12 (faux) principles of (Political) Economics
It's true. This side does not get enough attention in mainstream economics these days. And the heterodox mumble.
Here's mine, the goofy ones;
1. The answer to most questions in economics is usually “It depends”.
2. People respond to incentives, but incentives are determined in their own head and who knows what goes on in there.
3. But on average, masses of people respond in fairly predictable ways and these predictable ways, embodied in the so-called “Econ 101” thinking, are pretty useful guides. They are not absolutes however.
4. “On one hand … on the other hand” is about as good as you can do in a complicated world.
5. All economic models boil down to two (occasionally three) curves on a blackboard that cross. If it’s more than that or if you can't draw it that way, then your model stinks.
6. First Fundamental Theorem of Economics: Where the two curves cross, it’s important.
7. Game theory accidentally teaches us that outcomes are very sensitive to the structure of interaction. Small changes in the rules of the game can produce vastly different outcomes.
8. A logical, aesthetically compelling, story is important, even if the assumptions are crazy. Check it with math.
9. Anyone who makes exaggerated claims about their pet theories, ideas, or solutions, be they mainstream or heterodox, either doesn’t know what they’re talking about, hasn’t done their homework or is trying to sell you something. “Our results SUGGEST…” is a good indicator that a person has thought hard about their subject. At least as far as these things go. A thorough method combined with some humility should invite more attention than extraordinary claims of genius. Scientific progress takes place at the margin.
10. When an economic idea about how things work pops into your head, your very next question should be “why is that wrong?”. It’s useful to simulate competition among ideas in your brains so that only the truly good ones survive. Success, however, is not guaranteed.
13. “I don’t know” is often the best answer that can be given.
Here's mine, the goofy ones;
1. The answer to most questions in economics is usually “It depends”.
2. People respond to incentives, but incentives are determined in their own head and who knows what goes on in there.
3. But on average, masses of people respond in fairly predictable ways and these predictable ways, embodied in the so-called “Econ 101” thinking, are pretty useful guides. They are not absolutes however.
4. “On one hand … on the other hand” is about as good as you can do in a complicated world.
5. All economic models boil down to two (occasionally three) curves on a blackboard that cross. If it’s more than that or if you can't draw it that way, then your model stinks.
6. First Fundamental Theorem of Economics: Where the two curves cross, it’s important.
7. Game theory accidentally teaches us that outcomes are very sensitive to the structure of interaction. Small changes in the rules of the game can produce vastly different outcomes.
8. A logical, aesthetically compelling, story is important, even if the assumptions are crazy. Check it with math.
9. Anyone who makes exaggerated claims about their pet theories, ideas, or solutions, be they mainstream or heterodox, either doesn’t know what they’re talking about, hasn’t done their homework or is trying to sell you something. “Our results SUGGEST…” is a good indicator that a person has thought hard about their subject. At least as far as these things go. A thorough method combined with some humility should invite more attention than extraordinary claims of genius. Scientific progress takes place at the margin.
10. When an economic idea about how things work pops into your head, your very next question should be “why is that wrong?”. It’s useful to simulate competition among ideas in your brains so that only the truly good ones survive. Success, however, is not guaranteed.
13. “I don’t know” is often the best answer that can be given.
posted by YouNotSneaky! at 8:52 PM
6 Comments:
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>> "5. All economic models boil down to two (occasionally three) curves on a blackboard that cross. If it’s more than that or if you can't draw it that way, then your model stinks."
That's insane! It means that everything done after IS-LM-BP stinks. :-(
>> "6. First Fundamental Theorem of Economics: Where the two curves cross, it’s important."
Marshall + Pareto = Crazy Delicious!
>> "10. When an economic idea about how things work pops into your head, your very next question should be “why is that wrong?”."
Come on! If you can really pull this one off then you're a saint. -- I have so few ideas!... I really don't need to start questioning them myself :-) Fortunately, others will/do.
I see you edited the entry and delete some references to a certain someone who name-drops a lot a certain close relation of his... good choice! I don't think you want to get into that debate.
That's insane! It means that everything done after IS-LM-BP stinks. :-(
Well... Anyway, that stuff can be done with just a few curves too. See Barro or Carlin and Soskice (http://www.oup.com/uk/orc/bin/9780198776222/)
I have so few ideas!... I really don't need to start questioning them myself :-) Fortunately, others will/do.
I guess there is a quantity/quality trade off there. But questioning shouldn't destroy the idea, just make it better.
And yeah, I decided to be nicer.
"Scientific progress takes place at the margin...."
except when it doesn't
paine
--------------------
btw your list i must confess to me at least
has a sad
abandoned
candy box
taste to it
why ??
can some
smile extracting
mildly ironic
"truthy "stuff
just go stale ?????
as to infamous point 9 from inner space
word choice and
a gentle tone
can imply
a reassuring scepticism
but shit man
is it
ever easy to fake
falling for lib-speak mimics
from the dark towers
of corporate think tankery
or free lance mephistos
like gregory
" boy next door gee whiz" mankiw
comes all too easy
if you only look at
the rhetorical wrapper
my take:
some times ahh yes the worsed of times
"we"
are only warned
by gasping furious
mad men
prophets never operate
"on the margin"
and social quakes do come ...
in the long run
It appears to me that the majority of man's activities involve either justifying what he has no business doing or trying to perfect it.
There is no need to have a field of knowledge called "Economics" if real value is exchanged.
10 days and no new post?! Why have you foresaken us? (OK, that was a bit melodramatic.)
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