The Economist
EVERY January more than 10,000 economists meet for the annual conference of the American Economic Association (AEA). This year, the shindig was in balmy Chicago, a stone’s throw from its second-tallest building, the name TRUMP stamped in extra-large letters across its base. Most papers had been written months in advance; few sessions tackled the electoral earthquake in November. Yet there was no mistaking the renewed sense, following its failure to foresee the 2007-08 financial crisis, of an academic field in a crisis of its own. The election was seen as a defeat for liberalisation and globalisation, and hence for an economics profession that had championed them. If economists wish to remain relevant and useful, the modest hand-wringing at this year’s meetings will need to yield to much deeper self-reflection.
Their theories had always shown that globalisation would produce losers as well as winners. But too many economists worried that emphasising these costs might undermine support for liberal policies. A “circle the wagons” approach to criticism of globalisation weakened the case for mitigating policies that might have protected it from a Trumpian backlash. Perhaps the greatest omissions were the questions not asked at all. Most dismal scientists exclude politics from their models altogether. As Joseph Stiglitz, a Nobel laureate, put it on one star-studded AEA panel, economists need to pay attention not just to what is theoretically feasible but also to “what is likely to happen given how the political system works”......

It’s the politics, stupid
Many economists shy away from such questions, happy to treat politics, like physics, as something that is economically important but fundamentally the business of other fields. But when ignoring those fields makes economic-policy recommendations irrelevant, broadening the scope of inquiry within the profession becomes essential. Some justifiably worry that taking more account of politics could destroy what credibility economists have left as impartial, apolitical experts. Yet politics-free models are no insulation from political pressures—just ask a climate scientist—and nothing would boost economists’ reputations more than results which match, and even predict, critical outcomes.
Political and social institutions are much harder to model and quantify than commodity or labour markets. But a qualitative approach might actually be far more scientific than equations offering little guide to how the future will unfold. Donald Trump campaigned (and may well govern) by castigating the uselessness of experts. To prepare for a time when expertise comes back into fashion, economists should renew their commitment to generating knowledge that matters.

I often show this video at the start of my classes. BTW, Political Economy is at the root of the classical economics-  Smith (wrote The Theory of Moral Sentiments) and Ricardo and Malthus (whose adopted policies against the poor are a black mark on our science).

Vox
Albert Einstein was one of the most important physicists of all time. His scientific predictions have withstood 100 years of scientific challenges. His thinking fundamentally changed the way we understand the universe. Yet people are more likely to be convinced Einstein wasn’t a great physicist than to change their minds on topics like immigration or the death penalty.
It has nothing to do with a person’s intelligence (or the quality of information on Einstein or immigration policy). It’s due to the fact that we’re simply more open to changing our minds on nonpolitical topics. Scientists have been keen to figure out why — because if they can, it may open the door to the hardest challenge in politics right now: changing minds.

Psychologists have been circling around a possible reason political beliefs are so stubborn: Partisan identities get tied up in our personal identities. Which would mean that an attack on our strongly held beliefs is an attack on the self. And the brain is built to protect the self.

But these results are an intriguing step: The brain processes politically charged information (or information about strongly held beliefs) differently (and perhaps with more emotion) than it processes more mundane facts. It can help explain why attempts to correct misinformation can backfire completely, leaving people more convinced of their convictions.
The results also jibe with some of Kaplan and Harris’s past work on religious beliefs. “When we compared evaluating religious statements to nonreligious statements, we [found] some of the same brain regions that are active in the current study,” Kaplan said. Which makes sense, because religious beliefs also factor into our identities.
What the new study definitely doesn’t show is that “political beliefs are hardwired,” Kaplan says. We can change our minds. Reflecting on his work and his own experience, Kaplan says a good way to make facts matter is to remind people that who they are and what they believe are two separate things.

