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A plan to change how Harvard teaches economics

117 points by carlosgg 7y ago

carlosgg 7y ago
Vox article: https://www.vox.com/the-highlight/2019/5/14/18520783/harvard-economics-chetty https://www.vox.com/the-highlight/2019/5/14/18520783/harvard...
- dang 7y ago
  That gives more background, so we've changed the url to it from https://opportunityinsights.org/course/ https://opportunityinsights.org/course/. Thanks!
sarosh 7y ago
The course is EC1152 and titled “Big Data to Solve Economic and Social Problems”. Lecture notes are at https://opportunityinsights.org/wp-content/uploads/2019/05/Big-Data-Course-Slides-in-PDF-Format-1.zip https://opportunityinsights.org/wp-content/uploads/2019/05/B...
adamnemecek 7y ago
> Mankiw’s textbook covers the abstract theory that underpins economics as it has been understood for decades. It is about supply and demand, about how prices can be used to match production of a good to its consumption, and about the power of markets as a tool for allocating scarce resources. Few things are as abstract as supply and demand.
js8 7y ago
It's about time! The equilibrium theory of supply and demand has set economics back for decades. There is literally a century of criticism of the theory from postkeynesians, not only the lack of dynamism, but also all the strange assumptions.
- holy_city 7y ago
  I'm no economist or game theorist but in my experience with signals/systems, the "steady state" (which is an equilibrium, I guess) is the least interesting and important to the analysis of how a system behaves. Response to dynamics is far more important to understand and design around.
- barry-cotter 7y ago
  You know post-Keynesianism is just a flavour of dynamic stochastic general equilibrium models, right? Those “strange assumptions” are what distinguishes economics from disciplines whose models are so under specified that they can’t be proven wrong. Economic theory can at least say that if certain assumptions are met some set up is optimal.
  - viburnum 7y ago
    You mean New Keynesian.
  - js8 7y ago
    No, it isn't (as viburnum explains, you might have confused it with new-keynesian). Look what Steve Keen does with his Minsky program - that's decidedly not just DSGE flavor, it's a fully dynamic model. I would say distinguishing features of post-keynesian approach are fully dynamical modelling and treating uncertainty differently from risk. Both features go back to Keynes.
  - soVeryTired 7y ago
    > Those “strange assumptions” are what distinguishes economics from disciplines whose models are so under specified that they can’t be proven wrong When an economist sees evidence against the prevailing models, they call it a 'puzzle' and write a paper on it. So then there's one model per puzzle. That doesn't really feel like an approach that allows falsification either.
- neilwilson 7y ago
  The classic failure for me is the damping harmonics you get from the delay in a corrective response to a change input. It's control theory 101. Loans take time to approve and issue, therefore interest rate changes, even if all the other assumptions stack up, suffer from such control harmonics. They end up being just as badly targeted as the discretionary fiscal policy decisions they are supposed to replace. That problem is hand waved away using 'expectations', which when you dig down requires the entities in the calculation to have perfect foresight over infinite time. ie they can see the future. And such expectations would 'correct' the discretionary fiscal policy approach too.
  - BurningFrog 7y ago
    You seem to be talking about macroeconomics, which is a very different animal than supply/demand dynamics. Macroeconomics is a science all my itself, and by and in some ways a failed one. It may even be impossible as a (public) science, since the object of the study is intelligent, aware of the findings, and has incentive to change in response to it. This have very little to do with basic the microeconomic of supply/demand dynamics. Which could better be named "Price Theory".
- brownbat 7y ago
  People keep saying supply and demand is a broken theory, but I'm not sure how to interpret that. When oil prices fall some producers seem to shut off their pumps. When restaurants raise their prices the people I know tend to cook at home more. Do you think those are weird outliers, and increasing prices should spur increasing purchases as a general rule? Do you think consumer and producer behaviors have no relationship with price whatsoever? I have a hard time imagining what those worlds would look like, so I expect your critique is far more nuanced. But if it is a nuanced critique, then it seems we all agree on the general principles in broad strokes, and we don't need to throw out supply and demand after all.
  - atq2119 7y ago
    The biggest problem is with the supply curve, really. Economics tends to pretend that more supply requires a higher price. In reality, more supply very often leads to a lower price due to economies of scale. This is a fundamental problem because it means that even if you assume fixed supply and demand curves (which is very dubious), there can be more than one equilibrium. That in itself pretty much invalidates most of the standard subsequent analysis. The other big problem is that it assumes too much that all economic actors are price takers. In reality, prices are largely administered via cost-plus pricing, and advertisement and related tricks are used extensively to subvert the basic principles of supply and demand. Another problem specific to macroeconomics is that it largely ignored the effect of demand. Increased demand very often leads to an increase in production rather than an increase of prices, a fact that was largely ignored in decades of supply-centred thinking. This has led to bad policies in response to the global financial crisis, for example. I agree though that it makes no sense to throw out supply and demand as concepts entirely.
    - newaccount456 7y ago
      > Economics tends to pretend that more supply requires a higher price. No it doesn't. Shifts along the supply curve are due to changes in price, but other factors can shift the entire supply curve to the right or left. This is like day 1 of Economics 101.
camdenlock 7y ago
It’s hard not to be cynical when I see a link to vox.com, especially when my cynical assumptions end up being correct. “Please don’t be about revolutionizing economics via identitarianism... <taps link> ... sigh...”
- jonas21 7y ago
  Did we read the same article? The one I read is about changing how economics is taught by treating it more like a data-driven empirical science.
  - jnordwick 7y ago
