The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.
- BLS Handbook of Methods
- Bureau of Economic Analysis
- Bureau of Labor Statistics
- Congressional Budget Office
- Economic Data - FRED® II, St. Louis Fed
- Office of Management and Budget
- Statistics: Releases and Historical Data, Board of Governors
- U.S. Census Bureau Economic Programs
- White House Economic Statistics Briefing Room
November 08, 2006
Fisking Dave Altig (Philip Ball Responds)
In an earlier post, I gave science writer Philip Ball a hard time about his Financial Times article giving economists (or at least mainstream economists) a hard time. Dr. Ball has responded in the comment section of that post, but I feel he deserves equal time "above the fold" as it were. Here, then, a lightly-edited version of his rejoinder, with context inserted.
On my claim that economists do not assume that market outcomes are efficient:
The key criticism here – and in most other critiques of my article – is that economists seem to be reading “neoclassical economics” as “all of economics”. Interesting, that, and perhaps revealing, but come on guys, read the print. Once you do that, the remark about institutions collapses. So does the remark about market efficiency.
So let me say this clearly. Lots of economics goes beyond assumptions about perfectly rational agents, fixed preferences, perfectly efficient markets and so forth. That’s great. But lots doesn’t, and there are journals where you won’t get a look in if you challenge that dogma. My point is that it is time to ditch those notions altogether. Stop teaching them to undergraduates. Not only do they not work, but they are (mostly) demonstrably wrong in behavioural terms, and even if you accept them, the models derived from those assumptions are internally inconsistent. Won’t you at least admit that?
On my objection to asserting that neoclassical economics has "right-wing" political origins:
“It is tempting to infer that…” This is a rhetorical structure. It implies that “Yes, it’s tempting, but we should resist that simplistic idea.” I didn’t think this was so hard so understand, but sorry if I was wrong to assume that. In any event, clearly I should’t have mentioned the dread words ‘right-wing’, because you’vie really got hung up on that. I’m interested in why it provoked such a response.
On the "error" in neoclassical economics:
“This error” – is not that economics is highly mathematical, but that economics got stuck on ideas of equilibrium and a balancing of forces. Again, that’s what my article says quite clearly.
On the use of the word business cycle in economics:
“Business cycle” – words matter. Cyclist has been a persistent myth in economics, whence Kitchen cycles, Jugular cycles, Kuznets cycles, Kindred cycles, ad nausea. Ditch the word – it is not helping. In fact, if this really is ‘fine’ with you, then do call them ‘aggregate fluctuations’. ‘Cycle’ sounds like something well behaved and well understood. ‘Fluctuations’ sounds a bit more disconcerting, but why not face up to that?
“RBC theory” – yes, that’s what I’m referring to. And as I clearly said, what I object to is the way it places the cause of fluctuations outside the system, in the form of random, external shocks. Why not entertain the idea that the fluctuations may be intrinsic to the dynamics of this complex system?
On my claim that it is common for people who would call themselves neoclassical economists to step outside the assumption that agents are perfectly rational:
“Conversations like this one” – that ‘conversation’ begins “The rational expectations hypothesis swept through macroeconomics during the 1970s and permanently altered the landscape. It remains the prevailing paradigm in macroeconomics, and rational expectations is routinely used as the standard solution concept in both theoretical and applied macroeconomic modeling.” Look, I’m glad that hypothesis is now being debated, but are you seriously saying that this disproves my point?
On the very last word of my earlier post:
“Whatever” – i.e. shut up. Well, OK, it’s your blog. But I thought these comments were meant to be pointing out my errors.
[OK, I'm embarrassed by that one. Dr. Ball rightly called me out on what really was just a snotty nonconstructive comment. I apologize.]
Ball sums up:
I’vie no objection to economics calling itself a science. I believe that is just what it should be. And it’s a really, really hard science, which other scientists don’t sufficiently appreciate. What puzzles me is why it is finding it so hard to discard wrong ideas. All sciences struggle with that, but this one seems to have more problems than most. At least one economist agrees: see the FT on 6 November, http://www.ft.com/cms/s/d0cd9ee2-6d3b-11db-9a4d-0000779e2340.html.
But look, I’m sure all of this sounds more aggressive than I want it to, because I get irritated when I think my words haven’t been read properly. I’m not interested, however, in saying that I’m right and you’re wrong. There’s a lot I can learn from this exchange. And I recognize that I could have done more to indicate that there are many branches of economics, by no means all of which suffer from the defects I mentioned. If I’ve provoked discussion, the article has served its purpose. Let’s try to keep it as discussion, and not turn it into a battle.
The only thing I omitted from these remarks were comments specifically directed to other comments. If you are interested in those -- as well as my own response to Dr. Ball's response -- I refer you back to the comment section of the original post.
TrackBack URL for this entry:
Listed below are links to blogs that reference Fisking Dave Altig (Philip Ball Responds) :
- Part-Time Workers Are Less Likely to Get a Pay Raise
- Learning about an ML-Driven Economy
- Hitting a Cyclical High: The Wage Growth Premium from Changing Jobs
- Thoughts on a Long-Run Monetary Policy Framework, Part 4: Flexible Price-Level Targeting in the Big Picture
- Thoughts on a Long-Run Monetary Policy Framework, Part 3: An Example of Flexible Price-Level Targeting
- Thoughts on a Long-Run Monetary Policy Framework, Part 2: The Principle of Bounded Nominal Uncertainty
- Thoughts on a Long-Run Monetary Policy Framework: Framing the Question
- What Are Businesses Saying about Tax Reform Now?
- A First Look at Employment
- Weighting the Wage Growth Tracker
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- November 2017
- October 2017
- September 2017
- August 2017
- Business Cycles
- Business Inflation Expectations
- Capital and Investment
- Capital Markets
- Data Releases
- Economic conditions
- Economic Growth and Development
- Exchange Rates and the Dollar
- Fed Funds Futures
- Federal Debt and Deficits
- Federal Reserve and Monetary Policy
- Financial System
- Fiscal Policy
- Health Care
- Inflation Expectations
- Interest Rates
- Labor Markets
- Latin America/South America
- Monetary Policy
- Money Markets
- Real Estate
- Saving, Capital, and Investment
- Small Business
- Social Security
- This, That, and the Other
- Trade Deficit
- Wage Growth