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description= 15 posts published by Lars Syll during May 2015;
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can be trusted for advice about scientific methodology things can turn out very badly for the discipline bad methodology can do a lot more harm than a bad model paul romer so paul romer seems to be rather reluctant to have a methodological discussion it s too risky well maybe but on the other hand if we re not prepared to take that risk economics can t progress as tony lawson forcefully argues in his new book essays on the nature and state of modern economics twenty common myths and or fallacies of modern economics 1 the widely observed crisis of the modern economics discipline turns on problems that originate at the level of economic theory and or policy it does not the basic problems mostly originate at the level of methodology and in particular with the current emphasis on methods of mathematical modelling the latter emphasis is an error given the lack of match of the methods in question to the conditions in which they are applied so long as the critical focus remains only or even mainly at the level of substantive economic theory and or policy matters then no amount of alternative text books popular monographs introductory pocketbooks journal or magazine articles or whatever are going to get at the nub of the problems and so have the wherewithal to help make economics a sufficiently relevant discipline it is the methods and manner of their use that are the basic problem share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky adam smith s visible hand 26 may 2015 at 08 55 posted in economics 1 comment 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 sorrow from the sorrow of others is a matter of fact too obvious to require any instances to prove it for this sentiment like all the other original passions of human nature is by no means confined to the virtuous and humane though they perhaps may feel it with the most exquisite sensibility the greatest ruffian the most hardened violator of the laws of society is not altogether without it share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky tpp and the economics 101 ideology 25 may 2015 at 10 01 posted in economics comments off on tpp and the economics 101 ideology i ve written several times about what i call the economics 101 ideology the overuse of a few simplified concepts from an introductory course to make sweeping policy recommendations while branding any opponents as ignorant simpletons the most common way that first year economics is misused in the public sphere is ignoring assumptions for example most arguments for financial deregulation are ultimately based on the idea that transactions between rational actors with perfect information are always good for both sides and most of the people making those arguments have forgotten that people are not rational and do not have perfect information mark buchanan and noah smith have both called out greg mankiw for a different and more pernicious way of misusing first year economics simply ignoring what it teaches or in this case what mankiw himself teaches at issue is mankiw s times column claiming that all economists agree on the overall benefits of free trade so everyone should be in favor of the trans pacific partnership among other trade agreements this is what mankiw writes about international trade in his textbook p 183 of the fifth edition trade can make everyone better off t he gains of the winners exceed the losses of the losers so the winners could compensate the losers and still be better off but will trade make everyone better off probably not in practice compensation for the losers from international trade is rare we can now see why the debate over trade policy is often contentious whenever a policy creates winners and losers the stage is set for a political battle yet in his recent column mankiw says that opposition to free trade is because of irrational voters who are subject to anti foreign anti market and make work biases he doesn t mention what he said clearly in his textbook opposition to free trade is perfectly rational on the part of people who will be harmed by it and they express that opposition through the political process that s how a democracy is supposed to work by the way mankiw s column is a perfect example of how ideology works it provides a simple way to interpret the world people who don t agree with you are idiots or xenophobes while sweeping aside inconvenient evidence to the contrary and first year economics is as powerful an ideology as we have in this country today james kwak share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky på magdalena anderssons läslista 25 may 2015 at 09 38 posted in economics comments off on på magdalena anderssons läslista vid en analys av den svenska depressionens förlopp är det viktigt att ha klart för sig att statsskuldens snabba tillväxt inte har utgjort någon orsak till krisen utan istället varit ett symptom på nedgången i ekonomin i själva verket skulle krisen ha blivit djupare om inte mycket stora underskott i de offentliga finanserna släppts fram krisförloppet innebar en överflyttning av en given skuldbörda från privat till offentlig sektor någon ökning av folkhushållets totala skuldsättning har inte kommit till stånd en nödvändig privat skuldsanering utgör alltså kärnan i den svenska depressionen man måste också fråga sig hur krisen skulle ha utvecklat om den offentliga sektorn inte hade accepterat att utgöra en förhoppningsvis tillfällig parkeringsplats för den privata sektorns alltför stora skulder de stora budgetunderskotten kan ses som ett resultat av en omfattande socialisering där den offentliga sektorn kortsiktigt bidrar till att lyfta av den privata en alltför stor skuldbörda statsskuldsutvecklingen spelar idag en viktig pedagogisk roll som indikator på den fara som ligger i dröjsmål med det ekonomisk politiska reformarbetet endast under hotet om statsbankrutt förefaller sveriges riksdag förmögen att fatta beslut om begränsningar av statens utgiftsåtaganden hans tson söderström tyvärr lika sant idag som för 20 år sedan och det säger en hel del om kvalitén på den svenska statsskuldsdebatten bland politiker och ekonomer share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky doctor it hurts when i p 24 may 2015 at 16 34 posted in economics comments off on doctor it hurts when i p a low powered study is only going to be able to see a pretty big effect but sometimes you know that the effect if it exists is small in other words a study that accurately measures the effect is likely to be rejected as statistically insignificant while