    Keep reading. It goes so far as to hold Card up as some master of this new data-oriented movement - the guy massages it better than the girl offering you a happy ending. And it goes on to highlight other orthodox turned radical anti-capitalists. Anybody skilled enough can take a sample of data and play with it enough - fill in holes with other data - exclude some points - until they get the story they want. To some extent there needs to be a mechanism (beside "people are stupid") to tie things together. And this has been the general MO of left-wing economists. They lost ideas and theory so they moved to numbers. The numbers tend to not be predictive because they are so overly played with, so obviously everybody is just being irrational - the world is wrong not their theory because they proved it right with the data. It is Vox after all - a self proclaimed socialist website that has given page space to the the Jacobins on how Democratic Socialism isn't social democracy - it is only a starting point for pure socialism.
    - GoodJokes 7y ago
      Dude, you have no idea what socialism is. The vox article did briefly mention someone close to socialism, but in a pretty dismissive way. You sound like a straight up ass backwards libertarian. We could big data our way to socialism, maybe, but we could also big data our way to worse outcomes than currently. Technocratic solutions are pretty conservative at this point. Either you are ok with capitalism alienating and exploiting the vast majority of the world or you are not ok with it.
HillaryBriss 7y ago
If I read this right, Chetty's new EC course tries not only to put the focus on empirical data and its analysis, but also to disentangle ethical value judgments from economics. This is sorely needed. I've often thought that economists (on either side of the political divide) love to make pompous pronouncements about what's mathematically right and wrong and somehow translate that into what's ethically right and wrong, and then say that their opponents are stupid and evil.
- barry-cotter 7y ago
  Disentangling ethical value judgments from economics is difficult, to put it mildly. It’s also front and centre in any introductory economics course, where the first lecture will introduce the distinction between normative (what should be) and positive (what is). I’m not sure I’ve ever read an intro textbook that doesn’t introduce that distinction.
- kodz4 7y ago
  Chetty's own inequality/mobility data gets interpreted differently by the left and the right. There is no free lunch here, when it comes to dealing with people's vested interests (biases). Policy/decision makers know anytime things get political the issue is never about the data. If someone somewhere has to give up something, try doing it just showing them your data and analysis. You can run the experiment on HN. Try getting something in the architecture to change based on data, and pitch it to the HN community. See what happens...
carlosgg 7y ago
The course is called Economics 1152. The video lectures and course slides are available here: https://opportunityinsights.org/course/ https://opportunityinsights.org/course/
anbop 7y ago
Cool. One thing I hated about my Econ minor was that so much of undergraduate economics education assumes conditions which are never true. It’s like studying aerospace engineering and only introducing air resistance in graduate school.
- 333c 7y ago
  Good comparison. This is how I felt when I took ECON 101. Though I was fascinated with the concepts, they felt so far from reality as to be effectively useless.
  - WalterBright 7y ago
    My economics professor stated in lecture that he believed in the free enterprise system and the equal distribution of all income. I avoided taking any more econ classes. Dismal science, indeed.
  - notfromhere 7y ago
    That's what ECON 101 is, you need to get deeper into the curriculum. It's like complaining intro to algebra didn't teach you differential equations
    - 333c 7y ago
      The problem was that this stance was used to justify claims like "the free market allocates resources in the most efficient way" and "all taxes incur a deadweight loss" which are big statements to make based on such basic coursework. If the class is going to make claims like these, it needs to start with realistic assumptions.
- Kalium 7y ago
  My Newtonian physics courses taught projectile motion without really getting into the weeds on how to calculate air resistance. Given how complicated that can be and the much greater sophistication of mathematics involved, I think this is a reasonable choice. I don't think anybody walked out of those lectures believing that air resistance doesn't exist. Models, in my obviously limited experience, have the potential to be incredibly useful instructional tools. You can start with the unrealistic assumptions that are literally never true to get the basic points across, and then bring it stepwise closer to reality from them. Starting people off with the fluid dynamics to calculate air resistance reasonably accurately in projectile motion seems like it might make teaching Newtonian physics almost intractably difficult. On top of requiring a much more advanced understanding of mathematics than one can universally assume a college freshman is possessed of.
tathougies 7y ago
The difference big data/data science/empirical study and 'classical' economics (by which I'd include any system of economics that seeks to explain human behavior via an underlying metatheory) is that a primarily empirical approach obscures the necessary underlying theory present in any experiment where you're trying to fit data to a curve. For example, when you run a science experiment and you plot the data, you may find that you're looking at a line. While this is an interesting finding, it has zero predictive value for anything other than the exact situation you've collected data for. In order to formulate scientific law, you first must (a) believe that such a thing exists and (b) have some theory as to what shape the curve ought to fit. For example, a naive look at physics using an 'empirical' approach might incorrectly conclude that force is mass times acceleration. While moderately useful for many problems, this offers little predictive power in the general case. In order to actually formulate a law that can be of predictive value, you have to first consider various other laws and axioms (such as the constant speed of light for force), at which point -- by deduction, without any need of empirism -- you determine that this is wrong, and you need another kind of equation to fit your data to. I don't know if the simplistic demand curves drawn in the original text book are correct or not. However, at least those are based on a particular set of assumptions that can be validated or not. The kind of empiricism put forth by Mr Chetty does not offer this at all. All this is to say that, while data is useful for validation, it is not useful for prediction. The last thing we need is a black-box machine learning model to make major economic decisions off of. What we do need is proper models that are then validated, which don't necessarily need 'big data.'
