Hal Varian at Google

There is a new and fun article on this topic and it turns out Varian had the same favorite novel as did Paul Krugman:

It's a satisfying development for Varian, a guy whose career as an
economist was inspired by a sci-fi novel he read in junior high. "In
Isaac Asimov's first Foundation Trilogy, there was a
character who basically constructed mathematical models of society, and
I thought this was a really exciting idea. When I went to college, I
looked around for that subject. It turned out to be economics."

The article focuses on why Google needs a chief economist.  By the way, a few weeks ago Varian and Google were kind enough to invite D.C.'s top bloggers (a stellar line-up) to a free-for-all session at Google's D.C. offices.  Being mischievous, I wondered whether a more frequently sampled version of Google Trends could be used to predict (earn?) excess returns.  The quality of the bread in the sandwiches was high and the only dessert available was a chocolate chip cookie.

I thank Chris F. Masse for the pointer.


It is incredible to me that both Krugman and Varian were inspired to be economists by the story of the greatest central planners of all time - the second foundation, the men who could plan (within certain probability parameters) across time and space. I wonder if this has anything to do with their politics ...

Seldon and his gang weren't central planners (or real, for that matter). Central planning requires constant intervention. Seldon and the Second Foundation predicted the socioeconomic path the Empire was on, and merely made appropriate tweaks at appropriate times to move and keep humanity on a better path. It's much much closer to "nudge economics" than it is to central planning.

I grew up reading the books too, and also wanted to be a psychohistorian. It wasn't until later, when I ended up becoming an economist, that I realised the similarities.

Only an economist could be so persumptuous as to compare his profession to Seldon's team. Good grief.

I love the guys who hang around this blog solely to exercise the chip on their shoulder about "economists."

"... mathematical models of society" - Well, as they (I) say, so far, so fubar.

Didn't you read a better book a year or so ago about the perils we face thanks to more and more people using more and more models ignoring more and more variables? I think it had to do with things blowing up in peoples' faces when the unknowns, especially the unknown unknowns, dropped their blankets and said "peekaboo"!

I would agree that a large part of an economist's job is explaining afterwards why his predictions were wrong.

Thanks for posting this. That was a very interesting article to read. Makes me want to read Asimov.

"prices are higher in monopolies because of the difference between average revenue and marginal revenue"

Of course, this happens to be one of the things neoclassicals are wrong about:


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