Category Archives: Science and the scientific method

Cathy O’Neil: Economists Don’t Understand the Financial System (Quelle Surprise!)

By Cathy O’Neil, a data scientist who lives in New York City and writes at mathbabe.org

A bit more than a week ago I went to a panel discussion at the Met about the global financial crisis. The panel consisted of Paul Krugman, Edmund Phelps, Jeffrey Sachs, and George Soros. They were each given 15 minutes to talk about what they thought about the Eurocrisis, especially Greece, the U.S., and whatever else they felt like.

It was well worth the $25 admission fee, but maybe not for the reason I would have thought when I went. I ended up deciding something I’ve suspected before. Namely, economists don’t understand the financial system, and moreover they don’t get that they don’t get it. Let me explain my reasoning.

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Cathy O’Neil: How Big Pharma Cooks Data –The Case of Vioxx and Heart Disease

By Cathy O’Neil, a data scientist who lives in New York City and writes at mathbabe.org

Yesterday I caught a lecture at Columbia given by statistics professor David Madigan, who explained to us the story of Vioxx and Merck. It’s fascinating and I was lucky to get permission to retell it here.

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The Wages of Austerity: Superbug Runs Wild in Greek Hospitals

Many writers tend to depict the effects of austerity in purely economic terms: loss of wealth and income, lesser income/social mobility. But depressions and accompanying changes in social norms can and do have more serious consequences.

A story in Bloomberg illustrates how the combination of budgets slashed thanks to austerity policies leads directly to deaths. The Wall Street Journal described last year how distress in the Greek economy had produced a significant increase in suicides. A new Bloomberg story recounts how severe cutbacks in hospital staffing have enabled superbugs that is hard to combat even under normal circumstances to inflict even more fatalities than usual in Greek hospitals.

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Cathy O’Neil: Women in Math

By Cathy O’Neil, a data scientist who lives in New York City and writes at mathbabe.org

A study recently came out which was entitled “Can stereotype threat explain the gender gap in mathematics performance and achievement?”. One of the authors created and posted a video describing the paper, which you can view here.

As a preview, there seem to be four main points of the paper and the video:

1. The papers on stereotype threat normalize with respect to SAT scores which is bad.
2. Evidence for stereotype threat is therefore weak.
3. We should therefore stop putting all of our resources into combating stereotype threat.
4. We should instead do something easy like combating stereotypes themselves.

I will first address a meta -issue and a blog discussion related to this paper, and then will argue directly against the paper and its conclusions.

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Property Rights and Growth: Lessons from Slavery

I’m running this video because I like it and I hope you do too. I happen to know Suresh; he’s a member of the Alternative Banking Group of Occupy Wall Street. He discusses a clever and potentially important bit of research he is conducting on slavery in the US (the brutal 1800s kind, not our modern watered down debtcropper version). This clip also separately demonstrates that economists are not necessarily beyond redemption.

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Mainstream Economics as Ideology: An Interview with Rod Hill and Tony Myatt — Part II

Rod Hill and Tony Myatt are Professors of Economics at the University of New Brunswick in Saint John and Fredericton (respectively). Their new book, The Economics Anti-Textbook is available from Amazon. They also run a blog at www.economics-antitextbook.com.

Interview conducted by Philip Pilkington

Philip Pilkington: I think it was Joan Robinson who said something along the lines of “while we may have to teach a limited amount of material, we could at least teach that which is useful”. I’ve often encountered economics students who, frankly, seem to me to have a very tenuous grasp of the important aspects of economics. I recall one in particular who graduated from a very prestigious university not understanding what I meant when I said that I thought the chronic unemployment in Ireland was due to a lack of effective demand triggered by the bursting of the housing bubble.

In your experience do you find that students leave mainstream economics courses equipped to deal with real world issues?

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Paul Davidson: What Makes Economists So Sure of Themselves, Anyway?

By Paul Davidson, America’s foremost post-Keynesian economist. Davidson is currently the Holly Professor of Excellence, Emeritus at the University of Tennessee in Knoxville. In 1978 Davidson and Sydney Weintraub founded the Journal for Post-Keynesian Economics. Davidson is the author of numerous books, the most recent of which is an introduction to a post-Keynesian perspective on the recent crisis entitled ‘The Keynes Solution: The Path to Global Prosperity’.

Introduction by Philip Pilkington

In a recent interview I asked the US’s leading post-Keynesian economist and founder of the Journal of Post-Keynesian Economics, Paul Davidson to discuss what is known as the ‘ergodic axiom’ in economics. This is a particularly important axiom as it allows mainstream economists (including left-wing Keynesians like Paul Krugman and Joseph Stiglitz) to claim that they can essentially know the future in a very tangible way. It does this by assuming that the future can be known by examining the past.

Without this axiom the whole edifice of mainstream theory rests on very shaky grounds.

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The Trouble with Principles: Or, How to Not Lose Friends and Alienate People When Learning Economics (#OccupyWallStreet, #OWS)

By Jake Romero, an economics student at Portland State University. You can reach him at jvc613 (at) gmail.com

Economics has always been something of a battleground, but in November a group of about seventy Harvard students opened a new front in the ongoing hostilities: its introductory pedagogy. In solidarity with the Occupy movement, the students staged a walkout of their principles course to protest what they called its “inherent bias.”

In his rebuttal in the New York Times, Greg Mankiw countered that his teaching is careful to avoid policy conclusions and that its subject matter falls squarely within the current mainstream of the discipline. Narrowly correct, he nonetheless profoundly missed the broader points that his students, to be fair, seemed unable to articulate fully.

