Lars P. Syll

The false analogy between private and public debt One of the most effective ways of clearing up this most serious of all semantic confusions is to point out that private debt differs from national debt in being external. It is owed by one person to others. That is what makes it burdensome. Because it is interpersonal the proper analogy is not to national debt but to international debt…. But this does not hold for national debt which is owed by the nation to citizens of the same nation....

Jag har rätt och du har fel! [embedded content] Äntligen någon som vågar tala klarspråk. Tack Hans Rosling! (h/t Ella Johansson)

Rational expectations — a monstrous assumption ‘Rational expectations’ remains for me a sort of monster living in a cave. I have never ventured into the cave to see what he is like, but I am always uneasily aware that he may come out and eat me. If you will allow me to stir the cauldron of mixed metaphors with a real flourish, I shall suggest that ‘rational expectations’ is neo-classical theory clutching at the last straw. Observable circumstances offer us suggestions as to what may be the...

 [embedded content] And don’t even for a second think it’s different in economics and other social sciences!

Why most published research is wrong  [embedded content]

Never Seek to Tell Thy Love  [embedded content]

Economics — a rogue branch of applied mathematics A lot of people complain about the math in economics. Economists tend to quietly dismiss such complaints as the sour-grapes protests of literary types who lack the talent or training to hack their way through systems of equations. But it isn’t just the mathematically illiterate who grouse. New York University economist Paul Romer — hardly a lightweight when it comes to equations — recently complained about how economists use math as a tool...

Mainstream economics is perfectly correct — and totally useless A balloonist, lost, sees someone walking down a country lane. The balloonist lowers the balloon and shouts down to the the walker: — Where am I? — About 20 feet above the ground, comes the reply. After a moment’s pondering, the balloonist says: — You must be an economist. — How did you know? — Your information is perfectly correct — and totally useless. Timothy Brennan

Brad DeLong is wrong on realism and inference to the best explanation Brad DeLong has a new post up where he gets critical about scientific realism and inference to the best explanation: Daniel Little: The Case for Realism in the Social Realm: “The case for scientific realism in the case of physics is a strong one… The theories… postulate unobservable entities, forces, and properties. These hypotheses… are not individually testable, because we cannot directly observe or measure the...

Unbiased econometric estimates? Forget it! Following our recent post on econometricians’ traditional privileging of unbiased estimates, there were a bunch of comments echoing the challenge of teaching this topic, as students as well as practitioners often seem to want the comfort of an absolute standard such as best linear unbiased estimate or whatever. Commenters also discussed the tradeoff between bias and variance, and the idea that unbiased estimates can overfit the data. I agree with...