- westurner 7y ago
  > All this is to say that, while data is useful for validation, it is not useful for prediction. The last thing we need is a black-box machine learning model to make major economic decisions off of. What we do need is proper models that are then validated, which don't necessarily need 'big data.' Hand-wavy theory - predicated upon physical-world models of equillibrium which are themselves classical and incomplete - without validation is preferable to empirical models? Please. Estimating the predictive power of some LaTeX equations is a different task than measuring error of a trained model. If the model does not fit all of the big data, the error term is higher; regardless of whether the model was pulled out of a hat in front of a captive audience or deduced though inference from actual data fed through an unbiased analysis pipeline. If the 'black-box predictive model' has lower error for all available data, the task is then to reverse the model! Not to argue for unvalidated theory. Here are a few discussions regarding validating economic models, some excellent open econometric lectures (as notebooks that are unfortunately not in an easily-testable programmatic form), the lack of responsible validation, and some tools and datasets that may be useful for validating hand-wavy classical economic theories: "When does the concept of equilibrium work in economics?" https://news.ycombinator.com/item?id=19214650 https://news.ycombinator.com/item?id=19214650 > "Lectures in Quantitative Economics as Python and Julia Notebooks" https://news.ycombinator.com/item?id=19083479 https://news.ycombinator.com/item?id=19083479 (data sources (pandas-datareader, pandaSDMX), tools, latex2sympy) That's just an equation in a PDF. (edit) Here's another useful thread: "Ask HN: Data analysis workflow?" https://news.ycombinator.com/item?id=18798244 https://news.ycombinator.com/item?id=18798244
Animats 7y ago
This isn't an economics class. It's a public policy class. Here are the course topics:[1] - Part I: Equality of Opportunity - Part II: Education - Part III: Racial Disparities - Part IV: Health - Part V: Criminal Justice - Part VI: Climate Change - Part VII: Tax Policy - Part VIII: Economic Development and Institutional Change This really belongs in Harvard's "JFK School of Government", not economics. Possible topics for a modern economics intro class: - Instability and equilibrium, or why markets oscillate. - From zero to one, the tendency to and effects of monopoly and near-monopoly. - Externalities, their uses and discontents. - Debt vs. equity vs. what tax policy rewards - Scarce resources that don't map to money - attention and time. - Finance as a system decoupled from productive activity [1] https://opportunityinsights.org/wp-content/uploads/2019/05/Econ1152_syllabus_spring19_forweb-1.pdf https://opportunityinsights.org/wp-content/uploads/2019/05/E...
- zamfi 7y ago
  It’s a political economy class, what economics used of be before it became all simplified models and math.
- onlyrealcuzzo 7y ago
  Is there a single book that covers all that? That would be awesome.
  - AtHeartEngineer 7y ago
    The class doesn't have a book, just a set of papers
  - garmaine 7y ago
    Schools like Harvard don’t teach from a book.
    - barry-cotter 7y ago
      Wrong side of the Atlantic. I didn’t have to buy a single textbook my entire undergrad because we had libraries and lecture notes. Required textbooks are far more a US thing than most other countries. Harvard absolutely has courses taught from a book. I’m sure Mankiw requires his textbook for Harvard’s intro econ course. He wrote it, he thinks it’s good.
viburnum 7y ago
You can look through any mainstream micro textbook, graduate or undergrad, and in 1,000 pages won’t see a single citation to support any model empirically. Compare that to any decent physics textbook, which will link models to the experiments that back them up. Economics for the real world won’t be simple and pure like physics, it’ll be more like geology or biology, with a lot more facts and a lot fewer theories of everything.
- inciampati 7y ago
  The subfield known as psychology and economics definitely is based on experimental evidence. The experiments may often be laboratory based or contrived, but they are nevertheless a major input to the concepts as developed.
- barry-cotter 7y ago
  Experimental economics is all about seeing how markets work in practice. Mechanism design is all about taking the theory of economics and using it in the real world, where it works. Economics for the real world exists already. That’s why companies like Microsoft, Amazon and Uber hire so many Ph.D. economists. https://en.wikipedia.org/wiki/Experimental_economics https://en.wikipedia.org/wiki/Experimental_economics Experimental economics is the application of experimental methods[1] to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in order to mimic real-world incentives. Experiments are used to help understand how and why markets and other exchange systems function as they do. Experimental economics have also expanded to understand institutions and the law (experimental law and economics).
- cjblomqvist 7y ago
  This is not true. I've been through an economics program and a lot of theories have empirical data to support them. Of course it's much harder to prove there is causation and not only correlation (and all that that entails), but that's part of being a topic which to a large extent deal with social phenomena (people). Can't dig up anything now but a lot of phenomena in papers (though of course far from all /majority) do or reference some sort of quantitative research).
fromthestart 7y ago
>That shift could change economics itself, by attracting a new breed of students who are intrigued by the field’s new empiricism, not put off by its mathiness and high theory. It could make economics departments more diverse, and more open to new perspectives from women and students of color. >He also gives Mankiw credit for moving the curve of Ec 10 to match the curves of other large Harvard classes, based on research showing that unnecessarily tough grading of economics classes disproportionately discourages women from taking them. I do not understand how attracting members of underrepresented classes benefits them when standards need to be lowered to do so. Sure, the practice opens up opportunities to a more diverse sampling of individuals in the short term, but in the long term you devalue the credentials and, as bad or worse, you risk churning out graduates who are more qualified on paper than in reality. I feel like this is a dangerous, growing trend in modern Western society and I do not understand how nobody seems to see it as a problem.
