The efficient-market hypothesis has survived thousands of studies without consensus

Evidence

There is an old joke, widely told among economists, about an economist strolling down the street with a companion when they come upon a 100 bill lying on the ground. As the companion reaches down to pick it up, the economist says, “Don’t bother—if it were a real 100 bill, someone would have already picked it up.” This humorous example of economic logic gone awry strikes dangerously close to home for students of the Efficient Markets Hypothesis, one of the most important controversial and well-studied propositions in all the social sciences. It is disarmingly simple to state, has far-reaching consequences for academic pursuits and business practice, and yet is surprisingly resilient to empirical proof or refutation. Even after three decades of research and literally thousands of journal articles, economists have not yet reached a consensus about whether markets—particularly financial markets—are efficient or not. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 751

Categorization

• XREF: Connects to the broader theme of how the EMH’s survival post-2008 despite ridicule fits Mirowski’s thought-collective thesis, and to the ‘don’t bother, someone would have picked it up’ joke’s recurrence in finance literature. — connects to: The efficient-markets hypothesis simultaneously justifies state failure and enabled the financial crisis — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 150; The efficient-markets hypothesis erased discussion of bubbles and speculation — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 749; The efficient market hypothesis survived every empirical refutation and became finance orthodoxy — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 758 (+3 more)
• SHARE: The $100 bill joke is a good one to send to anyone who studies markets or economics nerdom.

Broader Connections

• The efficient market hypothesis survived every empirical refutation and became finance orthodoxy #corroborates (0.85) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 758
• The Efficient Market Hypothesis resists empirical falsification through the protective shield of auxiliary hypotheses #expands (0.78) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 753
• Market actions based on efficient-market models can create anomalies those models cannot explain #expands (0.72) — Donald MacKenzie, An Engine, Not a Camera, 1166
• Informed trading undermines the existence of competitive equilibrium #corroborates (0.72) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 769