Lars P. Syll

Validity is NOT enough Mainstream economics today is in the story-telling business whereby economic theorists create make-believe analogue models of the target system – usually conceived as the real economic system. This modeling activity is considered useful and essential. Since fully-fledged experiments on a societal scale as a rule are prohibitively expensive, ethically indefensible or unmanageable, economic theorists have to substitute experimenting with something else. To understand...

 [embedded content] And if you want to know more on science and inference, the one book you should read is Peter Lipton‘s Inference to the Best Explanation (2nd ed, Routledge, 2004). A truly great book. If you’re looking for a more comprehensive bibliography on Inference to the Best Explanation, “Lord Keynes” has a good one here. [And for those who read Swedish, I self-indulgently recommend this.]

Utility — an almost vacuous concept There is always a danger that, as you climb higher and higher, the principles become more and more general and harder and harder to translate into lower level operational principles … The economic notion of Utility looks dangerously general in the hands of, for example, Gary Becker. Becker won the Nobel Prize for modeling great swathes of what we do in day-to-day life under the principles of market equilibrium and rational choice theory, from drug...

Keeping one’s distance Only by the recognition of distance in our neighbour is strangeness alleviated: accepted into consciousness. The presumption of undiminished nearness present from the first, however, the flat denial of strangeness, does the other supreme wrong, virtually negates him as a particular human being and therefore the humanity in him, ‘counts him in,’ incorporates him in the inventory of property. Wherever immediateness posits and entrenches itself, the bad mediateness of...

Razor-sharp intellects immediately go for the essentials. They have no time for bullshit. And neither should we. In Evidence: For Policy Nancy Cartwright has assembled her papers on how better to use evidence from the sciences “to evaluate whether policies that have been tried have succeeded and to predict whether those we are thinking of trying will produce the outcomes we aim for.” Many of the collected papers center around what can and cannot be inferred from results in well-done...

Rational expectations — a theory without empirical content Cassidy: What about the rational-expectations hypothesis, the other big theory associated with modern Chicago? How does that stack up now? Heckman: I could tell you a story about my friend and colleague Milton Friedman. In the nineteen-seventies, we were sitting in the Ph.D. oral examination of a Chicago economist who has gone on to make his mark in the world. His thesis was on rational expectations. After he’d left, Friedman...

My first love (private)  [embedded content]

 [embedded content] Absolutely fabulous. This flashmob made my day!

Evidence-based theories and policies are highly valued nowadays. Randomization is supposed to control for bias from unknown confounders. The received opinion is that evidence based on randomized experiments therefore is the best. More and more economists have also lately come to advocate randomization as the principal method for ensuring being able to make valid causal inferences. I would however rather argue that randomization, just as econometrics, promises more than it can deliver,...

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....