- WoahNoun 7y ago
  That's not what that quote implies. It implies that underrepresented demographics were less likely to enroll in classes that were known as having harsher grading curves than other classes. It doesn't imply that the standards for passing the class were lowered or the performance of underrepresented demographics was lower than non-underrepresented demographics once they enrolled in the course.
  - fmajid 7y ago
    What it really implies is that minorities are more interested when the class is not an obvious rationale for the perpetuation of a status quo they know from personal experience is unjust. There's good money to be made in being an Uncle Tom, but Harvard students have more attractive options.
    - macspoofing 7y ago
      Wow. What an ugly thing to say. Who do you consider an 'Uncle Tom'?
  - 7y ago
skanderbm 7y ago
This initiative is very close in spirit to the CORE economics curriculum (https://www.core-econ.org/ https://www.core-econ.org/). It focuses on observable social and economics consequences (failures of equality, opportunity and sustainability in particular), when introducing new economic concepts. The goal is to avoid students being blinded by appealing, but simplistic, economics models. Having been seduced by many an economic theory before, I for one welcome this perspective.
scottlocklin 7y ago
Suggested parts, considering what Harvard econ has done for the human race: IX: "How we looted the former Soviet Union, blew up their economy, got away with it, and blamed it on the Russians" (team seminar by Andrei Shleifer and Larry Summers) X: "Selling your country to foreigners, indebting the masses for fun and profit, then telling the fools the GDP got bigger" (Greg Mankiw) XI: "Linear regression, with ideology" (everyone else)
- bubblewrap 7y ago
  Can you explain how the US looted the former Soviet Union? Never heard that one before.
  - sprafa 7y ago
    It’s considered among knowledgeable circles that the creation of the Russia we know of today was largely the work of the “Chicago Boys” type group of economists who were sent to liberalize the Russian economy through “shock therapy”. There are lots of well researched stories that show they did stupid badly thought of things such as, famously, handing over stocks in major companies to its workers, instantly making them shareholders. That sounds fine in theory. But with poverty at their throat workers simply sold their sto luck to the first person who asked. Often these were people with “connections” or some money stashed away or criminally-funded “entrepreneurs”, who with some barebones organisation and planning could quickly scoop up billions of dollars worth of stock and take a controlling position in major companies by buying them cents for a dollar. Thus the oligarchs were born which quickly led to the kleptocratic Russia we know of today. Liberal minded and educated Russians realised western economists were annihilating their country. One well known Russian independent magazine called the newly rebuilt Russia a “neoliberal dystopia”. Which more and more I think of as quite accurate.
    - kmlx 7y ago
      i lived in eastern europe during my childhood. most of the issues of Russia of today (and the rest of eastern europe/ussr) stem from communism and its planned economy. during the latter days of the soviets the amount of graft/corruption was incredible. the factories would churn out garbage 24/7. while regular folk had no heating and electricity. this led to even more corruption and an individualist mentality post-breakup. the west might have contributed to this downfall, but 1. this downfall was completely normal and partly expected and 2. the main culprits can be found among the populations of russia and eastern europe. my 2 cents
bubblewrap 7y ago
"They were teaching their students big ideas. But they were ideas about what causes what — not about supply and demand." Because supply and demand doesn't cause things? I think there are some citations needed for that claim. Reading between the lines, I think the VOX article makes the "new approach" sound more stupid than it actually is. It is of course a good idea to test economic ideas with rigorous methods. Article makes it sound almost as if the "new economics" was just "grievance studies" - creating statistics about how disadvantaged some people are (as if society and economics have been previously unaware that such people exist). That would be stupid, because it doesn't teach you anything about what you could possibly do about it. But between the lines, the professor seems to conduct experiments to determine actual outcomes of economic measures. That makes sense. But you still need "normal economics" to come up with measures that have a shot at improving things.
asabjorn 7y ago
I wonder how long it will take before the Ivys preference of social justice over teaching core curricula will affect their market value.
- SantalBlush 7y ago
  They probably don't see this false dichotomy of social justice vs. core curricula, which would explain why they are fine with it.
MrTonyD 7y ago
I've worked with lots of Harvard graduates over the years. They all seemed to be cloned with some kind of "group-think" about Economics. Essentially, they were all convinced that markets solved big problems, and anything vaguely Keynesian or Socialist or Marxist was doomed to failure. So I guess I view Harvard Economics as a tool of those with power, and probably something which has contributed to creating a worse world. (Hey, I believe markets have benefits too, but not to the point of dismissing moderating policies.)
Proven 7y ago
> “Economics 1152: Using Big Data to Solve Economic and Social Problems.” That's funny. Individuals and company owners work to solve their own (and shareholders'), not "social", problems. That leaves us with one group who believes there are social problems that need solving: statists. How can State even try to solve social problems using Big Data if I don't give them all my info and announce my intentions? They can't. They can try - and waste their time and taxpayer money - by gathering more data and increasing the role of State (which leads to poverty and worse). Stalinism, but now with Big Data and AI. Who knows - this time it might work!

