Lars P. Syll

Causal interaction and external validity As yours truly has repeatedly argued on this blog, randomized control trials (RCTs) usually do not provide evidence that their results are exportable to other target systems. The almost religious belief with which its propagators portray it, cannot hide the fact that RCTs cannot be taken for granted to give generalizable results. Randomized evaluations have become widespread in development economics in recent...

Laplace and the principle of insufficient reason (wonkish) After their first night in paradise, and having seen the sun rise in the morning, Adam and Eve were wondering if they were to experience another sunrise or not. Given the rather restricted sample of sunrises experienced, what could they expect? According to Laplace’s rule of succession, the probability of an event E happening after it has occurred n times is p(E|n) = (n+1)/(n+2). The probabilities...

The Grace of Undómiel  [embedded content] Advertisements

The gross substitution axiom Economics is perhaps more than any other social science model-oriented. There are many reasons for this — the history of the discipline, having ideals coming from the natural sciences (especially physics), the search for universality (explaining as much as possible with as little as possible), rigour, precision, etc. Mainstream economists want to explain social phenomena, structures and patterns, based on the assumption that the...

How to cope with the behavioural challenge How would you react if a renowned physicist, say, ​Richard Feynman, was telling you that sometimes force is proportional to acceleration and at other times it is proportional to acceleration squared? I guess you would be unimpressed. But actually, what most mainstream economists do amounts to the same strange thing when it comes to theory development and model modification. In mainstream economic theory,​...

Alan Kirman on why modern economics is of so little use  [embedded content] Almost a century and a half after Léon Walras founded general equilibrium theory, economists still have not been able to show that markets lead economies to equilibria. We do know that — under very restrictive assumptions — equilibria do exist, are unique and are Pareto-efficient. But what good does that do? As long as we cannot show that there are convincing reasons to suppose...

Profitfri skola? Ja tack! Som diskuterats tidigare kommer utförarens drivkrafter att spela en betydande roll för den verksamhet som bedrivs och det är svårt att via regelverket förhindra att utförarens motiv kan dra i en oönskad riktning … Exempelvis finns det anledning att ifrågasätta om de incitament till kostnadsminimering som vinstmotivet ger upphov till verkligen är lämpliga i skolan. Det helhetsansvar och den budget för en elev som en skola har för...

After the crisis — business as usual In contrast to the experience of the Great Depression, which led to the emergence and acceptance of novel theoretical concepts on a large scale, the financial crisis and its consequences have, by and large, been rationalized with reference to existing theoretical concepts. Although we do observe a slight shift away from the idea that financial markets are efficient by default and prices only follow random walks, the...

When did you last hear an economist​ say something like this? If the observations of the red shift in the spectra of massive stars don’t come out quantitatively​ in accordance with the principles of general relativity, then my theory will be dust and ashes. Albert Einstein (1920) Advertisements

The Gambler’s Ruin (wonkish)  [embedded content] [In case you’re curious what happens if you start out with $25 but we change the probabilities — from 0.50, 0.50 into e. g. 0.49, 0.51 — you can check this out easily with e.g. Gretl:matrix B = {1,0,0,0; 0.51,0,0.49,0;0,0.51,0,0.49;0,0,0,1} matrix v25 = {0,1,0,0} matrix X = v25*B^50 X which gives X = 0.68 0.00 0.00 0.32] Advertisements