Many academics have focused on building mathematically elegant, internally consistent models that bear little or no relation to what happens in the real world. Study the evidence, employ it to build testable theories of how the world works, then use them to inform actual policy — and always be ready to change theories that don’t match the facts. Left to their own devices, people and companies won’t produce enough new ideas, because they don’t get paid for all the society-wide benefits they generate. That’s why governments should encourage policies ranging from public investment in fundamental research to anti-trust enforcement designed to reduce barriers to economic change.