Famous economists’ famous errors

Bob T., a loyal MR reader, asks the following:

10 (or more) most famous mistakes in economics.
Viner on costs and Feldstein on Social Security come to mind. Malthus? Not
talking about old vs. new economics, but simple analytical errors and bad

That’s a good start.  What else might be listed?  Just to circumvent various hobby horses in the comments section, let’s avoid Marx and Marxists, Keynes, and the last twenty years. 

1. Kenneth Arrow confusing risk subdivision and risk multiplication, in arguing that government should use a riskless rate of discount.

2. The Cambridge, Mass. economists having to admit, finally, that capital reswitching could be quite a general phenomenon (though is it, really?)

3. Ricardo’s prediction that most of national output would end up going to the landlords.

4. Paul Samuelson praising the economic performance of Soviet central planning in his Principles text.

5. 93 percent of all proclamations made about the demand for money in macroeconomics.

6. The more exaggerated claims about the Laffer Curve.

7. Various claims that the Fed should have let the money supply fall during the Great Depression.

8. Jevons’s claim that England (or was it the world?) would soon run out of coal.

9. Welfare analysis done in overlapping generations models (the standard welfare theorems do not generally hold in such models).

And dare I offer up a controversial pick:?

10. Those who think that the difference between "capital" and "ideas" in a Solow growth model is actually well-defined.

What else can you think of?


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