Even the great Irving Fisher was, at times, a lousy microeconomist.
"In an attempt to memorize poetry," Irving Fisher wrote in 1926, "Professor Vogt of the University of Christiana found that on days when he drank one and one-half to three glasses of beer it took him 18 per cent longer to learn the lines." To an extreme dry like Fisher--which is to say, to an extreme dry who also happened to be one of America's foremost economists--this was a "fact" to fall in love with. Fisher wasn't going to miss the chance to attribute the strength of the U.S. economy to computations made by Professor Vogt during his attempt to master the Odyssey, in Norwegian, while a little bit in the tank. He had made a similar calculation in 1919, when he extrapolated from a study showing, he said, that "two to four glasses of beer will reduce the output of typesetters by 8 per cent." From this he determined that withholding those beers from those typesetters, and from everyone else in the American labor force, "will add to the national output of the U.S. between 7 [and] 1/2 to 15 billion dollars' worth of product, every year."
Fisher seemed to find evidence for the wonders of Prohibition behind every statistic he encountered--for instance, the discovery, in 1924, that arrests in New York City for the use of "foul language" had dropped 20 percent since pre-Volstead levels. He was not inclined to consider other causes--like, possibly, a wider acceptance of profanity in the Jazz Age city--when he could grab a number and pronounce it evidence. When Fisher determined that a single drink reduced efficiency by 2 percent, he said that this translated to more than a billion dollars of GNP.
These two passages are from Last Call: The Rise and Fall of Prohibition by Daniel Okrent.
To get serious for a few moments, these passages above demonstrate that even the great Irving Fisher, whose fantastic book The Theory of Interest the late Jack Hirshleifer had us read my first year in graduate school at UCLA [I read 250 pages in one sitting, the only time I've done that with an economics book], could be a poor economist when he wanted to impose his own values on others.
Consider the first paragraph above. I trust that I don't need to explain why extrapolating from a group of typesetters to the whole labor force is, well, problematic. That's a simple statistical mistake.
But he also makes a fundamental microeconomic error that shows his inability or unwillingness to apply my Seventh Pillar of Economic Wisdom: the value of a good or service is subjective. Let's say it had been true that when people in the labor force drank, their productivity fell. So what? Most of them enjoyed it. When people played tennis, they weren't being productive either. But does that mean tennis should have been banned? Fisher fell victim to what I've called "GDP [GNP] fetishism."
Now consider the second quote above. Fisher fails to take account of substitution in enforcement. Throughout the book, Okrent lays out how enforcing Prohibition sucked resources away from other enforcement activities by local police. The most likely explanation for the decline in arrests for foul language is that police were busy enforcing Prohibition.
Postscript: I just realized that Okrent is the former ombudsman for the New York Times who, in a parting shot, was critical (and justifiably so) of Paul Krugman, Maureen Dowd, and the late William Safire.