Real-World Economics Review

from Michael Joffe If you are interested in “creating greater economic equality, reducing the power of corporations” and so on, you have to understand how economic power works. I am using “power” here not as an ideological category, but in the sense of causation, the degree of one’s ability to bring something about. It is obvious that in the economy, some people and some organisations (e.g. firms) have more influence than others. What they want to happen is more likely to happen. This is...

Going Digital: What is the Future of Business and Labour? Discussion Forum extended to December 16th by Malgorzata Dereniowska We are delighted to inform that the Discussion Forum for the WEA Conference Going Digital: What is the Future of Business and Labour? has been extended to 16th December, 2019.  Join us to discuss recent contributions to the understanding of digital economy and its consequences for business trends and labour challenges! All papers are available HERE. You...

from Lars Syll Uber has conducted a study of internal pay differentials between men and women, which they describe as “gender blind” … The study found a 7% pay gap in favor of men. They present their findings as proof that there are issues unrelated to gender that impact driver pay. They quantify the reasons for the gap as follows: Where: 20% is due to where people choose to drive (routes/neighborhoods). Experience: 30% is due to experience … Speed: 50% was due to speed, they claim that...

from Lars Syll Axioms of ‘internal consistency’ of choice, such as the weak and the strong axioms of revealed preference … are often used in decision theory, micro-economics, game theory, social choice theory, and in related disciplines … Can a set of choices really be seen as consistent or inconsistent on purely internal grounds, without bringing in something external to choice, such as the underlying objectives or values that are pursued or acknowledged by choice? … The presumption of...

from Asad Zaman In this sequence of posts, I will go through a recent paper of mine, which explains that BOTH of the currently dominant approaches to probability are deeply, fundamentally, and irreparably flawed. The reason for this is that probability is a real-world phenomenon which is unobservable and unmeasurable. The early 20th Century foundations for probability were built at a time when logical positivism was dominant as the philosophy of science. Furthermore, despite its...

from Dean Baker Economists are continually developing new statistical techniques, at least some of which are useful for analyzing data in ways that allow us to learn new things about the world. While developing these new techniques can often be complicated, there are many simple things about the world that economists tend to overlook. The most important example here is the housing bubble in the last decade. It didn’t require any complicated statistical techniques to recognize that house...

from Lars Syll The other day, on my way home on the train after having attended an economics conference, yours truly tried to beguile the way by listening to a podcast of EconTalk where Garett Jones of George Mason University talked with EconTalk host Russ Roberts about the ideas of Irving Fisher on debt and deflation. Jones’s thoughts on Fisher were thought-provoking and interesting, but in the middle of the discussion Roberts started to ask questions on the relation between Fisher’s...

from Peter Soderbaum There is a tendency in mainstream neoclassical economics to claim value-neutrality. Economics is believed to be close to natural sciences where the scholar is standing outside observing what goes on in the economy. It is believed that experiments can meaningfully be carried out to arrive at “evidence-based” results. There is a focus on markets and markets are understood in terms of supply and demand as mechanistic forces. While reference to more than one perspective...

from Blair Fix Let’s talk sustainability. Unless you’re an anti-science crank, you probably agree that we’ve got a problem with carbon emissions. We need to drastically cut emissions to avoid catastrophic climate change. On this we should all agree. The question that’s open for debate is how to cut emissions. I think we actually know very little about how do to this. But even worse than knowing little is thinking we know a lot when we don’t. As the old saying goes, “It ain’t what you...