5 Apr 2011

A thought on micro- and macro-errors

Microeconomics refers to individual behavior; macroeconomics refers to guesswork, deception and alchemy (just kidding!) the aggregate behavior of individuals.

From this, we can create a parallel typology of errors, i.e., micro errors come from misunderstanding how an individual behaves; macro errors comes from a misunderstanding of how individuals interact to produce an aggregate outcome.

Do you have any examples of where analysts/economists/pundits made micro/macro errors?