Economists not only failed to anticipate the financial crisis; they may have contributed to it-with risk and derivatives models that, through spurious precision and untested theoretical assumptions, encouraged policy makers and market participants to see more stability and risk sharing than was actually present. Moreover, once the crisis occurred, it was met with incomprehension by most economists because of models that, on the one hand, downplay the possibility that economic actors may exhibit highly interactive behavior; and, on the other, assume that any homogeneity will involve economic actors sharing the economist's own putatively correct model of the economy, so that error can stem only from an

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Abstract:The economics profession appears to have been unaware of the long build-up to the current worldwide financial crisis and to have significantly underestimated its dimensions once it started to unfold. In our view, this lack of understanding is due to a misallocation of research efforts in economics. We trace the deeper roots of this failure to the profession's insistence on constructing models that, by design, disregard the key elements driving outcomes in real-world markets. The economics profession has failed in communicating the limitations, weaknesses, and even dangers of its preferred models to the public. This state of affairs makes clear the need for a major reorientation of focus in the research economists undertake, as well as for the establishment of an ethical code that would ask economists to understand and communicate the limitations and potential misuses of their models.

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The death toll of recent heat waves in developed countries has been remarkably high, contradicting the common assumption that high levels of economic and technological development automatically lead to lower vulnerability to weather extremes. Future climate change may further increase this vulnerability. In this article we examine some recent evidence of heat wave-related mortality and we conclude that while economic wealth and technological capacity might be a necessary condition for adequately coping with adverse climate change effects, they are not sufficient. Questions of awareness, preparedness, organizational issues, and actor networks have to be addressed in a proactive and focused manner in order to avoid future heat wave damages. We propose some practical consequences for heat wave adaptation measures by adopting a risk governance framework that can be universally applied, as it is sufficiently flexible to deal with the multi-level and often fragmented reality of existing coping measures.