Early in life I had three ambitions: to be the greatest economist in the world, the greatest horseman in Austria, and the best lover in Vienna.

[S]ome companies have scarcity power and can set prices that are far above their true cost, which is where they would be in a competitive market. This is why economists believe there’s an important difference between being in favour of markets and being in favour of business, especially particular businesses. A politician who is in favour of markets believes in the importance of competition and wants to prevent businesses from getting too much scarcity power. A politician who’s too influenced by corporate lobbyists will do exactly the opposite.

[T]he gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our passion nor our devotion to our country.

It measures everything, in short, except that which makes life worthwhile. And it can tell us everything about America—except why we are proud that we are Americans.

Nearly all modern economic theories of politics begin by assuming that the typical citizen understands economics and votes accordingly—at least on average. […] In stark contrast, introductory economics courses still tacitly assume that students arrive with biased beliefs, and try to set them straight, leading to better policy. […]

What a striking situation: As researchers, economists do not mention systematically biased economic beliefs; as teachers, they take their existence for granted.