Why Herbert Simon Matters for Policymaking
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The OECD created its New Approaches to Economic Challenges Initiative (NAEC) in 2012 to improve the understanding of the complex and interconnected nature of the global economy in order to provide better policy advice to the Organisation’s member governments. Contributors to NAEC call on Herbert Simon’s insights in their analyses of the economy in general as a complex system, and in particular when explaining the financial system and the dynamics of crises. In addition to underpinning much of the later work on complexity, Simon’s “bounded rationality” provides a strong critique of “modern” behavioural economics that remains in essence within the orthodox neoclassical framework of optimisation under constraints. Simon was prescient in tackling a number of issues that policymakers are now facing, including the role of expertise and populism in democratic systems; “ill-structured” problems such as climate change or trade protectionism; and how the information age would lead to a scarcity of attention. The OECD owes a particular debt to Herbert Simon because of his involvement in the Marshall Plan, in which the OECD had its origins.
KeywordsHerbert Simon Policy making Complexity Social media Behavioural economics OECD Financial crisis
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