How could economics not be behavioral? If it isn't behavioral, what the hell is it?
Charlie MungerRead
Economics profession, they've been - they've been confident in various formulas, but economics is not physics. The same formula that works in one decade doesn't work in the next. Economics is a difficult subject.
Interpretation
What this quote means
Economics is complex and ever-changing, unlike the consistent laws of physics.
Charlie Munger emphasizes the inherent unpredictability of economics, contrasting it with the more stable principles found in physics. He suggests that reliance on fixed formulas is misguided, as economic conditions and contexts evolve over time, requiring adaptability and critical thinking in the field.
Themes
EconomicsChangeComplexityFormulasAdaptability
In practice
Example use cases
During a seminar discussing economic fluctuations, one might quote Munger to illustrate the unpredictability of market behavior.
More from Charlie Munger
All quotes →The world of derivatives is full of holes that very few people are really aware of. It's like hydrogen and oxygen sitting on the corner waiting for a little flame.
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I believe in the discipline of mastering the best that other people have ever figured out. I don't believe in just sitting down and trying to dream it all up yourself. Nobody's that smart.
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Economics is in many respects the queen of the soft sciences. It's expected to be better than the rest. It's my view that economics is better at the multi-disciplinary stuff than the rest of the soft science. And it's also my view that it's still lousy.
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Look at this generation, with all of its electronic devices and multitasking. I will confidently predict less success than Warren, who just focused on reading.
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As I talk about strengths and weaknesses in academic economics, one interesting fact you are entitled to know is that I never took a course in economics. And with this striking lack of credentials, you may wonder why I have the chutzpah to be up here giving this talk. The answer is I have a black belt in chutzpah. I was born with it.
Charlie MungerRead
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