Tag Archives: Economics

In advanced economics the question would be: ‘What besides mathematics should be in an economics lecture?’ In physics the familiar spirit is Archimedes the experimenter. But in economics, as in mathematics itself, it is theorem-proving Euclid who paces the halls … Economics … has become a mathematical game. The science has been drained out of economics, replaced by a Nintendo game of assumption-making … Most thoughtful economists think that the games on the blackboard and the...

Putting sticky-price DSGE lipstick on the RBC pig ‘New Keynesian’ macroeconomists have for years been arguing (e.g. here) about the importance of the New Classical counter-revolution in economics. ‘Helping’ to change the way macroeconomics is done today — with rational expectations, Euler equations, intertemporal optimization and microfoundations — their main critique of New Classical macroeconomics is that it didn’t incorporate price stickiness into the...

Teaching of economics — captured by a small and dangerous sect The fallacy of composition basically consists of the false belief that the whole is nothing but the sum of its parts.  In the society and in the economy this is arguably not the case. An adequate analysis of society and economy a fortiori can’t proceed by just adding up the acts and decisions of individuals. The whole is more than a sum of parts. This fact shows up when...

Samuelson’s reconciliation of the micro-economic ideal type with involuntary unemployment was repudiated, along with Keynesian prescriptions, in favor of a view that there could be no involuntary unemployment , hence that government action was unnecessary. The result was a doctrinaire derivation of the laissez-faire conclusions that had been overturned by the formalist revolution; economics was now cleansed of Keynesian impurities that had been introduced in the interest of...

Guest post by Jeff Mosenkis of Innovations for Poverty Action If you haven’t seen it, it’s worth reading the article about star economist Roland Fryer’s sexual harassment. Here’s his response. At issue here is how easily academic structures put junior people at the mercy of senior ones. It’s not unique to economics – see psychology Antarctic geology, and the world’s top empathy researcher terrorizing the people who worked in her lab, among many others. Given how common we’re discovering this...

Well-regarded economics journals publishing rubbish In a new paper, Andrew Chang, an economist at the Federal Reserve and Phillip Li, an economist with the Office of the Comptroller of the Currency, describe their attempt to replicate 67 papers from 13 well-regarded economics journals … Their results? Just under half, 29 out of the remaining 59, of the papers could be qualitatively replicated (that is to say, their general findings held up, even if the...

At the University of Chicago, where I went to graduate school, they sell a t-shirt that says “that’s all well and good in practice, but how does it work in theory?” That ode to nerdiness in the ivory tower captures the state of knowledge about rising wealth inequality, both its causes and its consequences. Economic models of the distribution of wealth tend to assume that it is “stationary.” In other words, some people become wealthier and others become poorer, but as a whole...

When the herd turns  [embedded content]

The production function has been a powerful instrument of miseducation. The student of economic theory is taught to write Q = f(L, K) where L is a quantity of labor, K a quantity of capital and Q a rate of output of commodities. He is instructed to assume all workers alike, and to measure L in man-hours of labor; he is told something about the index-number problem in choosing a unit of output; and then he is hurried on to the next question, in the hope that he will forget to...

Brian Arthur and the ‘El Farol​ Problem’  [embedded content]