117 points by carlosgg 7y ago

Vox article: https://www.vox.com/the-highlight/2019/5/14/18520783/harvard-economics-chetty https://www.vox.com/the-highlight/2019/5/14/18520783/harvard...

dang 7y ago
That gives more background, so we've changed the url to it from https://opportunityinsights.org/course/ https://opportunityinsights.org/course/. Thanks!

sarosh 7y ago

The course is EC1152 and titled “Big Data to Solve Economic and Social Problems”. Lecture notes are at https://opportunityinsights.org/wp-content/uploads/2019/05/Big-Data-Course-Slides-in-PDF-Format-1.zip https://opportunityinsights.org/wp-content/uploads/2019/05/B...

adamnemecek 7y ago

> Mankiw’s textbook covers the abstract theory that underpins economics as it has been understood for decades. It is about supply and demand, about how prices can be used to match production of a good to its consumption, and about the power of markets as a tool for allocating scarce resources. Few things are as abstract as supply and demand.

js8 7y ago

It's about time! The equilibrium theory of supply and demand has set economics back for decades. There is literally a century of criticism of the theory from postkeynesians, not only the lack of dynamism, but also all the strange assumptions.

holy_city 7y ago
I'm no economist or game theorist but in my experience with signals/systems, the "steady state" (which is an equilibrium, I guess) is the least interesting and important to the analysis of how a system behaves. Response to dynamics is far more important to understand and design around.
barry-cotter 7y ago
You know post-Keynesianism is just a flavour of dynamic stochastic general equilibrium models, right? Those “strange assumptions” are what distinguishes economics from disciplines whose models are so under specified that they can’t be proven wrong. Economic theory can at least say that if certain assumptions are met some set up is optimal.
- viburnum 7y ago
  You mean New Keynesian.
- js8 7y ago
  No, it isn't (as viburnum explains, you might have confused it with new-keynesian). Look what Steve Keen does with his Minsky program - that's decidedly not just DSGE flavor, it's a fully dynamic model. I would say distinguishing features of post-keynesian approach are fully dynamical modelling and treating uncertainty differently from risk. Both features go back to Keynes.
- soVeryTired 7y ago
  > Those “strange assumptions” are what distinguishes economics from disciplines whose models are so under specified that they can’t be proven wrong When an economist sees evidence against the prevailing models, they call it a 'puzzle' and write a paper on it. So then there's one model per puzzle. That doesn't really feel like an approach that allows falsification either.
neilwilson 7y ago
The classic failure for me is the damping harmonics you get from the delay in a corrective response to a change input. It's control theory 101. Loans take time to approve and issue, therefore interest rate changes, even if all the other assumptions stack up, suffer from such control harmonics. They end up being just as badly targeted as the discretionary fiscal policy decisions they are supposed to replace. That problem is hand waved away using 'expectations', which when you dig down requires the entities in the calculation to have perfect foresight over infinite time. ie they can see the future. And such expectations would 'correct' the discretionary fiscal policy approach too.
- BurningFrog 7y ago
  You seem to be talking about macroeconomics, which is a very different animal than supply/demand dynamics. Macroeconomics is a science all my itself, and by and in some ways a failed one. It may even be impossible as a (public) science, since the object of the study is intelligent, aware of the findings, and has incentive to change in response to it. This have very little to do with basic the microeconomic of supply/demand dynamics. Which could better be named "Price Theory".
brownbat 7y ago
People keep saying supply and demand is a broken theory, but I'm not sure how to interpret that. When oil prices fall some producers seem to shut off their pumps. When restaurants raise their prices the people I know tend to cook at home more. Do you think those are weird outliers, and increasing prices should spur increasing purchases as a general rule? Do you think consumer and producer behaviors have no relationship with price whatsoever? I have a hard time imagining what those worlds would look like, so I expect your critique is far more nuanced. But if it is a nuanced critique, then it seems we all agree on the general principles in broad strokes, and we don't need to throw out supply and demand after all.
- atq2119 7y ago
  The biggest problem is with the supply curve, really. Economics tends to pretend that more supply requires a higher price. In reality, more supply very often leads to a lower price due to economies of scale. This is a fundamental problem because it means that even if you assume fixed supply and demand curves (which is very dubious), there can be more than one equilibrium. That in itself pretty much invalidates most of the standard subsequent analysis. The other big problem is that it assumes too much that all economic actors are price takers. In reality, prices are largely administered via cost-plus pricing, and advertisement and related tricks are used extensively to subvert the basic principles of supply and demand. Another problem specific to macroeconomics is that it largely ignored the effect of demand. Increased demand very often leads to an increase in production rather than an increase of prices, a fact that was largely ignored in decades of supply-centred thinking. This has led to bad policies in response to the global financial crisis, for example. I agree though that it makes no sense to throw out supply and demand as concepts entirely.
  - newaccount456 7y ago
    > Economics tends to pretend that more supply requires a higher price. No it doesn't. Shifts along the supply curve are due to changes in price, but other factors can shift the entire supply curve to the right or left. This is like day 1 of Economics 101.

camdenlock 7y ago

It’s hard not to be cynical when I see a link to vox.com, especially when my cynical assumptions end up being correct. “Please don’t be about revolutionizing economics via identitarianism... <taps link> ... sigh...”

