1. China photo of the day; I love the caption as well.
2. Improvised car pools, organized through iPhones.
3. A photograph of Gresham’s Law.
4. How has the financial crisis changed economics? My words: "People used to think that these behavioral effects were small
anomalies that turned up in experiments but washed out in the real
world," says Tyler Cowen, an economist at George Mason University not
himself affiliated with behavioral economics. "But there’s a sense in
which they get multiplied in the real world."
5. NYT Words of the year: Robin Hanson’s "futarchy" makes the list. Go directly to the excerpt here.
The Overcoming Bias discussion on the buzzword is here. Robin Hanson’s original futarchy paper is here. Robin Hanson’s discussion of Abramowicz’ critique is here. The Facebook group of Futarchists is here; for some reason, futarchy seems especially popular in Australia.
I have never been happy with the Wikipedia entry of futarchy to which you link, Tyler; those of us who run a prediction market know the supposed “opacity problem” is overstated, and the “example” given in the Wikipedia article is poor. In practice, prediction market investors refuse to trade in contracts they don’t understand, which makes that argument moot.
Good to see China is embracing individualism.
Crew cuts can be close or closer, with or without sideburns.
Tyler – Do you agree with the negative depiction of economists from that boston globe article?
“But there’s a sense in which they get multiplied in the real world.”
I believe good macroeconomists know what a “bubble” is, even if there is little research in the field. Many knew the “recession” was coming at least three months in advanced, as I did last year. Most importantly, this crisis is a failure of finance, not economics; the article places few blame on economics. How many economists are modeling the stock market vs. how many analysts in finance? The failure for economists is the lack of leadership; the united front. Solutions should be presented by a consortium, not independent research.
I wonder what will happen to demand for economists? Our demand is derived from student demand for courses. I would predict a collapse of the academic finance market, but economics is harder to forecast.
Hopefully the reevaluation of economic theoretical models will go deeper than more emphasis of behavioral economics. Prospect theory is NOT what economics is missing.
The article on financial crises looks like the sort of thing that Dean Baker ought to beat up on his “Beat the Press” blog. He is constantly pointing out how the MSM is constantly going back to the same-old, same-old economists who failed to forecast things to explain how economists failed to forecast what was coming. Well, I suppose there is some logic to getting some of these people on the record, with Shiller being the only one discussed who was more or less on the money.
Regarding behavioral economics, of which I am a fan, no they were not the main ones calling it, although Shiller did, more or less. Better were the Post Keynesians, the folks who never stopped taking Minsky seriously, although Minsky and Kindleberger depend on a lot of behavioral stuff, and Shiller has been a huge fan of theirs for years.
There are also the complexity folks, but, well, let us not speak to much of them, especially those with behavioral and PK tendencies…
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Oh, of course I meant to say “too much of them.” “To much” suggests some sort of unspeakable verb action that such dangerous people most certainly should be kept from, especially those with even more questionable tendencies,
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Economists need to get out of the warm embrace of the Ivory Towers and actually start getting their hands dirty by actually testing their theories. Less intellectual masturbation please!
Economics is intellectual masturbation as this and other econ blogs prove every day.
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