This is the Cato Daily Podcast for Saturday, August 1st, 2020.

I'm Caleb Brown.

Many economists model people's behavior using idealized assumptions.

Economists of the Austrian school however don't.

The Austrian school takes people as they are and constructs economic theories by examining

the logical structure of the choices they make.

Steve Horwitz is author of the new volume for Libertarianism.org,

Austrian economics and introduction.

Economists make a lot of assumptions.

That's the core of economics. You could write a short joke book about economists and their assumptions,

Assume a latter, as they say.

Suma can't open it, another one of those, yeah.

But we, when people who frankly aren't,

don't know a lot about economics

come into criticize economists, They look at these assumptions of perfect

information, of all the various other assumptions that we make that everything

responds within a moment to any change in a marketplace and you can

freely enter and leave markets hundreds of times a day if you wanted to,

depending on where the prices are.

And people who aren't schooled in economics will approach that and say,

well that's garbage. And economists say, no, no, no, no, we relax those

assumptions and then we approach reality and we try to understand how the world is working using those assumptions as sort of a background helper to help us understand things.

...