jonas21 7y ago
Did we read the same article? The one I read is about changing how economics is taught by treating it more like a data-driven empirical science.
- jnordwick 7y ago
  Keep reading. It goes so far as to hold Card up as some master of this new data-oriented movement - the guy massages it better than the girl offering you a happy ending. And it goes on to highlight other orthodox turned radical anti-capitalists. Anybody skilled enough can take a sample of data and play with it enough - fill in holes with other data - exclude some points - until they get the story they want. To some extent there needs to be a mechanism (beside "people are stupid") to tie things together. And this has been the general MO of left-wing economists. They lost ideas and theory so they moved to numbers. The numbers tend to not be predictive because they are so overly played with, so obviously everybody is just being irrational - the world is wrong not their theory because they proved it right with the data. It is Vox after all - a self proclaimed socialist website that has given page space to the the Jacobins on how Democratic Socialism isn't social democracy - it is only a starting point for pure socialism.
  - GoodJokes 7y ago
    Dude, you have no idea what socialism is. The vox article did briefly mention someone close to socialism, but in a pretty dismissive way. You sound like a straight up ass backwards libertarian. We could big data our way to socialism, maybe, but we could also big data our way to worse outcomes than currently. Technocratic solutions are pretty conservative at this point. Either you are ok with capitalism alienating and exploiting the vast majority of the world or you are not ok with it.

HillaryBriss 7y ago

If I read this right, Chetty's new EC course tries not only to put the focus on empirical data and its analysis, but also to disentangle ethical value judgments from economics. This is sorely needed. I've often thought that economists (on either side of the political divide) love to make pompous pronouncements about what's mathematically right and wrong and somehow translate that into what's ethically right and wrong, and then say that their opponents are stupid and evil.

barry-cotter 7y ago
Disentangling ethical value judgments from economics is difficult, to put it mildly. It’s also front and centre in any introductory economics course, where the first lecture will introduce the distinction between normative (what should be) and positive (what is). I’m not sure I’ve ever read an intro textbook that doesn’t introduce that distinction.
kodz4 7y ago
Chetty's own inequality/mobility data gets interpreted differently by the left and the right. There is no free lunch here, when it comes to dealing with people's vested interests (biases). Policy/decision makers know anytime things get political the issue is never about the data. If someone somewhere has to give up something, try doing it just showing them your data and analysis. You can run the experiment on HN. Try getting something in the architecture to change based on data, and pitch it to the HN community. See what happens...

carlosgg 7y ago

The course is called Economics 1152. The video lectures and course slides are available here: https://opportunityinsights.org/course/ https://opportunityinsights.org/course/

anbop 7y ago

Cool. One thing I hated about my Econ minor was that so much of undergraduate economics education assumes conditions which are never true. It’s like studying aerospace engineering and only introducing air resistance in graduate school.

333c 7y ago
Good comparison. This is how I felt when I took ECON 101. Though I was fascinated with the concepts, they felt so far from reality as to be effectively useless.
- WalterBright 7y ago
  My economics professor stated in lecture that he believed in the free enterprise system and the equal distribution of all income. I avoided taking any more econ classes. Dismal science, indeed.
- notfromhere 7y ago
  That's what ECON 101 is, you need to get deeper into the curriculum. It's like complaining intro to algebra didn't teach you differential equations
  - 333c 7y ago
    The problem was that this stance was used to justify claims like "the free market allocates resources in the most efficient way" and "all taxes incur a deadweight loss" which are big statements to make based on such basic coursework. If the class is going to make claims like these, it needs to start with realistic assumptions.
Kalium 7y ago
My Newtonian physics courses taught projectile motion without really getting into the weeds on how to calculate air resistance. Given how complicated that can be and the much greater sophistication of mathematics involved, I think this is a reasonable choice. I don't think anybody walked out of those lectures believing that air resistance doesn't exist. Models, in my obviously limited experience, have the potential to be incredibly useful instructional tools. You can start with the unrealistic assumptions that are literally never true to get the basic points across, and then bring it stepwise closer to reality from them. Starting people off with the fluid dynamics to calculate air resistance reasonably accurately in projectile motion seems like it might make teaching Newtonian physics almost intractably difficult. On top of requiring a much more advanced understanding of mathematics than one can universally assume a college freshman is possessed of.

tathougies 7y ago

The difference big data/data science/empirical study and 'classical' economics (by which I'd include any system of economics that seeks to explain human behavior via an underlying metatheory) is that a primarily empirical approach obscures the necessary underlying theory present in any experiment where you're trying to fit data to a curve. For example, when you run a science experiment and you plot the data, you may find that you're looking at a line. While this is an interesting finding, it has zero predictive value for anything other than the exact situation you've collected data for. In order to formulate scientific law, you first must (a) believe that such a thing exists and (b) have some theory as to what shape the curve ought to fit. For example, a naive look at physics using an 'empirical' approach might incorrectly conclude that force is mass times acceleration. While moderately useful for many problems, this offers little predictive power in the general case. In order to actually formulate a law that can be of predictive value, you have to first consider various other laws and axioms (such as the constant speed of light for force), at which point -- by deduction, without any need of empirism -- you determine that this is wrong, and you need another kind of equation to fit your data to. I don't know if the simplistic demand curves drawn in the original text book are correct or not. However, at least those are based on a particular set of assumptions that can be validated or not. The kind of empiricism put forth by Mr Chetty does not offer this at all. All this is to say that, while data is useful for validation, it is not useful for prediction. The last thing we need is a black-box machine learning model to make major economic decisions off of. What we do need is proper models that are then validated, which don't necessarily need 'big data.'

