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description= 15 posts published by Lars Syll during July 2023;
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use the condition for economic statistical series to be applicable for inductive inference is that it shows sufficient homogeneity or uniformity this all shows why economists perform so badly when it concerns forecasting marcel boumans maintaining that economics is a science in the true knowledge business yours truly remains a sceptic of the pretences and aspirations of econometrics the marginal return on its ever higher technical sophistication in no way makes up for the lack of serious under labouring of its deeper philosophical and methodological foundations that already keynes complained about the rather one sided emphasis of usefulness and its concomitant instrumentalist justification cannot hide that the legions of probabilistic econometricians who give supportive evidence for their considering it fruitful to believe in the possibility of treating unique economic data as the observable results of random drawings from an imaginary sampling of an imaginary population are skating on thin ice a rigorous application of econometric methods in economics really presupposes that the phenomena of our real world economies are ruled by stable causal relations between variables the endemic lack of predictive success of the econometric project indicates that this hope of finding fixed parameters is a hope for which there really is no other ground than hope itself according to keynes we live in a world permeated by unmeasurable uncertainty not quantifiable stochastic risk which often forces us to make decisions based on anything but rational expectations keynes rather thinks that we base our expectations on the confidence or weight we put on different events and alternatives to keynes expectations are a question of weighing probabilities by degrees of belief beliefs that often have preciously little to do with the kind of stochastic probabilistic calculations made by the rational agents as modelled by modern social sciences and often we simply do not know how strange that social scientists and mainstream economists as a rule do not even touch upon these aspects of scientific methodology that seem to be so fundamental and important for anyone trying to understand how we learn and orient ourselves in an uncertain world an educated guess on why this is a fact would be that keynes s concepts are not possible to squeeze into a single calculable numerical probability in the quest for measurable quantities one puts a blind eye to qualities and looks the other way so why do companies governments and central banks continue with this more or less expensive but obviously worthless activity a part of the answer concerns ideology and apologetics forecasting is a non negligible part of the labour market for mainstream economists and so of course those in the business do not want to admit that they are occupied with worthless things not to mention how hard it would be to sell the product with that kind of frank truthfulness governments the finance sector and central banks also want to give the impression to customers and voters that they so to say have the situation under control telling people that next year x will be 5 04 makes wonders in that respect why else would anyone want to pay them or vote for them these are sure not glamorous aspects of economics as a science but as a scientist it would be unforgivably dishonest to pretend that economics doesn t also perform an ideological function in society share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky sraffian economics an unhappy trade off between rigour and relevance 29 jul 2023 at 14 01 posted in economics 1 comment we have continually noted the tendency of sraffians to subordinate the study of the substantive nature of economic phenomena to the requirements of logical rigor and for sraffians rigor equals get general equilibrium theory the simultaneous determination of endogenous economic variables the marriage of sraffian economics and get is not a promising avenue for studying past thinkers such as classical economists and yet it is one of the major claims of sraffian economics that it alone throws light on past ideas the fact that classical economics whatever else it is is the study of an economy in motion indeed in motion in a state of disequilibrium only tending toward equilibrium makes sraffian economics particularly inappropriate for illuminating classical economics and the shadow that it casts over classical economics is made even darker when it considers problems in modern economics sraffians spend their time finding logical flaws in the models of their enemies rather than building platforms for illuminating the workings of an economy they are formalists pure and simple making a fetish of the form of theories at the neglect of strengthening their content they simply cannot resist what nancy cartwright 1999 calls the vanity of rigour in economics i have frequently likened sraffa to debreu but debreu 1987 3 402 was always insistent that get as such proves nothing about the case for free markets versus state intervention which would require a descriptive interpretation that goes beyond the domain of get but sraffa implies that the role of demand in price determination is settled once and for all by his objectivist theory even before we have begun to interpret the model by adding to it empirical assumptions from the real world mark blaug just as post war mainstream economics has been criticized for being founded on an axiomatic deductive mathematical methodology i think blaug is fair in his criticism of sraffa the core of sraffian economics is based on the same methodology 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 deficit lies mainstream economists knowingly tell us 29 jul 2023 at 11 12 posted in economics 4 comments the interview was given to mark blaug in 1995 in transcript i think there is an element of truth in the view that the superstition that the budget must be balanced at all times is necessary once it is debunked it takes away one of the bulwarks that every society must have against expenditure out of control there must be discipline in the allocation of resources or you will have anarchistic chaos and inefficiency and one of the functions of old fashioned religion was to scare people by sometimes what might be regarded as myths into behaving in a way that the long run civilized life requires samuelson s statement makes me come to think of the following passage in keynes general theory the ideas of economists and political philosophers both when they are right and when they are wrong are more powerful than is com monly understood indeed the world is ruled by little else practical men who believe themselves to be exempt from any intellectual influences are usually the slaves of some defunct economist madmen in authori ty who hear voices in the air are distilling their frenzy from some academic scribbler of a few years back share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky michael sandel and democracy s discontent 28 jul 2023 at 12 08 posted in politics society comments off on michael sandel and democracy s discontent sandel is as always both incisive and sensible in his analysis as did polanyi decades ago sandel shows the dangers of letting market economies drift into becoming market