Tag Archives: Economics

Pretending that the distribution of income and wealth that results from a long set of policy decisions is somehow the natural workings of the market is not a serious position. It might be politically convenient for conservatives who want to lock inequality in place. It is a more politically compelling position to argue that we should not interfere with market outcomes than to argue for a system that is deliberately structured to make some people very rich while leaving others...

On the limits of Adam Smith’s invisible hand [embedded content] It might look trivial at first sight, but what Harold Hotelling showed in his classic paper Stability in Competition (1929) was that there are cases when Adam Smith’s invisible hand doesn’t actually produce a social optimum. With the advent of neoclassical economics at the end of the 19th century, a large amount of intellectual energy was invested in trying to formalize the stringent conditions...

Adam Smith’s visible hand How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it. Of this kind is pity or compassion, the emotion which we feel for the misery of others, when we either see it, or are made to conceive it in a very lively manner. That we often derive...

Wenn ich 64 bin (personal)  [embedded content] div{float:left;margin-right:10px;} div.wpmrec2x div.u > div:nth-child(3n){margin-right:0px;} ]]> Advertisements

Guest post by Jeff Mosenkis of Innovations for Poverty Action. You might have heard that just giving the poor cash, no strings attached, is all the rage in the effective aid community. Some people have suggested that if organizations want to give (more expensive) in-kind aid (food, cattle), they should first show that it’s more effective than cash. Dev Patel just recirculated a relevant paper (summary here) from Cunha, De Giorgi, and Jayachandran, who tested giving cash vs. in-kind...

Guest post by Jeff Mosenkis of Innovations for Poverty Action. You might have heard that just giving the poor cash, no strings attached, is all the rage in the effective aid community. Some people have suggested that if organizations want to give (more expensive) in-kind aid (food, cattle), they should first show that it’s more effective than cash. Dev Patel just recirculated a relevant paper (summary here) from Cunha, De Giorgi, and Jayachandran, who tested giving cash vs. in-kind food aid...

Dutch books and money pumps Mainstream neoclassical economics nowadays usually assumes that agents that have to make choices under conditions of uncertainty behave according to Bayesian rules (preferably the ones axiomatized by Ramsey (1931), de Finetti (1937) or Savage (1954)) – that is, they maximize expected utility with respect to some subjective probability measure that is continually updated according to Bayes theorem. If not, they are supposed to be...

Important. I think Noah has this right. Fit the tool to the job, rather than the job to the tool. Aristotle defined speculative knowledge in terms of causal explanation. This definition stuck although Aristotle's analysis of causality did not. In the Posterior Analytics, Aristotle places the following crucial condition on proper knowledge: we think we have knowledge of a thing only when we have grasped its cause (APost. 71 b 9–11. Cf. APost. 94 a 20). That proper knowledge is knowledge...

Modern macroeconomics — totally messed up Until a few years ago, economists of all persuasions confidently proclaimed that the Great Depression would never recur. In a way, they were right. After the financial crisis of 2008 erupted, we got the Great Recession instead. Governments managed to limit the damage by pumping huge amounts of money into the global economy and slashing interest rates to near zero. But, having cut off the downward slide of 2008-2009,...

Economists — people being paid for telling stories justifying inequality If economics was an honest profession, economists would focus their efforts on documenting the waste associated with protectionist barriers for professionals. They devoted endless research studies to estimating the cost to consumers of tariffs on products like shoes and tires. It speaks to the incredible corruption of the economics profession that there are not hundreds of studies...