westurner 7y ago
> All this is to say that, while data is useful for validation, it is not useful for prediction. The last thing we need is a black-box machine learning model to make major economic decisions off of. What we do need is proper models that are then validated, which don't necessarily need 'big data.' Hand-wavy theory - predicated upon physical-world models of equillibrium which are themselves classical and incomplete - without validation is preferable to empirical models? Please. Estimating the predictive power of some LaTeX equations is a different task than measuring error of a trained model. If the model does not fit all of the big data, the error term is higher; regardless of whether the model was pulled out of a hat in front of a captive audience or deduced though inference from actual data fed through an unbiased analysis pipeline. If the 'black-box predictive model' has lower error for all available data, the task is then to reverse the model! Not to argue for unvalidated theory. Here are a few discussions regarding validating economic models, some excellent open econometric lectures (as notebooks that are unfortunately not in an easily-testable programmatic form), the lack of responsible validation, and some tools and datasets that may be useful for validating hand-wavy classical economic theories: "When does the concept of equilibrium work in economics?" https://news.ycombinator.com/item?id=19214650 https://news.ycombinator.com/item?id=19214650 > "Lectures in Quantitative Economics as Python and Julia Notebooks" https://news.ycombinator.com/item?id=19083479 https://news.ycombinator.com/item?id=19083479 (data sources (pandas-datareader, pandaSDMX), tools, latex2sympy) That's just an equation in a PDF. (edit) Here's another useful thread: "Ask HN: Data analysis workflow?" https://news.ycombinator.com/item?id=18798244 https://news.ycombinator.com/item?id=18798244

Animats 7y ago

This isn't an economics class. It's a public policy class. Here are the course topics:[1] - Part I: Equality of Opportunity - Part II: Education - Part III: Racial Disparities - Part IV: Health - Part V: Criminal Justice - Part VI: Climate Change - Part VII: Tax Policy - Part VIII: Economic Development and Institutional Change This really belongs in Harvard's "JFK School of Government", not economics. Possible topics for a modern economics intro class: - Instability and equilibrium, or why markets oscillate. - From zero to one, the tendency to and effects of monopoly and near-monopoly. - Externalities, their uses and discontents. - Debt vs. equity vs. what tax policy rewards - Scarce resources that don't map to money - attention and time. - Finance as a system decoupled from productive activity [1] https://opportunityinsights.org/wp-content/uploads/2019/05/Econ1152_syllabus_spring19_forweb-1.pdf https://opportunityinsights.org/wp-content/uploads/2019/05/E...

zamfi 7y ago
It’s a political economy class, what economics used of be before it became all simplified models and math.
onlyrealcuzzo 7y ago
Is there a single book that covers all that? That would be awesome.
- AtHeartEngineer 7y ago
  The class doesn't have a book, just a set of papers
- garmaine 7y ago
  Schools like Harvard don’t teach from a book.
  - barry-cotter 7y ago
    Wrong side of the Atlantic. I didn’t have to buy a single textbook my entire undergrad because we had libraries and lecture notes. Required textbooks are far more a US thing than most other countries. Harvard absolutely has courses taught from a book. I’m sure Mankiw requires his textbook for Harvard’s intro econ course. He wrote it, he thinks it’s good.

viburnum 7y ago

You can look through any mainstream micro textbook, graduate or undergrad, and in 1,000 pages won’t see a single citation to support any model empirically. Compare that to any decent physics textbook, which will link models to the experiments that back them up. Economics for the real world won’t be simple and pure like physics, it’ll be more like geology or biology, with a lot more facts and a lot fewer theories of everything.

inciampati 7y ago
The subfield known as psychology and economics definitely is based on experimental evidence. The experiments may often be laboratory based or contrived, but they are nevertheless a major input to the concepts as developed.
barry-cotter 7y ago
Experimental economics is all about seeing how markets work in practice. Mechanism design is all about taking the theory of economics and using it in the real world, where it works. Economics for the real world exists already. That’s why companies like Microsoft, Amazon and Uber hire so many Ph.D. economists. https://en.wikipedia.org/wiki/Experimental_economics https://en.wikipedia.org/wiki/Experimental_economics Experimental economics is the application of experimental methods[1] to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in order to mimic real-world incentives. Experiments are used to help understand how and why markets and other exchange systems function as they do. Experimental economics have also expanded to understand institutions and the law (experimental law and economics).
cjblomqvist 7y ago
This is not true. I've been through an economics program and a lot of theories have empirical data to support them. Of course it's much harder to prove there is causation and not only correlation (and all that that entails), but that's part of being a topic which to a large extent deal with social phenomena (people). Can't dig up anything now but a lot of phenomena in papers (though of course far from all /majority) do or reference some sort of quantitative research).

fromthestart 7y ago

>That shift could change economics itself, by attracting a new breed of students who are intrigued by the field’s new empiricism, not put off by its mathiness and high theory. It could make economics departments more diverse, and more open to new perspectives from women and students of color. >He also gives Mankiw credit for moving the curve of Ec 10 to match the curves of other large Harvard classes, based on research showing that unnecessarily tough grading of economics classes disproportionately discourages women from taking them. I do not understand how attracting members of underrepresented classes benefits them when standards need to be lowered to do so. Sure, the practice opens up opportunities to a more diverse sampling of individuals in the short term, but in the long term you devalue the credentials and, as bad or worse, you risk churning out graduates who are more qualified on paper than in reality. I feel like this is a dangerous, growing trend in modern Western society and I do not understand how nobody seems to see it as a problem.