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Philip Mirowski: The Seekers, or How Mainstream Economists Have Defended Their Discipline Since 2008 – Part IV

By Philip Mirowski, Carl Koch Professor of Economics and the History and Philosophy of Science University of Notre Dame. Professor Mirowski has written numerous books including More Heat than Light, Machine Dreams and, most recently Science-Mart

Edited and with an introduction by Philip Pilkington, a journalist and writer living in Dublin, Ireland

The debates surrounding the Dynamic Stochastic General Equilibrium [DSGE] models are perhaps some of the most interesting and important to have surfaced in the wake of the crisis. Of course, they, too many debates within the economics profession after the crisis, are deployed in order to insulate the research program from any fundamental criticism. But it is in the nature of the material that the critical observer can see something more interesting going on. And that is the contradiction at the heart of economics: the dichotomy, the abyss that opens up by necessity between macroeconomics and microeconomics.

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Philip Mirowski: The Seekers, or How Mainstream Economists Have Defended Their Discipline Since 2008 – Part II

By Philip Mirowski, Carl Koch Professor of Economics and the History and Philosophy of Science University of Notre Dame. Professor Mirowski has written numerous books including More Heat than Light, Machine Dreams and, most recently Science-Mart

Edited and with an introduction by Philip Pilkington, a journalist and writer living in Dublin, Ireland

What follows is Mirowski’s account of the behaviourist defence of neoclassicism after the crisis. While behaviourism does not occupy a central position within the discipline it stabalises it in a different way, in that it allows certain neoclassicals who have a nagging feeling that the whole edifice of the research program is based on shaky and unrealistic foundations to think that they have found some new and exciting way of doing research. They then conclude that if they can only get their colleagues to see the light all will be well and the neoclassical research program can continue. In addition to this it allows them to take a sleeping pill with regards to the recent crash; after all, surely it was the result of some sort of irrational behaviour and not due to inherent structural imbalances within a capitalist economy, right?

As Mirowski points out, the behaviourist research program is largely a sideshow – one might be tempted to say: a sideshow for left-wing economists making excuses.

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Philip Mirowski: The Seekers, or How Mainstream Economists Have Defended Their Discipline Since 2008 – Part I

By Philip Mirowski, Carl Koch Professor of Economics and the History and Philosophy of Science University of Notre Dame. Professor Mirowski has written numerous books including More Heat than Light, Machine Dreams and, most recently Science-Mart

Edited and with an introduction by Philip Pilkington, a journalist and writer living in Dublin, Ireland

During a recent interview with the eminent historian of economic thought, Philip Mirowski, I raised a series of questions relating to how mainstream economists had dealt with the crisis on an intellectual level and what this might mean for the discipline in the coming years.

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Philip Pilkington: Libertarianism and the Leap of Faith – The Origins of a Political Cult

By Philip Pilkington, a journalist and writer living in Dublin, Ireland

You wanted God’s ideas about what was best for you to coincide with your ideas, but you also wanted him to be the almighty Creator of heaven and earth so that he could properly fulfil your wish. And yet, if he were to share your ideas, he would cease to be the almighty Father.

– Søren Kierkegaard

Political cults often have the strangest and most obscure origins. Take Marxism, for example. Today it is well-known that Marxist doctrine essentially sprang out of the obscure 19th century economic debates over the source of ‘value’. By ‘proving’ – that is, lifting the assumption from classical political economy – that all ‘value’ came from labour, Karl Marx went on to show that it was therefore only logical to assume the existence of something called ‘surplus value’ that was sucked out of labourers by a parasitic capitalist class. From out of this obscure debate flowed an awesome political movement – and a tyranny to match.

What is less well-known is that today’s most popular political cult – that is, libertarianism – was born in very similar circumstances; it too, arrived into the world out of the obscure 19th century debates over economic ‘value’.

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Debunking Economics: An Interview with Steve Keen – Part II

Steve Keen is an Associate Professor in economics and finance at the University of Western Sydney. The second expanded edition of his popular book Debunking Economics is available now.

Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland

Part I of the interview can be found here.

PP: Let’s move on to another interesting point about neoclassical economic theory. It’s my understanding that the whole system is assumed to be, at its very essence, one of ‘truck and barter’. In that I mean that they tend to ignore the fact that capitalist economies are, in reality, monetary economies and have nothing to do with barter-based economies. Yet, am I correct in saying that the neoclassicals abstract away from this in order to get away from all sorts of things that make their type of analysis more difficult? I’m thinking in particular of where profits come from and the role of credit in the capitalist system of production. Could you talk about this a little?

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Philip Pilkington: Debunking Economics – An Interview with Steve Keen – Part 1

Steve Keen is an Associate Professor in economics and finance at the University of Western Sydney. The second expanded edition of his popular book Debunking Economics is available now.

Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.

Philip Pilkington: One cannot help but be struck by the reaction of the economics profession to the recent financial crisis. In the first edition of your book, Debunking Economics, you warned that a crash was probably coming – and in this you weren’t the only one. And yet now, post-crash, neoclassical economists have simply buried their heads in the sand and pretended that rational criticism of their theories simply doesn’t exist. The crash discredits almost all these theories and yet they continue to insist that they remain valid.

They remind me of Christian fundamentalists rabidly arguing against evolution in face of what appears to be insurmountable evidence against their assertions. Could you talk a little about this? How can these people be so deluded? Why won’t they listen to reason?

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