Tag Archives: Economics

Ekonomistudier leder till ökad korruption Orsakerna till korruption är mångahanda men ett överraskande resultat är att befolkningen i länder med svårartad korruption ingalunda internaliserar detta beteende som en del av sin kultur. Tvärtom tar de i allmänhet starkt avstånd från sådant beteende och de inser också att korruption svårt skadar deras samhällen. Anledningen till att de deltar i denna verksamhet är att de inte uppfattar att de har något egentligt val. Det nyttar föga att vara den...

Mainstream economics and the perils of simplicity Mainstream — neoclassical — economics has become increasingly irrelevant to the understanding of the real world. The main reason for this irrelevance is the failure of economists to match their deductive-axiomatic methods with their subject. It is — sad to say — a fact that within mainstream economics internal validity is everything and external validity nothing. Why anyone should be interested in that kind of theories and models — as long...

Economic convergence and the Markov chain approach In the Markov chain approach to income convergence … the “law of motion” driving the evolution of the income distribution is assumed memory-less and time invariant. Upon having estimated probabilities of moving up or down the income hierarchy during a transition period of a given length, the law is used to calculate a limiting income distribution characterizing a stochastic steady-state income distribution to which the system converges...

Nobel prize and self-righteous Chicago drivel In 2007 Thomas Sargent gave a graduation speech at University of California at Berkeley, giving the grads “a short list of valuable lessons that our beautiful subject teaches”: 1. Many things that are desirable are not feasible. 2. Individuals and communities face trade-offs. 3. Other people have more information about their abilities, their efforts, and their preferences than you do. 4. Everyone responds to incentives, including people you want...

Bostadsbubblan på väg spricka! Konjunkturinstitutets generaldirektör Mats Dillén gick igår ut och varnade för en påtaglig risk för att bostadspriserna ligger på en ohållbart hög nivå. De höga bostadspriserna går inte att förklara med ökade inkomster, låga räntor och skattelättnader. Med en årlig prisökningstakten på 10-15 procent är vi uppenbarligen på väg mot en situation där bostadsbubblan spricker och en ny finansiell och ekonomisk krasch är ett faktum. Det är glädjande att...

Redistributive economic policies and the limited applicability of Markov model thinking  [embedded content]

On the dynamics of wealth inequality Over the last three decades, Atkinson et al. (2011) find that there has been an increase in the concentration of income in many countries while Wolff (2010) describes a similar though smaller increase in the concentration of wealth in the United States. Motivated by these stylized facts, we develop a model in which infinitely lived households face idiosyncratic investment risk, and we examine the dynamic behavior of the distribution of wealth over time....

The Greek word “empiric” refers to ancient physicians who based their medical advice on experience, not theory. Medieval empirics came to the conclusion that blood-letting caused improvements in health because the health of the patients often improved after the blood was let. But we know now that temporal orderings do not imply causation, even though we give Nobel prizes [Clive Granger] to folks who use temporal orderings to infer causation. Just to make sure, we call it a fallacy and...

Probability and economics (wonkish) Modern neoclassical economics relies to a large degree on the notion of probability. To at all be amenable to applied economic analysis, economic observations allegedly have to be conceived as random events that are analyzable within a probabilistic framework. But is it really necessary to model the economic system as a system where randomness can only be analyzed and understood when based on an a priori notion of probability? When attempting to convince...

Look who’s lecturing who!  [embedded content] A must-see! Rethinking economics student vs. mainstream economics professor: 10–0.