Lars P. Syll

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...

How not to be wrong What is 0.999 …, really? It appears to refer to a kind of sum: .9 + + 0.09 + 0.009 + 0.0009 + … But what does that mean? That pesky ellipsis is the real problem. There can be no controversy about what it means to add up two, or three, or a hundred numbers. But infinitely many? That’s a different story. In the real world, you can never have infinitely many heaps. What’s the numerical value of an infinite sum? It doesn’t have one — until...

Vad säger nationalekonomisk skolforskning om skolkonkurrens och friskolor? I morse satt den moderata politikern Kristina Axén Olin i snackesoffan i SVT:s Gomorron Sverige och hävdade — mot bakgrund av de i veckan redovisade svenska resultaten i TIMSS — att friskolorna varit “pådrivande” av utvecklingen av svensk skola. Nu brukar ju politiker haspla ur sig lite av varje utan att fundera så mycket över om de har fog för de kausala slutsatser de drar utifrån...

Keynes on the ‘devastating inconsistencies’ of econometrics In practice Prof. Tinbergen seems to be entirely indifferent whether or not his basic factors are independent of one another … But my mind goes back to the days when Mr. Yule sprang a mine under the contraptions of optimistic statisticians by his discovery of spurious correlation. In plain terms, it is evident that if what is really the same factor is appearing in several places under various...

Reading an applied econometrics paper could leave you with the impression that the economist (or any social science researcher) first formulated a theory, then built an empirical test based on the theory, then tested the theory. But in my experience what generally happens is more like the opposite: with some loose ideas in mind, the econometrician runs a lot of different regressions until they get something that looks plausible, then tries to fit it into a theory (existing or...

‘Teaching-to-the-test’ — fel väg framåt för svensk skola Det är värt att notera att kunskapsnedgången i de internationella undersökningarna överhuvudtaget inte avspeglas i resultaten på de nationella proven (jag är medveten om att axlarna i figuren nedan inte är optimalt skalade). En tolkning av detta är att undervisningen idag är så inriktad på proven att eleverna trots fallande underliggande kunskapsnivå ändå lyckas rätt hyfsat på dem. När eleverna ställs...

The results reported here suggest that an exam school education produces only scattered gains for applicants, even among students with baseline scores close to or above the mean in the target school. Because the exam school experience is associated with sharp increases in peer achievement, these results weigh against the importance of peer effects in the education production function … Of course, test scores and peer effects are only part of the exam school story. It may be...

[embedded content] [h/t Eric Schüldt]

The Economist — economics prone to fads and methodological crazes When a hot new tool arrives on the scene, it should extend the frontiers of economics and pull previously unanswerable questions within reach. What might seem faddish could in fact be economists piling in to help shed light on the discipline’s darkest corners. Some economists, however, argue that new methods also bring new dangers; rather than pushing economics forward, crazes can lead it...