Lars P. Syll

Econometric causality and Simpson’s paradox Which causal relationships we see depend on which model we use and its conceptual/causal articulation; which model is bestdepends on our purposes and pragmatic interests. Take the case of Simpson’s paradox, which can be described as the situation in which conditional probabilities (often related to causal relations) are opposite for subpopulations than for the whole population. Let academic salaries be higher for...

Mainstream macro modeling — nothing but smoke and mirrors Those of us in the economics community who are impolite enough to dare question the preferred methods and models applied in mainstream macroeconomics, are as a rule met with disapproval. But although people seem to get very agitated and upset by the critique, defenders of ‘received theory’ always say that the critique is “nothing new”, that they have always been “well aware” of the problems, that...

So let’s say a woman faces discrimination by this definition – she loses out to a man with weaker credentials. “Loses out” itself is pretty vague and could reasonably be consistent with several different observed labor market outcomes, two of which are: Outcome A: She gets hired to the same job as the man but at lower pay, and Outcome B: She doesn’t get the job and instead takes her next best offer in a different occupation at lower pay. Let’s further say that she is paid her...

Halcyon days (Berlin 1988) Photo by Bengt Nilsson

Who do we trust? [h/t Edward Fullbrook]

Looking out my library window today — over the Magistrate’s Park and the Opera — the soft glowing twilight on the winter sky was pure magic. “A thing of beauty is a joy forever.”

I programmet Text och musik med Eric Schüldt — som sänds på söndagsförmiddagarna i P2 mellan klockan 11 och 12 — kan man lyssna på seriös musik och en programledare som verkligen har något att säga. En lisa för själen. Och något att se fram emot vecka efter vecka. [embedded content] [h/t Eric Schüldt]

Econ 101 theory of labour markets — not very scientific OK, so what are some empirical things we know about labor markets? Here are two stylized facts that, while not completely uncontroversial, are pretty one-sided in the literature: 1. A surge of immigration does not have a big immediate negative impact on wages. 2. Modest minimum wage hikes do not have a big immediate negative impact on employment. The first fact alone does not falsify the Econ 101...

Individuals, households and firms behave so irrationally and their behaviour in groups is so little understood that it is hard to think of an economic law with any claim to universality. This is a strong statement. If the statement is true, this is unfortunate, not only for its own sake, but also because of its consequences. Let me briefly discuss one consequence of a universal law. The example is a very famous one taken from physics, a discipline where everything is easier...

NAIRU — a false hypothesis The natural rate hypothesis (NRH) is the idea that unemployment has an inherent tendency to return to some special “natural rate” that is a property of the available technology for finding jobs. It is a fact of nature, a bit like the gravitational constant in celestial mechanics. The theory of the NRH natural rate hypothesis has been taught to every economist in every top economics department for the past thirty years. As part of...