Economics

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Read: Sixty Days and Counting

After reading Robinson’s Fifty Degrees Below I was hoping the “science science fiction” trilogy would get better with its concluding volume. It didn’t.

The trilogy started as science fiction about science. You got a glimpse at academia, research and administration, and the plot’s background addressed a serious, topical issue: global warming. That was the first volume. Unique and interesting enough to get me on reading despite the novel’s flaws. The second volume, I still do not know what to make of the second volume.

And now, the third volume is even worse. Sixty Days and Counting is strangely anticlimactic. It is not science fiction about science any more but an odd mix of political thriller, conspiracy theory novel, spy novel, new age self improvement, and rant against capitalism. Yes, the ranting about the evil economic system, the evil capitalists’ exploitation of the poor 99% that put me off in the first volume is back. The transitions between the genres do not succeed and the book would not be a good example for any of these genres.

Bottom line: Sixty Days and Counting was a waste of time and I am seriously concerned about my memory as I was pretty sure that I liked Robinson’s Mars trilogy. It was well written and absolutely enjoyable. Can a writer deteriorate that dramatically?

Read: Debunking Economics

Steve Keen’s Debunking Economics has the potential to greatly antagonize the reader, not just mainstream economists.

The book leaves me divided.

I like, I greatly appreciate the undertaking of pointing at all the flaws of economic theory – as it may be taught in many places – to improve our understanding of the real world. ‘Our’ as in the economic researcher and teacher, the student of economics, and the economic layperson. Yes, textbook economics has many flaws, over-simplifications that may lead us to wrong conclusions and thus policy measures if ‘we’ believe (too strongly) in them but over-simplifications that also may facilitate the understanding of specific economic mechanisms. There are many attempts to correct our economic model-theoretic view of the world. The current rise of behavioral economics is just one observable symptom of this change, of this advancement of (micro-)economic science. And, I guess the financial crisis will also lead to a change in macro-economic modelling.

I absolutely detest Keen’s writing style. He is condescending, not just with regard to the mainstream economics and economists that he is (rightly) criticizing. Also the reader has to feel like a little child that is guided through the world by a deeply disappointed, cynic great-uncle who was denied the one success that he so desperately strived for. This changes, however, dramatically to the better when he is not criticizing other’s economic modelling failures but is introducing his own macro-economic model that allowed him to predict the looming occurrence of a financial crisis.

If all of the book would have been written in this enthusiastic manner, with the desire to instruct, I would absolutely love this book. It’s not.

Nevertheless, the book is instructive and more of the many little flaws, the limitations of standard theory Keen is pointing out should be mentioned in textbooks, also in introductory textbooks, to stimulate a critical discussion and reflection of the material. I know I am often deviating from the text – have to, really.

Since I do not mention any details of the book’s content here, I want to at least point to a stimulating chapter by chapter discussion of Debunking Economics at Unlearning Economics.

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Read: The Calculus of Selfishness

Karl Sigmund’s The Calculus of Selfishness applies basic evolutionary game theory to the analysis of cooperation in strategic interactions. Though it is published in the Princeton Series in Theoretical and Computational Biology it is rather addressed to social scientist, economist and psychologist, and in particular undergraduates.

The Calculus starts simple enough and Sigmund introduces whatever mathematics he needs without being too formal in his approach. For a text in applied math the book reads surprisingly well. However, it is still a book in applied math and I fear it is as such not really appealing to an undergraduate in the social sciences. Indeed, I do not believe there are many undergraduate economics students who would enjoy this book and not put it aside after the first few pages, the first chapter at the latest. While this may be a good example of a text in applied math it is not ”good enough” for the nascent social scientist.

On the other hand, it is an excellent introductory text on the evolutionary game theory of cooperation, direct and indirect reciprocity, fairness, reputation, and trust. I only wished Sigmund would have expanded on structured interaction and the co-evolution of subpopulations. He only hints at what results would be obtained when one would look at these things more carefully.

I also particularly appreciate that each chapter ends with a briefly annotated list of references for further, in more depth, reading on the topic and the game theoretic approach that was introduced in the respective chapter. While the terse exposition of the chapter can only serve to raise one’s interest these references are the real treasure trove of The Calculus of Selfishness.

