Posted on 01/30/2006 10:59:01 AM PST by Sonny M
Taking as a model the research techniques that Steven D. Levitt displays in his best-selling book, "Freakonomics," graduate students in economics are focusing on small insights about the economy rather than broad theories that explain how the overall system works. In doing so, they are withdrawing in effect from political debate.
The broad-brush approach was a defining characteristic of the economists who were shaped by the Depression. The younger generation has tried to shun prescriptions that seek to cure the economy's ills. Instead, they cast economics as a scientific inquiry, using mathematical models, for example, to explore the economy without becoming advocates for one solution or another.
Mathematical modeling tries to determine such things as rates of economic growth by plugging into computer models assumptions about inflation, hiring and the like. It is still the thrust of graduate training, but the students themselves are pushing for training in another form of exploration — empirical research like that of Mr. Levitt, which relies on statistical evidence.
Mr. Levitt, a 38-year-old professor at the University of Chicago, analyzes data that seem to explain behavior — why the crime rate has declined, for example — and that is what a growing number of graduate students in economics want to do, according to a poll of 230 of them at seven prestigious universities.
"They don't see themselves as having political persuasions," said David Colander, an economic historian at Middlebury College, who conducted the poll and a similar one in 1987. "They see themselves as doing the best analytical-statistical work that can be done, better than in sociology and other social sciences. They are telling you what the options are, but not which option to choose."
(Excerpt) Read more at nytimes.com ...
XIX century England fought the Opium War against China in the name of free trade and human freedom. The information was freely available then.
There was nothing "free market" about the slave trade since the commodities were stolen to begin with.
Not true, in most of history the large part of slaves was legally acquired, some became slaves because of debts (in free market Rome or Greece), others were enslaved as a result of war (their life was spared in exchange), others were born as slaves.
What is your alternative to "rationality", math and logic?
I am not against math used properly, but building intricate/complex math models in economics or psychology is a pretentious and silly imitation of physics. But I am all for logic, which unfortunately is missing here.
"focusing on the small insights...rather than the broad theories that explain how the overall system works."
That sounds like how the public schools teach everything.
Some of them are--Warren Buffett, George Soros, and others are certainly experts at understanding the market. Many of the top commodities, bond, and equity traders make millions of dollars a year. Others, such as Bill Gates and Jeff Bezos, have made their fortunes by providing a product or service superior to market alternatives, on the assumption that many people would rationally chose theirs over inferior competition. And many people did.
Free trade does not come at the point of a bayonet or from the muzzles of cannons. The monopolies which forced China to allow opium have nothing to do with free trade.
Slaves were not slaves as the result of their free choice.
Logic is clearly missing from your posts allegedly about economics.
As a result of Opium War China was forced to LOWER TARIFFS from 65% to 5% and to allow British merchants FREE TRADE in China. It ruined China and enriched England.
Slaves were not slaves as the result of their free choice. Logic is clearly missing from your posts allegedly about economics.
It is you who has problem with logic, slavery resulting from debt WAS the result of free choice.
There was nothing about the Opium War that was Free Trade.
And no there were no slaves of their own free choice where you come up with that doozey is of interest. Well unless you are speaking of submissive sex slaves.
OK, are you for freedom of contracts? Isn't the freedom of contracts a part of free market?
In ancient Rome (and other places) people were able to borrow money using their own freedom as the collateral. So slavery is a natural and logical consequence of the free market.
And here you have one interesting historical example:
"[...]Before the introduction of coined money the peasant farmer borrowed commodities and repaid the loan in kind, and … was probably able to meet the obligation without great difficulty; but after the introduction of coined money the situation became decidedly more difficult…he must take a loan of money to purchase his necessary supplies at a time when money was cheap and commodities dear. When a year of plenty came and he undertook to repay the loan, commodities were cheap and money was dear", wrote Professor Calhoun.
Unable to get out of debt, eventually bad weather or a poor harvest would bring foreclosure on their land and even bind them into slavery. This enslavement grew to crisis proportions, when Solon came to Athens rescue with his "Seisachtheia" or "shaking off" of burdens. Personal slavery was no longer allowed as security for debts. He canceled such existing debt contracts; and gave back land which had been seized. Farmers who had been sold into slavery abroad by those to whom they owed money were "bought" back and returned to Athens. [...]"
(A Brief History of Interest)
None of that was a matter of choice as we understand "choice" When there is no freedom there is no choice.
You are not very logical. The freedom of contract can lead to the contractual obligations limiting freedom.
In order for transactions meeting the requirements of the theory of perfect competition the parties must be free to make the choices. A gunman threatening to shoot you if you do not turn over your wallet means that when you do so it was not a free choice. Nor is it acceptable to say "well I had the choice of surrendering it or getting shot."
Trying to reduce human beings to fake physical formulas is silly and pretentious.
An economist, one who actually makes a darn good living as an economist in the private sector, said that anyone who says he understands economics is either lying or ignorant. He said that economics is psychological at its base and there are far too many variables for anyone to understand.
If that were true, than stagers would be out of jobs.
In either case, its an act of faith. Faith by definition is not rational.
"In either case, its an act of faith. Faith by definition is not rational."
Students are playing the odds. They can see that people with higher educations tend to get paid more. They weigh the downside against the potential up-side, and determine what they think is best for themselves.
A lot of college students have to make a similar decision. They eat macaroni and cheese, take the bus, and live in a dorm for years -- so that they can eventually qualify for a better job. Is that more or less rational than dropping out early to take a job?"
True enough. Then we get into opportunity costs. I guess the example I was trying to put forward to kinda missed.
Let me try another: 'Giffen goods'. This is one of the few areas in which rational doesn't appear to apply. Case in point: The increased prices in tennis shoes, and folks still buying them despite the increased price, especially in demographics that would be better served by 3 square meals a day. There are some other areas I could think of examples for.
Typically, the rational person is assumed to have weighed opportunity costs, and forgone the non-utility of such an item in order to provide for their basic needs. I did notice in one of your other posts you touched on this indirectly ( pointing out that there is the generally sound assumption that there aren't too many irrational folks out there with respect to making choices).
Also, kudos for pointing out the difference between positive and normative economics in another post. It is the normative stuff where a lot of fuzziness ( and often mischief ) takes place.
Mind translating that statement into English more or less?
As to your #91 - any real economist will tell you that econometrics is a very valuable forecasting tool particularly for certain types of industries. Since Keynes the role of pyschology has taken the forefront in economic theory. His whole theory was based upon expectations and reactions to them. Economics is understandable but just difficult to focus on small questions. But theory gives directions of change with great accuracy just not the magnitude without enormous modeling work.
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