"Smith makes a lot of assumptions about human nature. He says that we have a natural propensity to truck, barter, and exchange, that we are naturally self-interested, and that we are naturally fairly equal in abilities. We learned yesterday that he also thinks humans have a natural preference for the country and for agriculture.
Although his model is non-technical, these are still modeling assumptions. How do these assumptions compare to the assumptions about economic agents today? Why are they different (in other words, what's different about the way our models work that leads us to keep some of Smith's assumptions and drop others)?"Thoughts?
The first three, put together, give us a lot of Adam Smith. The fourth assumption is more relevant for his growth theory in Book III and some of his commentary on policy. That's not as relevant for our models, but what's interesting to me is that we've dropped several of the first three assumptions too, but we've managed to get similar outcomes by adding others.