from Lars Syll How, then, can social scientists best make inferences about causal effects? One option is true experimentation … Random assignment ensures that any differences in outcomes between the groups are due either to chance error or to the causal effect … If the experiment were to be repeated over and over, the groups would not differ, on average, in the values of potential confounders. Thus, the average of the average difference of group outcomes, across these many experiments,...
Read More »Beating up on finance
from Dean Baker When I do one of my diatribes about how our protectionist barriers allow U.S. doctors to earn twice as much as doctors in other wealthy countries, I invariably get complaints from doctors and their friends asking why I don’t go after the really big bucks people on Wall Street. The answer of course is that I do, but the bloated paychecks on Wall Street are not a reason to pay an extra $100 billion a year ($750 per household) to doctors in the United States. But it is true...
Read More »Causality and analysis of variation
from Lars Syll Modern econometrics is fundamentally based on assuming — usually without any explicit justification — that we can gain causal knowledge by considering independent variables that may have an impact on the variation of a dependent variable. This is however, far from self-evident. Often the fundamental causes are constant forces that are not amenable to the kind of analysis econometrics supplies us with. As Stanley Lieberson has it in Making It Count: One can always say...
Read More »Economics as moral philosophy
from Asad Zaman Among the many dimensions I have listed in “New Directions in Macroeconomics”, the most important is the moral dimension. If we take Adam Smith as the founder, economics was born as a branch of moral philosophy. However, modern economists claim that the subject is purely positive and scientific, and makes no value judgments. Before we can discuss moral dimensions of economic theories, we must counter this claim, and establish that, contrary to claims made by economists,...
Read More »Testing game theory
from Lars Syll The “prisoner’s dilemma” is a familiar concept to just about everyone who took Econ 101 … Yet no one’s ever actually run the experiment on real prisoners before, until two University of Hamburg economists tried it out in a recent study comparing the behavior of inmates and students. Surprisingly, for the classic version of the game, prisoners were far more cooperative than expected. Menusch Khadjavi and Andreas Lange put the famous game to the test for the first time ever,...
Read More »Hidden Horsepower Episode 18 – Dean Baker
Dean Baker from JGRMX joins Joe and Lake on this episode of Hidden Horsepower. They discuss the transition from 2 cycle engines to 4 cycles, and the talk turns to wet clutches, cams and more.
Read More »As we exhaust our oil, it will get cheaper but less affordable
from Blair Fix It was a bet heard around the world. Okay, that’s an exaggeration. It was a bet heard mostly by academics and sustainability buffs. But still, it was a bet … and it was important. The year was 1980. The players were biologist Paul Ehrlich and business professor Julian Simon. The two had conflicting ideas about where humanity was headed. Ehrlich, the author of the 1968 book The Population Bomb, thought humanity was headed for a Malthusian catastrophe. Simon thought the...
Read More »Complexity Economics
from Asad Zaman Classical Physics, the model for modern economics, was based on the ideas of stability and permanence of astronomical orbits; see Mirowski (1992). Deeper examination of astrophysics led to the replacement of this view by big bang which gave birth to the universe, and increasing entropy, which will lead to its heat death. “Equilibrium” just appears as a temporary and local phenomenon in an evolving and chaotic universe. Complexity economics takes non-equilibrium seriously....
Read More »Historic Perplexity
from Peter Radford A week or so ago I wrote that I was in the midst of reading Robert Skidelsky’s book “What’s Wrong With Economics”. His account is complete and balanced, he clearly has a great deal of respect for the discipline, but his critique is well worthwhile the time it takes to read. At the end the reader might well ask what is left of the mainstream line of theorizing after all the holes Skidelsky punches through it. The problem that many of us might have is that this ground...
Read More »More bad news about the Pandemic Recession: Longer hours
from Dean Baker We know that the economy is likely to get worse in the immediate future as the pandemic is spreading out of control in most parts of the country. However, the latest data on average weekly hours indicates we may be facing a longer-term issue that has not generally been anticipated. In a normal recession, we see both a loss of jobs and a reduction in hours for those who managed to keep their jobs. The shortening of hours is a better way for employers to deal with reduced...
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