## Book review: Cogs and Monsters: What Economics Is, and What It Should Be

## Source details

**Canonical URL:** [Book review: Cogs and Monsters: What Economics Is, and What It Should Be](https://www.imf.org/-/media/files/publications/fandd/article/2021/september/book-review-cogs-and-monsters-diane-coyle.pdf)

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### Course correction: context and central metaphor
- Timeframe and context:
  - "THE PAST TWO DECADES" have been disruptive for economics, marked by the global financial crisis (early 2000s) and COVID-19 (Just over a decade later).
- Central framing from the book:
  - "Cogs" represent flaws in standard economic models, notably the assumption of fully rational agents optimizing complex objective functions.
  - "Monsters" denote new and changing features of the global economy—uncharted territories that current economics struggles to navigate.

### Main criticisms of economics highlighted
- Stylized and overly abstract modeling:
  - Economic models are highly stylized; Coyle criticizes excessive "mathiness" that can obscure underlying assumptions.
  - Analogy: a London Underground map is useful for its purpose but is a poor depiction of London; similarly, models abstract reality.
- Proposed methodological shift:
  - Coyle suggests embracing "theoretical ad-hoc-ery"; the reviewer judges this solution unlikely to improve credibility.
- Specific conceptual critiques:
  - Critique of the Pareto criterion: Coyle laments its limited usefulness for policymaking, though the reviewer notes most economists do not rely on Pareto improvements alone and focus on compensation mechanisms for losers (example: trade liberalization).

### Problems within the profession
- Structural and cultural issues listed by Coyle:
  - Entrenched networks that can stifle fresh ideas.
  - An aggressive debating culture.
  - Lack of gender and racial diversity.
- Consequence:
  - The long list of professional shortcomings can crowd out attention to other substantive topics.

### Measurement and modeling challenges from the digital economy
- Coyle "convincingly outlines the difficulties the digital economy poses for the measurement of GDP and economic modeling."

### Noted omissions and pressing topics the book does not fully address
- Missing or underemphasized issues:
  - "What role can and should economic policy play in addressing climate change?"
  - "How can we make economic growth more inclusive?"
  - "What does increasing automation imply for the future of work?"

### Assessment and takeaway
- Overall appraisal:
  - Coyle separates genuine criticisms of economics from straw men, though the reviewer notes she builds some straw men of her own.
  - The book "persuasively highlighted several important issues the economics profession— in both academia and policy circles—should take to heart."
- Publication details preserved from source:
  - Diane Coyle, Cogs and Monsters: What Economics Is, and What It Should Be, Princeton University Press, Princeton, NJ, 272 pp., $24.95.

*MARTIN SCHINDLER, deputy division chief, IMF Institute for Capacity Development*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2021/september/book-review-cogs-and-monsters-diane-coyle.pdf_