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Stuart_Armstrong comments on Valuable economics knowledge available, ironically, for free - Less Wrong
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Comments (37)
I would caution to be sceptical of undergrad-level economics, in particular macro. The usual models taught to students have huge problems dealing with the real world.
This is not to say that one should not study economics. However the state of this discipline is pretty bad right now (again, in particular concerning macro) and it's generally acknowledged that simple macro models are NOT how the world actually works.
Thanks for the warning! Do you have any references for this, btw, or is it just your own sentiment?
If for no other reason, that macro has lots of political implications which winds up being mind killy. Micro OTOH, is instrumentally useful, in that people who understand it generally evade some common errors.
Micro has a lot of political implications as well (minimum wages, regulations, taxes, barriers to entry...)
That there is a danger, though, that people who study micro but don't study macro will end up with a bias that will mislead them, especially in political terms. I know people who took microeconomics 101 and nothing else, and there is a danger there in that people who did that now think they now understand how the whole economy works, but actually don't.
I think the danger of people thinking that they understand how the economy works rises with the amount of economic causes the person takes.
Are they any more wrong than people who study macro and think they understand how the whole economy works? Do these wrong beliefs cash out in actions that negatively impact them? The only thing macro impacts for most people is their conversations with other people about macro.
Not directly. But in a collective tragedy of the commons style way, wrong beliefs about macro ultimately lead to had economic policy which in tern ultimately does negatively impact everyone.
FWIW I'm a grad student in econ, and in my experience the undergrad and graduate macro are completely different. I recall Greg Mankiw sharing a similar sentiment on his blog at some point, but can't be bothered to look it up.
I would say that undergrad and grad econ are very different methodologically (at least at most schools), but a lot of the content is the same.
Stephen Williamson's intermediate macro textbook tries to bring in a lot of grad-level models/concepts, albeit in a "toy" form.
What do you mean by 'content' here? The basic narrative each model tells about the economy?
I think I agree with you. The big difference between the models I learned in undergrad and the models I learned in grad school was that in undergrad, everything was static. In grad school, the models were dynamic - i.e. a sequence of equilibria over time instead of just one.
Right. Plus most undergrad models have an analog in grad macro, i.e. the AD-AS model and the New Keynesian model, or Quantity theory of money and a basic cash in advance model.
True in general. Some intermediate macro courses use a two-period framework to explore basic dynamics. Williamson's textbook does this.
See among others: http://en.wikipedia.org/wiki/Criticisms_of_neoclassical_economics http://en.wikipedia.org/wiki/Ronald_Coase
More tendentiously, http://en.wikipedia.org/wiki/Post-autistic_economics
(Edit: removed irrelevant bit)