This is a GREAT clip, contains some deep questions, and was a lot of fun to make. JF starts by asking why Voltaire’s “Candide” is one of Doug’s favourite economics books of all time and why he assigns it for his students to read ! Voltaire is mocking the intellects who started our discipline, the very idea of an “invisible” hand made famous by Adam Smith. Doug is unique among economists at confronting head on the implications of the economic view of the world – behaviour, institutions, conventions, are , in the model of human behaviour that defines economics, constrained efficient…so in the model, we all live in the best of all possible worlds given the constraints. The Panglossian dilemma. Dr Pangloss rules OK – or does he? Most economists simply ignore the implications here, others (e.g. moi, Milgrom and Roberts) recognize them but can’t stomach it. But Doug quite persuasively argues that the opposite point of view, espoused in the huge literature of market failures and social welfare economics – and some parts of behavioural economics – is really intellectual arrogance. We, economists, will tell others who are doing the best they can with what they’ve got that, well, they’re not? We may not understand their behaviour (yet), we may not like or condone that behaviour, but we view it as a maximizing solution to a problem that individual or group is facing and need to dig deeper to understand what is their problem what is their solution – not our problem with our solution which we would like them to implement. But we dig deeper with maximizing models, not by abandoning maximizing models.