CPA Canada
Senior debt via CBC
Food banks in Alberta via CBC
Consumer bankruptcies on  the rise

Our conclusions include the following: Households’ perceptions are not responsive to signs indicating a possible deterioration in the economic environment; however, households are aware of their susceptibility to specific negative financial shocks. A number of recent developments suggest a possible deterioration of Canada’s economic prospects; those include the decline in international oil prices and Bank of Canada’s target interest rate. However, households outside Alberta did not view these changes as having the potential to affect their financial wellbeing: 
• Nearly half (49%) of households said these changes would not have a noticeable impact on their financial wellbeing over the next 12 months. 
• In total, 34% of households said the changes in oil prices and interest rates were likely to prompt them to decrease their current pace of savings, while 22% thought they were likely to borrow more than was initially planned as a result of the shift in economic conditions. 
• Further, households that reported having no wealth were much more likely to say that the changing economic environment would prompt them into more extensive borrowing and lesser effort of saving. While providing substantive insight into provincial or regional differences is difficult without a deeper level of data, it is clear from the survey results that households in Alberta are different than in the rest of the country, likely because Albertans will be more directly affected by the recent decline in oil prices. While only 16% of Canadians surveyed expected a negative change in their financial situation because of changes in the economic outlook, 34% of Albertans expected to be negatively affected by such change. 

Our primary finding is supported by evidence that the behaviour and attitudes of households has changed very little in the face of the change in economic outlook and the increased uncertainty since mid-2014. A comparison of the results from the two waves of CPA Canada’s Households Public Opinion survey—spring of 2014 and winter of 2015—suggests that households did not noticeably change their approach to managing finances in light of the shifting economic conditions and the attention drawn to those developments by various observers. By comparison, when asked how they would react to a specific, quantifiable economic shock, households showed both understanding and the willing to take appropriate financial measures to protect their wealth.



For example:
 • Seventy-nine per cent of mortgage holders agreed they would have to make adjustments to meet their mortgage obligations should their household income decline by 25% for at least three months. Forty per cent of mortgage holders said they would have to cut back on spending and the same percentage said they would have to use cash or money in savings accounts to ensure mortgage obligations were met. 

• All property owners felt that a 15% decline in housing prices would be associated with some negative consequences in addition to psychological discomfort. Twenty-four per cent of property owners said the decline in housing prices would reduce their retirement savings, while 21% thought they would have to cut spending. The perceived impact of the price decline was greater for non-retired households and those with lower levels of equity in their homes. 

While Canadian households rate themselves highly in terms of financial discipline, not many households are paying attention to signals of potential economic weakness and are taking measures that could help mitigate financial vulnerability. A total of 65% of Canadian households assessed the level of their financial discipline as somewhat or very strong. 

However: • Only 60% of households with debt said they paid off a portion of their outstanding debt on a regular basis (weekly, bi-weekly, monthly, etc.)

. Forty-one per cent of households with home equity lines of credit (HELOCs) did not make regular payments that covered both interest and principal to repay the outstanding balance. 

More than half (53%) of non-retired households said they did not save on a regular basis and 30% of households reported that they had no wealth.

 • Few households said they kept themselves well informed regarding the value of their wealth: 25% had either never calculated their wealth or last calculated it about a year or more ago; as many as 20% of those surveyed did not remember when their household last assessed the value of its wealth. 

• Few households monitored changes in external economic and regulatory conditions; 24% of households said they did not usually watch the key external factors that could affect their financial wellbeing. 

• A full 51% of non-retired households said they did not have a special reserve fund for unexpected financial emergencies. About a fifth of those who had such a fund said that the emergency savings would allow their household to cover regular expenses for no longer than four weeks. 

We all have the tendency to look for evidence that supports our  world view and dismiss items that run contrary. Here are a couple of posts by blogger Noahpinion, one on the general tendency for macro models/papers to have a conservative policy bias, the other a specific critique on the weak criticism by Tyler Cowen, of Marginal Revolution, on Keynesian economics.

As  to my own confirmation bias, I once again say that those cheerleaders for the  FED/ECB, US Economic recovery, and current valuations of the stock market are incredibly premature and most likely self-delusional.

Just saying its them -not me.