The Evolution of Economics: Where We are and How We Got Here

Abstract

This paper suggests that contemporary economics is characterized by three key features. First, it is focused on 'big questions' in political economy and is willing to look outside economics to search for these questions and their answers. Second, contemporary economics is empirically focused. 'Grand theory' has taken a back seat to empirical explorations of institutions in particular. Third, modern economics has been dramatically influenced by 'freakonomics' - the application of economic principles to unusual and unorthodox topics - and is increasingly directed at a popular lay audience. We argue that these particular areas of modern economics’ evolution are not unrelated. The development of each key feature is connected to the others.