Real-World Economics Review

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,...

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.

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...

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....

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...

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...

December 17th, 1940-November 23rd, 2020

from Lars Syll Page after page of professional economic journals are filled with mathematical formulas leading the reader from sets of more or less plausible but entirely arbitrary assumptions to precisely stated but irrelevant theoretical conclusions … Year after year economic theorists continue to produce scores of mathematical models and to explore in great detail their formal properties; and the econometricians fit algebraic functions of all possible shapes to essentially the same...

from Dean Baker It’s good to see the New York Times making the case for higher wages in an editorial. Unfortunately, they get much of the story confused. First off, the essence of the case is that higher wages will lead to more consumption, which will spur growth. This is true, but higher pay is not the only way to generate more demand. We also get more demand with larger budget deficits, lower interest rates, and a smaller trade deficit. But that is the less important problem with the...

Richard Dean Baker - Dec. 17th, 1940-Nov. 23rd, 2020