What are the limitations of economic thinking?

Answer 1

The biggest limitation is in the current academic environment.

Empirical work and behavioral micro (topics that are relevant to the real world) are not as prized as theoretical mathematical work.

Answer 2

Generally people that complain about the limits of economics are talking about the limits of a free enterprize system to deliver social goods. But that is really just an example of the primary flaw of socialism, not a flaw in economics. The flaw being that if something is free to you (somebody else pays for it), there is nothing to limit your demand for it.

The problem with economics education is that the subject is so simple it is boring. As a consequence the vast majority of the unwashed masses don't bother to learn it. Otherwise they would realise that free enterprise is the best system satisfying the needs of individual people.

Answer 3

Economic theory is based on a set of assumptions that don't match reality very well. It's good for a limited set of questions, but not much beyond that.

Two important assumptions that spring to mind are
1) No externalities from consumption or production. In other words, if you produce a product, all the costs of production are borne by the producer -- no pollution, for example. No such product exists.
2) The initial distribution of resources is given. In other words, we get an "efficient" outcome from the markets, even if most of the resources (land, capital) are concentrated in the hands of a few, and most people are poor because they own only their own labour.

Answer 4

Do you want that in dollars, pounds, euros or some other currency?

Answer 5

irrational behavior