Nobel Economics prize goes to...

[Handprints]

...Elinor Ostrom and Oliver Williamson, both of whom have done a lot of debunking of classical economics' (and movement conservatism's) theories about what markets can and can't achieve on their own. I'm feeling rather smugly proud of my own beliefs in that regard right now and would like someone to send me a very large cheque and an invitation to Stockholm...(Really, I suppose I should have done some actual work to deserve them, rather than just having a feeling.)

 

[Handley_Page]

...Elinor Ostrom and Oliver Williamson, both of whom have done a lot of debunking of classical economics' (and movement conservatism's) theories about what markets can and can't achieve on their own. I'm feeling rather smugly proud of my own beliefs in that regard right now and would like someone to send me a very large cheque and an invitation to Stockholm...(Really, I suppose I should have done some actual work to deserve them, rather than just having a feeling.)

I sometimes feel that way about the sciences.

 

[trysail]

I frequently think that it wasn't the Malthusian aspect that caused the field to be nicknamed "The Dismal Science," rather it was the fact that— like most of social "science"— it is not possible to empirically test theories. The testing of theories can only be accomplished by analogy. As a result, it is therefore also difficult, if not downright impossible, for laymen to discriminate between fast-talking charlatans and truth.

It leads me to periodically exclaim, "If something can't be quantified, it is ( potentially ) bullshit." When something genuinely defies quantification, only wisdom, intellectual integrity, maturity, good judgment, identity of interest and experience will answer.

Whatever you do, don't ask me about the utility of the Capital Asset Pricing Model or Modern Portfolio Theory or the Efficient Market Hypothesis. While providing something of an abstract intellectual framework, in actual practice those theories ( particularly when employed by people like Myron Scholes or Robert Merton or the rocket scientists hired by Wall Street to construct MBSs, CDOs, SIVs, etc. ) are ruinous IN THE ABSENCE OF APPLICATION OF COMMON SENSE and experience. Warren Buffett has already weighed in with his thoughts on the subject.

 

[JamesSD]

To me, Classical Economics is a lot like Newton's Laws of Motion. They do an excellent job of describing a wide range of things. However, at some point, both break down and fail to accurately describe how things actually work. For Newtonian physics the problems arise as the particles get smaller and smaller. Classical economics are based off some assumptions that are only true when you get a very large group of people, and also have trouble when markets have high barriers to entry or regulation.

I find behavioral economics to be one of the most exciting scientific fields around these days.

 

[Liar]

I find behavioral economics to be one of the most exciting scientific fields around these days.

It takes into account that money is handled and economic desicions are made by people. And that people are sometimes pretty weird.

 

[uzya]

They should give me the nobel prize for economics, because I have contributed as much to economics as Obama has to peace.

 

[JamesSD]

It takes into account that money is handled and economic desicions are made by people. And that people are sometimes pretty weird.

Exactly. Although, in theory if you take enough people being weird over a long enough period of time, most of those decisions will average each other out and you'll be left with the dominant trend. But, as discoveries in social psychology have shown, groups of people can collectively be irrational together. The recent housing bubble and collapse in the credit markets is a glaringly obvious example of how markets can either be very, very wrong or at least create outcomes that are so detrimental in the short-run they need to be prevented, even if things will correct themselves in the long-run.

I love the fact that there are quality books being published for mass consumption on the topic such as Predictably Irrational and Blink. But then again, I'm kind of a nerd in that regard.

 

[amicus]

They should give me the nobel prize for economics, because I have contributed as much to economics as Obama has to peace.[/QUOTE]

~~~

Hello and welcome, uzya from Asia...nice to have you on board...

Perhaps we could share that prize in economics, as I set forth to deflate the bragging handprints in his self congratulatory modus operandi...

Any system, economic or sociological, that violates the innate rights of man, will inevitably fail. This casual, 'whatever works', premise, ignores the basic value that underlies all systems, the rights of the individual.

Free market capitalism, resting upon laws that enumerate the rights of life, liberty and property, is the best and only system that supplies the needs of humanity without violating those basic human rights.

We can split that 1.4 million in prize money, 50/50, if thas okay wid u?

amicus

 

[JAMESBJOHNSON]

They should give me the nobel prize for economics, because I have contributed as much to economics as Obama has to peace.

Obama was nominated for the economics prize. They'd like to give him one for medicine in hopes he manages to pull his head from his butt.

 

[Loring2]

Praxeology

I frequently think that it wasn't the Malthusian aspect that caused the field to be nicknamed "The Dismal Science," rather it was the fact that— like most of social "science"— it is not possible to empirically test theories. The testing of theories can only be accomplished by analogy. As a result, it is therefore also difficult, if not downright impossible, for laymen to discriminate between fast-talking charlatans and truth.

It leads me to periodically exclaim, "If something can't be quantified, it is ( potentially ) bullshit." When something genuinely defies quantification, only wisdom, intellectual integrity, maturity, good judgment, identity of interest and experience will answer.

Whatever you do, don't ask me about the utility of the Capital Asset Pricing Model or Modern Portfolio Theory. While providing something of an abstract intellectual framework, in actual practice those theories ( particularly when employed by people like Myron Scholes or Robert Merton or the rocket scientists hired by Wall Street to construct MBSs, CDOs, SIVs, etc. ) are ruinous IN THE ABSENCE OF APPLICATION OF COMMON SENSE and experience. Warren Buffett has already weighed in with his thoughts on the subject.

You've said it well here. Economics is not and cannot be a science and any effort to reduce it to a science is either too foolish or too arrogant or both to be taken seriously.

Mises dealt with it seriously and if we are to understand the field of Economics to any degree we must, I think, realize that we make all monetary decisions in ordinal fashion and we don't assign numerical priorities to our decisions. Therefore we cannot be plugged into the equations that comprise the models. We can't be quantified. We can however be fooled by clever salesmanship

Caveat Emptor applies.

Loring