societies 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 tractability hoax in modern economics 27 jul 2023 at 12 34 posted in economics 3 comments while the paternity of the theoretical apparatus underlying the new neoclassical synthesis in macro is contested there is wide agreement that the methodological framework was largely architected by robert lucas bringing a representative agent meant foregoing the possibility to tackle inequality redistribution and justice concerns was it deliberate how much does this choice owe to tractability what macroeconomists were chasing in these years was a renewed explanation of the business cycle they were trying to write microfounded and dynamic models rational expectations imposed cross equation restrictions yet estimating these new models substantially raised the computing burden assuming a representative agent mitigated computational demands and allowed macroeconomists to get away with general equilibrium aggregate issues it made new classical models analytically and computationally tractable was tractability the main reason why lucas embraced the representative agent and market clearing or could he have improved tractability through alternative hypotheses leading to opposed policy conclusions some macroeconomists may have endorsed the new class of lucas critique proof models because they liked its policy conclusions other may have retained some hypotheses then some simplifications because it makes the model tractable and while the limits of simplifying assumptions are often emphasized by those who propose them as they spread caveats are forgotten tractability restricts the range of accepted models and prevent economists from discussing some social issues and with time from even seeing them tractability filters economists reality the aggregate effect of looking for tractable models is unknown and yet it is crucial to understand the current state of economics beatrice cherrier cherrier s highly readable article underlines that the essence of mainstream neoclassical economic theory is its almost exclusive use of a deductivist methodology a methodology that is more or less used without a smack of argument to justify its relevance the theories and models that mainstream economists construct describe imaginary worlds using a combination of formal sign systems such as mathematics and ordinary language the descriptions made are extremely thin and to a large degree disconnected from the specific contexts of the targeted system than one usually wants to partially represent this is not by chance these closed formalistic mathematical theories and models are constructed for the purpose of being able to deliver purportedly rigorous deductions that may somehow be exportable to the target system by analyzing a few causal factors in their laboratories they hope they can perform thought experiments and observe how these factors operate on their own and without impediments or confounders unfortunately this is not so the reason for this is that economic causes never act in a socio economic vacuum causes have to be set in a contextual structure to be able to operate this structure has to take some form or other but instead of incorporating structures that are true to the target system the settings made in economic models are rather based on formalistic mathematical tractability in the models they appear as unrealistic assumptions usually playing a decisive role in getting the deductive machinery to deliver precise and rigorous results this of course makes exporting to real world target systems problematic since these models as part of a deductivist covering law tradition in economics are thought to deliver general and far reaching conclusions that are externally valid but how can we be sure the lessons learned in these theories and models have external validity when based on highly specific unrealistic assumptions as a rule the more specific and concrete the structures the less generalizable the results admitting that we in principle can move from partial falsehoods in theories and models to truth in real world target systems does not take us very far unless a thorough explication of the relation between theory model and the real world target system is made if models assume representative actors rational expectations market clearing and equilibrium and we know that real people and markets cannot be expected to obey these assumptions the warrants for supposing that conclusions or hypotheses of causally relevant mechanisms or regularities can be bridged are obviously non justifiable to have a deductive warrant for things happening in a closed model is no guarantee for them being preserved when applied to an open real world target system henry louis mencken once wrote that there is always an easy solution to every human problem neat plausible and wrong and mainstream economics has indeed been wrong very wrong its main result so far has been to demonstrate the futility of trying to build a satisfactory bridge between formalistic axiomatic deductivist models and real world d target systems assuming for example perfect knowledge instant market clearing and approximating aggregate behaviour with unrealistically heroic assumptions of representative actors just will not do the assumptions made surreptitiously eliminate the very phenomena we want to study uncertainty disequilibrium structural instability and problems of aggregation and coordination between different individuals and groups the punch line is that most of the problems that mainstream economics is wrestling with emanate from its attempts at formalistic modelling per se of social phenomena reducing microeconomics to refinements of hyper rational bayesian deductivist models is not a viable way forward it will only sentence to irrelevance the most interesting real world economic problems and as someone has so wisely remarked murder is unfortunately the only way to reduce biology to chemistry reducing macroeconomics to walrasian general equilibrium microeconomics basically means committing the same crime if scientific progress in economics as robert lucas and other latter days mainstream economists seem to think lies in our ability to tell better and better stories without considering the realm of imagination and ideas a retreat from real world target systems reality one would of course think our economics journal being filled with articles supporting the stories with empirical evidence however i would argue that the journals still show a striking and embarrassing paucity of empirical studies that try to substantiate these theoretical claims equally amazing is how little one has to say about the relationship between the model and real world target systems it is as though thinking explicit discussion argumentation and justification on the subject is not required mainstream economic theory is obviously navigating in dire straits if the ultimate criteria for the success of a deductivist system is to what extent it predicts and coheres with parts of reality modern mainstream economics seems to be a hopeless misallocation of scientific resources to focus scientific endeavours on proving things in models is a gross misapprehension of what an economic theory ought to be about deductivist models and methods disconnected from reality are not relevant to predict explain or understand real world economic target syste...
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