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description= 15 posts published by Lars Syll during September 2019;
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17 posted in varia comments off on adults in the room why we need pluralist economics 30 sep 2019 at 11 52 posted in economics 1 comment the only economic analysis that mainstream economists accept is the one that takes place within the analytic formalistic modeling strategy that makes up the core of mainstream economics all models and theories that do not live up to the precepts of the mainstream methodological canon are pruned you re free to take your models not using mathematical models at all is considered totally unthinkable and apply them to whatever you want as long as you do it within the mainstream approach and its modeling strategy if you do not follow that particular mathematical deductive analytical formalism you re not even considered doing economics if it isn t modeled it isn t economics that isn t pluralism that s a methodological reductionist straightjacket share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky maman 30 sep 2019 at 11 39 posted in varia comments off on maman how to do and not to do economics 28 sep 2019 at 20 55 posted in economics comments off on how to do and not to do economics great lectures on how to do and not to do economics delivered by a great historian and economist robert skidelsky here you can follow them all naket självutlämnande 28 sep 2019 at 18 50 posted in varia comments off on naket självutlämnande mer naken och självutlämnande musik är svår att hitta en rak höger i solar plexus peter lemarc imponerade för trettio år sedan det gör han fortfarande the m s estonia disaster 28 sep 2019 at 09 46 posted in varia comments off on the m s estonia disaster twenty five years ago on september 28 1994 m s estonia was on its way from tallinn to stockholm with 989 people on board when the visor in the ship s bow door opened and the ship sank 852 people died and 137 people survived in the worst maritime accident ever on the baltic sea sargent s nobel prize winning mumbo jumbo 26 sep 2019 at 19 26 posted in economics 11 comments the royal swedish academy of sciences decided back in 2011 to award the sveriges riksbank prize in economic sciences in memory of alfred nobel to thomas sargent and christopher sims for their empirical research on cause and effect in the macroeconomy in an interview with thomas sargent in the region the nobel prize winner tried to defend the kind of modern macro he himself has been part of developing sargent i know that i m the one who is supposed to be answering questions but perhaps you can tell me what popular criticisms of modern macro you have in mind rolnick ok here goes examples of such criticisms are that modern macroeconomics makes too much use of sophisticated mathematics to model people and markets that it incorrectly relies on the assumption that asset markets are efficient in the sense that asset prices aggregate information of all individuals that the modern macro mainstay real business cycle model is deficient because it ignores so many frictions and imperfections and is useless as a guide to policy for dealing with financial crises shouldn t these be taken seriously sargent sorry art but aside from the foolish and intellectually lazy remark about mathematics all of the criticisms that you have listed reflect either woeful ignorance or intentional disregard for what much of modern macroeconomics is about and what it has accomplished a rule of thumb is that the more dynamic uncertain and ambiguous is the economic environment that you seek to model the more you are going to have to roll up your sleeves and learn and use some math that s life are these the words of an empirical macroeconomist i ll be dipped to me it sounds like the same old axiomatic deductivist mumbo jumbo that parades as economic science of today mainstream economic theory today is in the story telling business whereby economic theorists create make believe analogue models of the target system usually conceived as the real economic system this modelling activity is considered useful and essential since fully fledged experiments on a societal scale as a rule are prohibitively expensive ethically indefensible or unmanageable economic theorists have to substitute experimenting with something else to understand and explain relations between different entities in the real economy the predominant strategy is to build models and make things happen in these analogue economy models rather than engineering things happening in real economies mainstream economics has since long given up on the real world and contents itself with proving things about thought up worlds empirical evidence only plays a minor role in economic theory where models largely function as a substitute for empirical evidence hopefully humbled by the manifest failure of its theoretical pretences the one sided almost religious insistence on axiomatic deductivist modelling as the only scientific activity worthy of pursuing in economics will give way to methodological pluralism based on ontological considerations rather than formalistic tractability when that day comes the sveriges riksbank prize in economic sciences in memory of alfred nobel will hopefully be awarded real macroeconomists and not axiomatic deductivist modellers like thomas sargent and economists of that ilk in the efficient market rational expectations camp share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky the rational expectations hoax 26 sep 2019 at 16 25 posted in economics 1 comment it can be said without great controversy that no other theoretical approach in this century has ever enjoyed the same level of ubiquity throughout the social sciences as the rational choice approach enjoys today despite this ubiquity the success of the approach has been very tenuous its advance has been accompanied by an intense debate over its relative merit the approach has been subject to the usual criticism of blatant inaccuracy given by outsiders to any would be theoretical hegemon and to a predictable fuzzying of its assumptions as it is adapted to a wider and wider range of empirical phenomena more notably however some of the most virulent mere criticisms of the rational choice approach have come from within its own ranks despite the absence of any clear cut resolution to this debate there appears to be a growing consensus about the strengths and weaknesses of the approach to put it briefly the main strengths of the approach are that its conventional assumptions about actors are parsimonious and applicable to a very broad range of environments generating usually falsifiable and sometimes empirically confirmed hypotheses about action across these environments this provides conventional rational choice with a combination of generality and predictive power not found in other approaches however the conventional assumptions of rational choice not only lack verisimilitude in many circumstances but also fail to accurately predict a wide range of human behaviors in mainstream economics especially in microeconomics social choice and game theory it is taken for granted by definition that the actors appearing in the model world are rational and try to satisfy given preferences but confronting the axiomatic model world with the real world it usually turns out that quite a few actors are irrational in a classic experiment