Tag Archives: Economics

David Freedman — uncovering where the statistical skeletons are buried Invariance assumptions need to be made in order to draw causal conclusions from non-experimental data: parameters are invariant to interventions, and so are errors or their distributions. Exogeneity is another concern. In a real example, as opposed to a hypothetical, real questions would have to be asked about these assumptions. Why are the equations “structural,” in the sense that the...

Tony Lawson — en presentation En av de ledande metodologerna inom den ekonomiska vetenskapen i dag heter Tony Lawson. Denne engelske ekonom har i flera böcker på djupet undersökt och kritiserat de vetenskapsteoretiska och metodologiska fundamenten för den moderna nationalekonomin. Ekonomer uppvisar ofta ett svalt intresse inte bara för det egna ämnets idéhistoria, utan också för vetenskapsteoretiska reflektioner kring förutsättningarna för och antagandena...

Conventional thinking about financial markets begins with the idea that security prices always accurately reflect all available information; it ends with the belief that price changes come about only when there is new information. Markets are supposed to reflect new information quickly and efficiently, albeit with a few anomalies. In 2007, I interviewed over 50 investment managers mainly in New York, Boston, London, and Edinburgh. Talking to them I came to the conclusion that...

Mainstream macro modeling — nothing but smoke and mirrors Those of us in the economics community who are impolite enough to dare question the preferred methods and models applied in mainstream macroeconomics, are as a rule met with disapproval. But although people seem to get very agitated and upset by the critique, defenders of ‘received theory’ always say that the critique is “nothing new”, that they have always been “well aware” of the problems, that...

So let’s say a woman faces discrimination by this definition – she loses out to a man with weaker credentials. “Loses out” itself is pretty vague and could reasonably be consistent with several different observed labor market outcomes, two of which are: Outcome A: She gets hired to the same job as the man but at lower pay, and Outcome B: She doesn’t get the job and instead takes her next best offer in a different occupation at lower pay. Let’s further say that she is paid her...

Econ 101 theory of labour markets — not very scientific OK, so what are some empirical things we know about labor markets? Here are two stylized facts that, while not completely uncontroversial, are pretty one-sided in the literature: 1. A surge of immigration does not have a big immediate negative impact on wages. 2. Modest minimum wage hikes do not have a big immediate negative impact on employment. The first fact alone does not falsify the Econ 101...

NAIRU — a false hypothesis The natural rate hypothesis (NRH) is the idea that unemployment has an inherent tendency to return to some special “natural rate” that is a property of the available technology for finding jobs. It is a fact of nature, a bit like the gravitational constant in celestial mechanics. The theory of the NRH natural rate hypothesis has been taught to every economist in every top economics department for the past thirty years. As part of...

Reading an applied econometrics paper could leave you with the impression that the economist (or any social science researcher) first formulated a theory, then built an empirical test based on the theory, then tested the theory. But in my experience what generally happens is more like the opposite: with some loose ideas in mind, the econometrician runs a lot of different regressions until they get something that looks plausible, then tries to fit it into a theory (existing or...

The Economist — economics prone to fads and methodological crazes When a hot new tool arrives on the scene, it should extend the frontiers of economics and pull previously unanswerable questions within reach. What might seem faddish could in fact be economists piling in to help shed light on the discipline’s darkest corners. Some economists, however, argue that new methods also bring new dangers; rather than pushing economics forward, crazes can lead it...

Om ekonomiskt vetande — Fronesis nr 54-55 Efter den globala finanskrisen 2008 har den ekonomiska vetenskapen hamnat i blickfånget. Studentrörelser och heterodoxa ekonomer har kritiserat det dominerande ekonomiska paradigmet och krävt ökad pluralism. Den senaste tidens politiska utveckling har blottat nyliberalismens brister och aktualiserat frågan om dess koppling till den ekonomiska vetenskapen. I Fronesis nr 54–55 fördjupar vi oss i det ekonomiska...