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I am tempted to ask which school and truly in the post crisis era? In my econ podcasts they keep lamenting how things like this are still thaught, but I was som
by wjnc 8y ago
I am tempted to ask which school and truly in the post crisis era? In my econ podcasts they keep lamenting how things like this are still thaught, but I was somewhat incredulous. I studied econ in the early aughts and there was more behavioral, industrial and institutional economics than macro in my program. That was long before the crisis and still looks like the proper mix.
And then on the question. Perfect information is false and there are degrees in the definition of how efficient markets are, with the most common one approximating 'somewhat' on the not too short timescale. Mileage varies between commodities, stocks, your staple teaching example of the market for used cars (lemons) going towards the more micro models with network effects etc.
Institutional economics will teach you that no market functions without surrounding institutional arrangements and that there is some relationship between the nature of the product and the optimal 'institutional burden' (my words). Mechanism design is the subject where they try to design optimally structured markets.
Economics is awesome and anyone teaching only perfect information even to undergrads or business students should be fired. Ceterum censeo
- deleted 8y ago[deleted]
- scottlocklin 8y agoEconomics is not a science. The end. It's mostly ideology with mathematical excuses. At best, it's non predictive modeling.
- FabHK 8y ago> Economics is not a science. The end. That’s too facile. I’d say, insofar as it is a science, it’s not about the real world, and insofar as it’s about the real world, it's not a science. But even that doesn’t give it enough credit.
- kurtisc 8y agoTo me that's hiding another question of whether or not it's worthwhile. Like when we ask if something is or isn't art, or if writing software is or isn't engineering. There shouldn't be any link between saying economics is or isn't a science and giving it credit.
- wjnc 8y agoSuch and utter BS. There is so much science in econ. Just look at some of the work of the nobel laureates. Gary Becker treating social relationships as outcomes of economic relations. Great and provacative work. Ostrom on tragedy of the commons and solutions? That has properly changed the way we treat things like fishery, with more sustainable outcomes when applied correctly. Had we learned more of Douglas North, we wouldn't have so much kleptocracy in eastern Europe in the post-USSR period. Fama in finance, etc. etc. Too easy to dismiss that much work. And don't blame economists for the crisis. That's politics. There are a lot more lawyers in politics than economists... We don't discredit the whole of psychological science for the failures of a load of social pop-psychologists. Perhaps, perhaps we can discredit the whole of nutritional science. And even there I'd say we have learned some but that the financial incentives are so biased against proper learning that it's hard to blame the field as a whole.
- scottlocklin 8y agoSane people do discredit most of psychological science. BTW, they're a real science where people could find an answer, and economics almost entirely isn't. Probably the best piece of economics I've seen is Coase's theorem. While we base our laws on this idea, it's still a shaggy dog story, and basing it on dialectical materialism, the divine right of kings or Schmitt's friend/enemy principle would work just as well. Citation: places which never heard of Coase's theorem work/worked just as well.
- mathattack 8y agoEfficiency doesn’t have to imply perfect information. (There are many forms) Just that probabilities are baked into the price so that there are no easy arbs.