conducted by barbara mcneil and colleagues it was investigated how variations in the way information were presented to patients influenced their choices between alternative therapies individuals randomly assigned were asked to imagine that they had lung cancer and to choose between two different therapies different groups of respondents received input data that differed only in whether or not the treatments were identified and whether the outcomes were framed in terms of the probability of living or the probability of dying the experiment demonstrated that by only changing the emphasis from surviving x to dying 1 x in the description of the treatment alternatives there was a significant change in population preferences according to rational choice theory the way you frame alternatives should be totally inconsequential rational people do not change preferences for inconsequential reasons so what do we learn from this kind of experiments this in mainstream as if model worlds there are only rational people and in real life there are a lot of irrational people things are obviously not as postulated in mainstream microeconomics the final court of appeal for models is the real world as long as no convincing justification is put forward for how the inferential bridging is made from the model world to the real world rational choice models have to be considered little more than hand waving those who want to build macroeconomics on microfoundations usually maintain that the only robust policies and institutions are those based on rational expectations and representative actors as yours truly repeatedly argued there is really no support for this conviction at all on the contrary if we want to have anything of interest to say on real economies financial crisis and the decisions and choices real people make it is high time to place macroeconomic models building on representative actors and rational expectations microfoundations in the dustbin of pseudo science for if this microfounded macroeconomics has nothing to say about the real world and the economic problems out there why should we care about it the final court of appeal for macroeconomic models is the real world and as long as no convincing justification is put forward for how the inferential bridging de facto is made macroeconomic modelbuilding is little more than hand waving that gives us a rather little warrant for making inductive inferences from models to real world target systems if substantive questions about the real world are being posed it is the formalistic mathematical representations utilized to analyze them that have to match reality not the other way around the real macroeconomic challenge is to accept uncertainty and still try to explain why economic transactions take place instead of simply conjuring the problem away by assuming rational expectations and treating uncertainty as if it was possible to reduce it to stochastic risk that is scientific cheating and it has been going on for too long now share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky hyman minsky at 100 24 sep 2019 at 16 57 posted in economics comments off on hyman minsky at 100 on the occasion of the 100th anniversary of the birth of hyman minsky 1919 1996 i recommend every one to listen to bbc 4 where duncan weldon tries to explain in what way hyman minsky s thoughts on banking and finance offer a radical challenge to mainstream economic theory as a young research stipendiate in the u s yours truly had the great pleasure and privilege of having hyman minsky as a teacher he was a great inspiration at the time he still is share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky nobel prize winner thomas sargent talking absolute unadulterated horse shit 24 sep 2019 at 11 28 posted in economics 9 comments i especially love the way this nobel laureate explains rational expectations there are so many people out there and it is so difficult to know how each one of them thinks about the future so let s just assume they think the same problem solved and that absolute nonsense reasoning rendered this guy a nobel prize in economics the tiny little problem that there is no hard empirical evidence that verifies rational expectations models obviously doesn t bother rational expectations überpriest thomas sargent he goes on defending the epistemological status of the rational expectations hypothesis arguing that since it focuses on outcomes and does not pretend to have behavioral content it has proved to be a powerful tool for making precise statements yeah precise and rigorous but what good does that do when they are all wrong as sargent says in the interview the concept of rational expectations was first developed by john muth in an econometrica article in 1961 rational expectations and the theory of price movements and later from the 1970s and onward applied to macroeconomics muth framed his rational expectations hypothesis reh in terms of probability distributions expectations of firms or more generally the subjective probability distribution of outcomes tend to be distributed for the same information set about the prediction of the theory or the objective probability distributions of outcomes but muth was also very open with the non descriptive character of his concept the hypothesis of rational expectations does not assert that the scratch work of entrepreneurs resembles the system of equations in any way nor does it state that predictions of entrepreneurs are perfect or that their expectations are all the same to muth its main usefulness was its generality and ability to be applicable to all sorts of situations irrespective of the concrete and contingent circumstances at hand muth s concept was later picked up by new classical macroeconomics where it soon became the dominant model assumption and has continued to be a standard assumption made in many neoclassical macro economic models most notably in the fields of real business cycles and finance being a cornerstone of the efficient market hypothesis reh basically says that people on the average hold expectations that will be fulfilled this makes the economist s analysis enormously simplistic since it means that the model used by the economist is the same as the one people use to make decisions and forecasts of the future but in the real world it is not possible to just assume as does sargent that we know the exact probability distribution of future events on the contrary we can t even assume that probability distributions are the right way to characterize understand or explain acts and decisions made under uncertainty when we simply do not know when we have not got a clue when genuine uncertainty prevails reh simply is not reasonable in those circumstances it is not a useful assumption since under those circumstances the future is not like the past and henceforth we cannot use the same probability distribution if it at all exists to describe both the past and future if we want to have anything of interest to say on real economies financial crisis and the decisions and choices real people make it is high time to replace the rational expectations hypothesis with more relevant and realistic assumptions concerning economic agents and their expectations rational expectations paraphrasing nichols kaldor is a barren and irrelevant apparatus of thought to deal with the way real world people make decisions and act ...
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