Lars P. Syll

A man doesn’t live by rock ‘n’ roll and brew alone  [embedded content]

To a mainstream economist, theory means model, and model means ideas expressed in mathematical form … These models, students learn, are theory … Students also learn that the legitimate way to argue is with models and econometrically constructed forms of evidence … Because all models are incomplete, students also learn that no model is perfect. Indeed, students learn that it is bad manners to engage in excessive questioning of simplifying assumptions. Claiming that a model is deficient is...

Modern economics is sick Modern economics is sick. Economics has increasingly become an intellectual game played for its own sake and not for its practical consequences for understanding the economic world. Economists have converted the subject into a sort of social mathematics in which analytical rigour is everything and practical relevance is nothing. To pick up a copy of The American Economic Review or The Economic Journal these days is to wonder whether one has landed on a strange...

Who could be against allowing people their ‘just deserts?’ But there is that matter of what is ‘just.’ Most serious ethical thinkers distinguish between deservingness and happenstance. Deservingness has to be rigorously earned. You do not ‘deserve’ that part of your income that comes from your parents’ wealth or connections or, for that matter, their DNA. You may be born just plain gorgeous or smart or tall, and those characteristics add to the market value of your marginal product, but...

Experimentelle Ökonomik — Versuch auf der wissenschaftlichen Leiche zu leben In jedem Fall, gilt dass das Verhaltensmodell eines HOM (Homo oeconomicus) realwissenschaftlich widerlegt ist. Denn auch, wenn sich aufgrund der Systemeigenschaften ein Verhalten einstellen sollte, das so wirkt, als ob ein Homo oeconomicus im klassischen Sinne am Werk wäre, so steckt dieser gerade nicht dahinter. Selbst wenn die Beobachtungs-ergebnisse dem, was nach dem HOM ebenfalls zu erwarten gewesen wäre,...

Gerald Friedman vs. Romer & Romer The Romers critique of my work comes from this old, pre-Keynesian model where the economy tends towards full employment equilibrium and moves to full employment on its own without need for government intervention or stimulus … Government stimulus spending is only expected to slightly speed recovery, bringing the return of full employment forward by about 6 months. Without stimulus, the economy will return on its own to full employment at a capacity...

Economics textbooks and minimum wages Suppose worker productivity rises so that workers can produce more per hour, and this causes the value of production to rise … According to the textbooks, worker pay should rise to reflect this increase, but that is not what has happened in recent decades. Instead, the lion’s share of the additional revenue has gone to the owners and managers of firms instead of to workers. The working class has not been able to bargain effectively and capture its...

Krugman’s textbook — mistaking the map for the territory Paul Krugman has — together with Robin Wells — written an economics textbook that is used all over the world. As all the rest of mainstream economics textbooks, it stresses from the first pages the importance of supplying the student with a systematic way of thinking through economic problems with the help of simple models. Modeling is all about simplification … A model is a simplified representation of reality that is used to better...

Ceteris paribus — an alibi fairy When applying deductivist thinking to economics, mainstream economists usually set up ‘as if’ models based on a set of tight axiomatic assumptions from which consistent and precise inferences are made. The beauty of this procedure is of course that if the axiomatic premises are true, the conclusions necessarily follow. The snag is that if the models are to be relevant, we also have to argue that their precision and rigour still holds when they are applied to...

Economic modelers — in need of a code of conduct Auditors have a code of conduct because financial information is open to abuse and people rely on this information to make important decisions. Actuaries … have a code of conduct that includes context, basic rules and a declaration of fairness and accuracy. A consistent standard would be in the interest of the economic modelling industry and its reputation. We call on the government to develop a code of conduct to ensure the standard of all...