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I suspect financial market are like a hoey trap for economics researchers. Fast, plentiful transactions, rules about information flow and limitless liquidity, "

I suspect financial market are like a hoey trap for economics researchers. Fast, plentiful transactions, rules about information flow and limitless liquidity, "scientific" valuation of derivatives... It's so damn close to a theoretical model and it exists in real life! Data is easily accessed and interpreted. Compare this to the markets for real estate, used cars, or online advertising. It's all precise enough to tie to monetary rules, central bank actions ...the policy levers top economists have available in a normal year. Whatever your theory, it will be easier to test for publicly traded stocks or commodities. The problem is that public markets are formalized, centralized markets. They are rational by design. This is unlike every other market. To extend their ecological metaphor a different way... Researching public markets is like cells in a petri dish, not a real ecology.

oelmekki 9y ago
Which doesn't mean it's not interesting to study :) The omnipresence of fibonacci ratios is interesting by itself. Last year, I was reading Proudhon's criticism of the speculative part of financial markets. His main objection was that speculation was adding absolutely no value to the world, by opposition to investors (who help making something useful real) and merchants (who displace products from somewhere where they're abundant to somewhere where they're scarce). It hitted me back then: actually, they do produce something, they produce data. Financial markets have produced the longest lived and most detailed dataset ever (I can't think of a bigger one, at least). Would be a waste not to try to use it.
- dalbasal 9y ago
  True, I don't mean to say it's a bad idea to study it. I just mean "watch out" with theories that are general, but studied mostly within the confines of these market where the dataset is (as you say) orders of magnitude bigger/better than anywhere else. .. searching under a streelamp

oelmekki 9y ago

Which doesn't mean it's not interesting to study :) The omnipresence of fibonacci ratios is interesting by itself. Last year, I was reading Proudhon's criticism of the speculative part of financial markets. His main objection was that speculation was adding absolutely no value to the world, by opposition to investors (who help making something useful real) and merchants (who displace products from somewhere where they're abundant to somewhere where they're scarce). It hitted me back then: actually, they do produce something, they produce data. Financial markets have produced the longest lived and most detailed dataset ever (I can't think of a bigger one, at least). Would be a waste not to try to use it.

dalbasal 9y ago
True, I don't mean to say it's a bad idea to study it. I just mean "watch out" with theories that are general, but studied mostly within the confines of these market where the dataset is (as you say) orders of magnitude bigger/better than anywhere else. .. searching under a streelamp