From ivory tower to economic pedestal

Think philosophy and Wall Street are worlds apart? Think again.

A University of Otago philosophy professor has captured the attention of some of the world's leading financiers with his thinking on economic issues.

Professor Alan Musgrave has leaped to international acclaim after an article he wrote 20 years ago was described as "a classic" in authoritative US business magazine Barron's.

It said the article - "Unreal assumptions in economic theory" - was a must-read for economists and financiers.

Since then the professor has received a host of requests for a copy of his article.

Although a little bemused by all the attention, Musgrave said the reaction to his theories showed that, far from being airy fairy, philosophy could be applied to almost any situation in a useful and constructive way.

"I'm very surprised at all the attention the article has received but it proves that the study of philosophy is not such an ivory tower," he said.

"The article discusses the way in which economists make unreal assumptions about the world and the results that this can have. I was trying to show what's really going on in the world of economics.

"For instance, the assumption that consumers have perfect knowledge of goods and services (one that economists often make) is simply not true in the real world."

Michael Petrucelli, a vice-president of global investment bank Lehman Brothers and one of those who sought the article, said it provided great food for thought.

"The article is an excellent tool for economists as it allows us to review how economic assumptions might affect a theory, and a possible outcome."