Lunchtime Must Read: Robert Lucas Rejects the “Microfoundational” Project

Robert Lucas’s rejection of the very idea of microfoundations:

…say, 280 million people are going to respond if you change something in the tax structure, something in the inflation rate, or whatever…. Neurophysiology is exciting, cognitive psychology is interesting… Freudian psychology…. Kahnemann and Tversky haven’t even gotten to two people; they can’t even tell us anything interesting about how a couple that’s been married for ten years splits or makes decisions about what city to live in–let alone 250 million. This is like saying that we ought to build it up from knowledge of molecules or–no, that won’t do either, because there are a lot of subatomic particles…. We’re not going to build up useful economics… starting from individuals…. Behavioral economics should be on the reading list…. But to think of it as an alternative to what macroeconomics or public finance people are doing or trying to do… there’s a lot of stuff that we’d like to improve–it’s not going to come from behavioral economics… at least in my lifetime…”