Hence, while I would not recommend the book to any of my undergraduates in economics or social sciences I would happily point any graduate student in its direction.

Read: In the Beginning was the Command Line

In The Beginning was the Command Line, a manifest for the command interface published in 1999, is obviously dated. It cannot discuss any of the more recent developments in operating systems. Though I wonder whether there really is that much development that would be needed to discuss the essay’s thesis. Or at least the essay’s thesis as I see it. Stephenson has, of course, made many more observations and statements that one could discuss, that maybe would merit an update.

Stephenson has made some valid observation concerning the economics of software production and the particular cases of Microsoft, Apple, and Linux. These observations could even merit a discussion in an appropriate business information technology course at college. Yet, this is not what I would consider Stephenson’s main insight. (And therefore I do not think that Birkel’s 2004 update of the essay, essentially an annotated version, does add anything of substance. It just corrects a few factual errors that are irrelevant to the essay’s insight.)

The main insight, I believe, is the classification of computer users, users of any product really, in two groups (or was this three?). There are the users who don’t need to know. They run the applications. There are the users who want to know. They write the applications, they hack and produce a solution to a problem.

The first group of users may be sub-divided in more specific groups with different needs and demands, generating a continuum of users that may approach the second, much smaller group of expert users, the makers.

These two groups differ dramatically in their approach to use a computer. One group may be thankful for abstraction, simplification, and GUIfying. The other will want to use the command line interface, access the computer at a lower level, bend it to one’s will (and will rant about the inferiority of MS Windows).

I (happily, proudly) admit that I – often, not always – want to know. And yes, I am still using the Command Line Interface. I feel so much more in control, so much faster in many tasks.

Thus, I think the lesson of Stephenson’s essay is not the economics behind the software production at Microsoft, Apple, and for Linux. It’s that, especially for software, a one-size-fits all does not exist and that feature wars may be detrimental to the final product’s usability and quality. Maybe not necessarily due to the needs of the users but due to their different mind sets, their approach to software use.

Read: The Myth of the Rational Market

Slowly, very slowly I read through the backlog of books on my to-read-shelf. Justin Fox’s The Myth of the Rational Market must have been on my shelf for about three years. I should have read it earlier. It’s good.

The Myth of the Rational Market is an entertaining history of academic and applied finance. Fox links the events in the financial sector to financial innovations to changing schools of thought and to persons. The result is a vivid tour through the ups and downs of the stock market and an introduction to the various characters that shaped and challenged the scholar’s view on the financial markets. I honestly enjoyed reading the book, seeing all those well known names of (dare I say) colleagues and their research.

Though there is, of course, a chapter on experimental economics and behavioral finance it is pleasantly little pop-sciency. Given the hype around behavioral economics during the past years this is anything but granted…

Not being from or in the US I also found the remarks about the distinction between economics departments and business schools – which encourages differences in approaches, research questions and rigor – interesting. Yes, there is a similar divide in content and academic ‘style’ in Germany, yet, we are most often part of the same academic unit and not separated by the design of the institution.

Read: Living Economics

Peter Boettke’s Living Economics is an excellent collection of essays on the history of (austrian) economic thought and thinkers together with some more general remarks on the teaching and practice of economics.

As Boettke often summarizes the contribution to economics of a scholar’s whole lifetime in only a few pages Living Economics requires (and deserves) the reader’s undivided attention. (I have to admit that – I hope it was just due to me having a cold – I had to reread a few passages to fully grasp them.) It is well worth it and the reader is likely to be rewarded. It is obvious how passionate Boettke is about his profession.

I like the distinction between mainline and mainstream economics which allows Boettke to show the connections of the Austrian school to other streams of economics that follow the same or closely related lines, pulling the different streams closer together.

Yet, I would have preferred a more monolithic book. As it is a collection of essays there are some repetitions and the transitions between chapters (i. e. the essays) was often quite abrupt. On the other hand, this allowed me to put the book aside after an essay more easily and ponder on what I had just learned.

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