any result that passes the p 05 test is either a false positive or a true positive that massively overstates the effect a conventional boundary obeyed long enough can be easily mistaken for an actual thing in the world imagine if we talked about the state of the economy this way economists have a formal definition of a recession which depends on arbitrary thresholds just as statistical significance does one doesn t say i don t care about the unemployment rate or housing starts or the aggregate burden of student loans or the federal deficit if it s not a recession we re not going to talk about it one would be nuts to say so the critics and there are more of them and they are louder each year say that a great deal of scientific practice is nuts in just this way if anything this underlines how important it is not to equate science with statistical calculation all science entail human judgement and using statistical models doesn t relieve us of that necessity working with misspecified models the scientific value of significance testing is actually zero even though you re making valid statistical inferences statistical models and concomitant significance tests are no substitutes for doing real science or as a noted german philosopher once famously wrote there is no royal road to science and only those who do not dread the fatiguing climb of its steep paths have a chance of gaining its luminous summits statistical significance doesn t say that something is important or true since there already are far better and more relevant testing that can be done see e g here and here it is high time to consider what should be the proper function of what has now really become a statistical fetish given that it anyway is very unlikely than any population parameter is exactly zero and that contrary to assumption most samples in social science and economics are not random or having the right distributional shape why continue to press students and researchers to do null hypothesis significance testing testing that relies on a weird backward logic that students and researchers usually don t understand in its standard form a significance test is not the kind of severe test that we are looking for in our search for being able to confirm or disconfirm empirical scientific hypothesis this is problematic for many reasons one being that there is a strong tendency to accept the null hypothesis since it can t be rejected at the standard 5 significance level in their standard form significance tests bias against new hypotheses by making it hard to disconfirm the null hypothesis as shown over and over again when it is applied people have a tendency to read not disconfirmed as probably confirmed and most importantly we should of course never forget that the underlying parameters we use when performing significance tests are model constructions our p values mean next to nothing if the model is wrong as david freedman writes in statistical models and causal inference i believe model validation to be a central issue of course many of my colleagues will be found to disagree for them fitting models to data computing standard errors and performing significance tests is informative even though the basic statistical assumptions linearity independence of errors etc cannot be validated this position seems indefensible nor are the consequences trivial perhaps it is time to reconsider share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky solow and krugman on inequality 24 may 2015 at 11 06 posted in economics comments off on solow and krugman on inequality are you tired of people like walked out harvard economist greg mankiw and their repeated attempts at defending the 1 by invoking adam smith s invisible hand and arguing that a market economy is some kind of moral free zone where if left undisturbed people get what they deserve then i suggest you listen to this great conversation on inequality listening to solow and krugman is a healthy antidote to unashamed neoliberal inequality apologetics the outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes i believe that there is social and psychological justification for significant inequalities of income and wealth but not for such large disparities as exist to day john maynard keynes general theory 1936 a society where we allow the inequality of incomes and wealth to increase without bounds sooner or later implodes the cement that keeps us together erodes and in the end we are only left with people dipped in the ice cold water of egoism and greed share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky on tour 20 may 2015 at 21 07 posted in varia comments off on on tour touring again conference in stockholm and guest appearence in the swedish parliament and the national institute of economic research regular blogging to be resumed during the weekend consistency and validity is not enough 20 may 2015 at 19 01 posted in economics comments off on consistency and validity is not enough neoclassical 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 modeling 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 formalistic deductive glasperlenspiel can be very impressive and seductive but in the realm of science it ought to be considered of little or no value to simply make claims about the model and lose sight of reality as julian reiss writes there is a difference between having evidence for some hypothesis and having evidence for the hypothesis relevant for a given purpose the difference is important because scientific methods tend to be good at addressing hypotheses of a certain kind and not others scientific methods come with particular applications built into them the advantage of mathematical modelling is that its method of deriving a result is that of mathemtical prof the conclusion is guaranteed to hold given the assumptions however the evidence generated in this way is valid only in abstract model worlds while we would like to evaluate hypotheses about what happens in economies in the real world the upshot is that valid evidence does not seem to be enough what we also need is to evaluate the relevance of the evidence in the context of a given purpose neoclassical 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 modeling as the only scientific activity worthy of pursuing in economics will give way to methodological pluralism based on ontological considerations rather than formalistic tractability to have valid evidence is not enough what economics needs is sound evidence discussing paul romer s mathiness concept peter dorman yesterday criticized economists belief that theories and models being consistent with data so...
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