Inverse Thinking in Economic Theory: A Radical Approach to Economic Thinking

TL;DR

This paper proposes a radical inverse thinking approach to economic theory, emphasizing the importance of inverse problems over traditional optimization to address current economic crises and promote stability.

Contribution

It introduces an innovative inverse thinking framework that challenges conventional economic assumptions like optimality and stability, offering a multidisciplinary perspective.

Findings

Inverse problems are central to addressing economic crises.

The approach offers a new platform for multidisciplinary economic analysis.

Provides insights for economic and financial stability policies.

Abstract

The seriousness of the current crisis urgently demands new economic thinking that breaks the austerity vs. deficit spending circle in economic policy. The core tenet of the paper is that the most important problems that natural and social science are facing today are inverse problems, and that a new approach that goes beyond optimization is necessary. The approach presented here is radical in the sense that identifies the roots in key assumptions in economic theory such as optimal behavior and stability to provide an inverse thinking perspective to economic modeling of use in economic and financial stability policy. The inverse problem provides a truly multidisciplinary platform where related problems from different disciplines can be studied under a common approach with comparable results.