Real-World Economics Review

from Lars Syll Since econometrics doesn’t content itself with only making optimal predictions, but also aspires to explain things in terms of causes and effects, econometricians need loads of assumptions — most important of these are additivity and linearity. Important, simply because if they are not true, your model is invalid and descriptively incorrect.  And when the model is wrong — well, then it’s wrong. The assumption of additivity and linearity means that the outcome variable is,...

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...

from Lars Syll In the postwar period, it has become increasingly clear that economic growth has not only brought greater prosperity. The other side of growth, in the form of pollution, contamination, wastage of resources, and climate change, has emerged as perhaps the greatest challenge of our time. Against the mainstream theory’s view on the economy as a balanced and harmonious system, where growth and the environment go hand in hand, ecological economists object that it can rather be...

from Blair Fix In The Growth of Hierarchy and the Death of the Free Market, I argued that economic development involves killing the free market. What was the evidence? As energy use increases, so does the relative number of managers. This growth of managers, I argued, indicates that economic development involves the growth of hierarchy. I showed that a simple model of hierarchy could explain why the number of managers increases with energy use. To get a sense for this model, try the app...

from Lars Syll Some go so far as to insist that development interventions should be subjected to the same kind of randomised control trials used in medicine, with “treatment” groups assessed against control groups. Such trials are being rolled out to evaluate the impact of a wide variety of projects – everything from water purification tablets to microcredit schemes, financial literacy classes to teachers’ performance bonuses … The real problem with the “aid effectiveness” craze is that...

from David Ruccio I cringe when I listen to or watch these interviews. But here it is, with the Real News Network. The interview was based on my recent blog post, “Economics of poverty, or the poverty of economics.” [embedded content] I also want to recommend a recent piece by Ingrid Harvold Kvangraven [ht: ms], who argues that The interventions considered by the Nobel laureates tend to be removed from analyses of power and wider social change. In fact, the Nobel committee specifically...

Going Digital What is the Future of Business and Labour? A conference from the WEA 11th November to 9th December, 2019 visit conference website contacts: Maria Alejandra Madi: [email protected] Małgorzata Dereniowska: [email protected]

from Lars Syll Do you believe that 10 to 20% of the decline in crime in the 1990s was caused by an increase in abortions in the 1970s? Or that the murder rate would have increased by 250% since 1974 if the United States had not built so many new prisons? Did you believe predictions that the welfare reform of the 1990s would force 1,100,000 children into poverty? If you were misled by any of these studies, you may have fallen for a pernicious form of junk science: the use of mathematical...

Scientific economics needs more memes: short statements which capture the imagination and stick to the mind of lay people as well as economists. One of the well known memes of classical and neoclassical economics is the definition of money: Money is: * A means of exchange * A store of value * A unit of account As such, it’s not bad. But it’s incomplete. The unit of account and the means of exchange do not have to be the same thing. In the olden days, in the Dutch Republic (as well as...

from Blair Fix Hello, my name is Blair Fix. I’m a recovering academic writer. Let me explain. I’m convinced that a major part of grad school is learning to decipher academic prose. Let’s face it — academic writing is usually bad. It’s dense. It’s jargon filled. It’s often monotonous. In short, academic writing begs the reader not to read it. So a big part of grad school is learning how to read prose that was designed not to be read. This takes great effort and a healthy dose of masochism....