I find it frustratingly difficult to evaluate which claims economists make actually have empirical backing and which don’t. This certainly isn’t the first thing I’ve read that suggests that the field has a real problem with believing theory over facts.

For the workers who are curious why their wages have not increased in the past decade – while the incomes of some, such as footballers, have soared – the Bank of England’s website has a reassuring message: ‘There is a method to this madness: the economic theory of supply and demand’. The bank’s website provides an ‘idiot’s guide’ to the economy that explains how ‘Supply and demand is a bit like an economist’s version of the law of gravity. It decides how much everything costs: a cup of coffee, a house and even your salary.’

The US Federal Reserve Bank provides similar explainers for Americans who want to understand how their country’s wealth is created or allocated, including a colourful downloadable infographic that shows how higher prices create additional supplies of goods, and lower prices create additional demand. On its website, the International Monetary Fund notes that supply, demand and price are ‘magic words’ that make the economist’s ‘heart beat faster’.

For the economists in the neoclassical tradition, as most are, the world can be understood as a series of supply-and-demand curves – the X-shaped graphs that Alfred Marshall first made for his book Principles of Economics (1890) and that now litter almost every chapter of almost every economics textbook. Humans might be occasionally irrational but, en masse, orthodox economics says they respond to prices in a consistent and proportional way. People have what economists call ‘price elasticities’ that make their behaviour predictable and open to manipulation.

[…]This neoclassical perspective is widely, although not uniformly, accepted by world political leaders. It informs and underpins policies on taxation, spending, labour market regulation, health, the environment and more.

The problem, and a key reason why economic policy often fails, is that, while Isaac Newton’s law of gravity can predict behaviour at all times anywhere on this planet, these and other supposed economic laws often fail.

https://aeon.co/essays/economics-is-once-again-becoming-a-worldly-science