Tuesday, September 8, 2009

Tuesday Notes

Paul Krugman had a very nice essay in the NY Times' Sunday Magazine about how the economics profession missed the current crisis completely.

One of his theses suggests that mathematical fireworks became more important than the utility of the models themselves. Paul is the perfect person to make this claim: his work is delightful in that it is amazingly lucid and insightful with sparing use of high-level math. Try and publish some of his same seminal works today and you would have trouble - "too simple," referees would inevitable say. And yes, this resonates with me as I strive for the same simplicity in my theoretical work but sometimes wonder whether I should dress it up will a bunch of useless math. And I can't tell you how many papers I have received to referee from good journals that have pages and pages of math and proofs all to make a simple point that could have been made with one simple algebraic equation. That said, the introduction of serious math into economics has been hugely beneficial - allowing for precision and insight that would have not been there in its absence. But like anything, there can be too much of a good thing, however, it is this pushing of the boundaries, however, that enhances the profession overall. I don't think that Paul would argue for less math, just more attention to what it buys you in terms of insight and a much lower reliance on the rule of thumb that more math means better economics. In fact, I think it is more likely that the opposite is true.

Also in the NY Times, a nice article about how stimulus spending is being dwarfed by state level cuts (in this case in education), something I have talked about before. Having just returned from dropping my child off at his second grade classroom that is overstuffed with little bodies, I can relate.


GeoGeek said...

I couldn't agree more. Even physicists know that the models only get you so far - hence the old joke about a perfectly spherical cow. Physicists can't solve the general case of the three-body problem, why on earth do economists think they can solve the six-billion body problem?

Chuck Sheketoff said...

Too bad the NYTimes didn't cite how Oregon maximized the effect of the stimulus money by coming up with a balanced fiscal plan that not only made cuts in public services (arghh, some had to happen) but minimized the cuts and maximized the federal dollars by raising revenue in a targeted way (from corporations and the wealthest households).