WoahNoun 7y ago
That's not what that quote implies. It implies that underrepresented demographics were less likely to enroll in classes that were known as having harsher grading curves than other classes. It doesn't imply that the standards for passing the class were lowered or the performance of underrepresented demographics was lower than non-underrepresented demographics once they enrolled in the course.
- fmajid 7y ago
  What it really implies is that minorities are more interested when the class is not an obvious rationale for the perpetuation of a status quo they know from personal experience is unjust. There's good money to be made in being an Uncle Tom, but Harvard students have more attractive options.
  - macspoofing 7y ago
    Wow. What an ugly thing to say. Who do you consider an 'Uncle Tom'?
- 7y ago

skanderbm 7y ago

This initiative is very close in spirit to the CORE economics curriculum (https://www.core-econ.org/ https://www.core-econ.org/). It focuses on observable social and economics consequences (failures of equality, opportunity and sustainability in particular), when introducing new economic concepts. The goal is to avoid students being blinded by appealing, but simplistic, economics models. Having been seduced by many an economic theory before, I for one welcome this perspective.

scottlocklin 7y ago

Suggested parts, considering what Harvard econ has done for the human race: IX: "How we looted the former Soviet Union, blew up their economy, got away with it, and blamed it on the Russians" (team seminar by Andrei Shleifer and Larry Summers) X: "Selling your country to foreigners, indebting the masses for fun and profit, then telling the fools the GDP got bigger" (Greg Mankiw) XI: "Linear regression, with ideology" (everyone else)

bubblewrap 7y ago
Can you explain how the US looted the former Soviet Union? Never heard that one before.
- sprafa 7y ago
  It’s considered among knowledgeable circles that the creation of the Russia we know of today was largely the work of the “Chicago Boys” type group of economists who were sent to liberalize the Russian economy through “shock therapy”. There are lots of well researched stories that show they did stupid badly thought of things such as, famously, handing over stocks in major companies to its workers, instantly making them shareholders. That sounds fine in theory. But with poverty at their throat workers simply sold their sto luck to the first person who asked. Often these were people with “connections” or some money stashed away or criminally-funded “entrepreneurs”, who with some barebones organisation and planning could quickly scoop up billions of dollars worth of stock and take a controlling position in major companies by buying them cents for a dollar. Thus the oligarchs were born which quickly led to the kleptocratic Russia we know of today. Liberal minded and educated Russians realised western economists were annihilating their country. One well known Russian independent magazine called the newly rebuilt Russia a “neoliberal dystopia”. Which more and more I think of as quite accurate.
  - kmlx 7y ago
    i lived in eastern europe during my childhood. most of the issues of Russia of today (and the rest of eastern europe/ussr) stem from communism and its planned economy. during the latter days of the soviets the amount of graft/corruption was incredible. the factories would churn out garbage 24/7. while regular folk had no heating and electricity. this led to even more corruption and an individualist mentality post-breakup. the west might have contributed to this downfall, but 1. this downfall was completely normal and partly expected and 2. the main culprits can be found among the populations of russia and eastern europe. my 2 cents

bubblewrap 7y ago

"They were teaching their students big ideas. But they were ideas about what causes what — not about supply and demand." Because supply and demand doesn't cause things? I think there are some citations needed for that claim. Reading between the lines, I think the VOX article makes the "new approach" sound more stupid than it actually is. It is of course a good idea to test economic ideas with rigorous methods. Article makes it sound almost as if the "new economics" was just "grievance studies" - creating statistics about how disadvantaged some people are (as if society and economics have been previously unaware that such people exist). That would be stupid, because it doesn't teach you anything about what you could possibly do about it. But between the lines, the professor seems to conduct experiments to determine actual outcomes of economic measures. That makes sense. But you still need "normal economics" to come up with measures that have a shot at improving things.

asabjorn 7y ago

I wonder how long it will take before the Ivys preference of social justice over teaching core curricula will affect their market value.

SantalBlush 7y ago
They probably don't see this false dichotomy of social justice vs. core curricula, which would explain why they are fine with it.

MrTonyD 7y ago

I've worked with lots of Harvard graduates over the years. They all seemed to be cloned with some kind of "group-think" about Economics. Essentially, they were all convinced that markets solved big problems, and anything vaguely Keynesian or Socialist or Marxist was doomed to failure. So I guess I view Harvard Economics as a tool of those with power, and probably something which has contributed to creating a worse world. (Hey, I believe markets have benefits too, but not to the point of dismissing moderating policies.)

Proven 7y ago

> “Economics 1152: Using Big Data to Solve Economic and Social Problems.” That's funny. Individuals and company owners work to solve their own (and shareholders'), not "social", problems. That leaves us with one group who believes there are social problems that need solving: statists. How can State even try to solve social problems using Big Data if I don't give them all my info and announce my intentions? They can't. They can try - and waste their time and taxpayer money - by gathering more data and increasing the role of State (which leads to poverty and worse). Stalinism, but now with Big Data and AI. Who knows - this time it might work!