Before I read the article Richard mentions in Krugman – How Did Economists Get it So Wrong?, I post this rebuttal by Jane Smiley.

Jane Smiley is a Pulitzer Prize-winning novelist and essayist.  Lest you say, What does she know and how does that stack up against a Nobel Prize winning economist?, I’ll throw the following into the mix.

I have just started to read The Economic Naturalist’s Field Guide: Common Sense Principles for Troubled Times by Robert H. Frank.  This is a collection of his columns printed in the New York Times.  He starts off the introduction to the book with:

In an essay written in 1879, Francis Amasa Walker tried to explain why economists tend to be in bad odor amongst real people. Walker, who went on to become the first president of the American Economic Association, argued that it was partly because economists disregard the customs and beliefs that tie individuals to their occupations and locations and lead them to act in ways contrary to predictions of economic theory.

Lest you wonder if Robert Frank knows anything, here is his curriculum vitae from the back cover flap of his book:

Robert H. Frank is the Henrietta Johnson Louis Professor of Management and Professor of Economics at Cornell University’s Johnson Graduate School of Management and a regular economics columnists for the New York Times. His previous books include The Economic Naturalist, Falling Behind, The Winner-Take-All Society, Luxury Fever, and Principles of Economics (with Ben Bernanke).  Frank’s many awards include the Leontief Prize for Advancing the Frontiers of Economic Thought.

I am only up to page 27, but already his insights seem more on the mark than anything Krugman has ever written.  He is a devotee of the field of Behavioral Economics which attempts to take a realistic look at how people actually behave rather than how traditional economists thought that they ought to behave.

If you need further proof of the irrationality of homo econimicus, just think about the opponents of health care reform.