Keen (2020) is known for which central claim?

• A. It critiques neoclassical economics and argues models underestimate risks.
• B. It defends neoclassical models.
• C. It supports ignoring urgency.
• D. It claims climate economics is settled.

Answer: (A)

Keen’s main claim is that mainstream neoclassical economics relies on simplified models that downplay risk by ignoring debt dynamics, financial instability, and the non-linear feedbacks of real-world systems. He argues these models give a false sense of certainty about outcomes, assuming smooth paths to equilibrium and representative agents with perfect information, which leads to underestimating the likelihood and potential severity of crises. This perspective fits the option that Keen critiques neoclassical economics and argues that the models underestimate risk. The other statements miss his stance: defending neoclassical models contradicts his critique; suggesting we ignore urgency runs opposite to his emphasis on recognizing and addressing risk; and claiming climate economics is settled ignores his view that there are significant unresolved questions and uncertainties.