Fifteen commandments for and about economics

YouNotSneaky! is very wise, judging from his "12" commandments for and about economists:

1. The answer to most questions in economics is usually “It depends”.
2. People respond to incentives, but incentives are determined in their own head and who knows what goes on in there.
3. But on average, masses of people respond in fairly predictable ways and these predictable ways, embodied in the so-called “Econ 101” thinking, are pretty useful guides. They are not absolutes however.
4. “On one hand … on the other hand” is about as good as you can do in a complicated world.
5. All economic models boil down to two (occasionally three) curves on a blackboard that cross. If it’s more than that or if you can't draw it that way, then your model stinks.
6. First Fundamental Theorem of Economics: Where the two curves cross, it’s important.
7. Game theory accidentally teaches us that outcomes are very sensitive to the structure of interaction. Small changes in the rules of the game can produce vastly different outcomes.
8. A logical, aesthetically compelling, story is important, even if the assumptions are crazy. Check it with math.
9. Anyone who makes exaggerated claims about their pet theories, ideas, or solutions, be they mainstream or heterodox, either doesn’t know what they’re talking about, hasn’t done their homework or is trying to sell you something (it could also be the case that their ego is well over blown, because, perhaps, maybe, I'm just guessin', their father was famous and worked for some famous politician or something). “Our results SUGGEST…” is a good indicator that a person has thought hard about their subject. At least as far as these things go. A thorough method combined with some humility should invite more attention than extraordinary claims of genius. Scientific progress takes place at the margin.
10. When an economic idea about how things work pops into your head, your very next question should be “why is that wrong?”. It’s useful to simulate competition among ideas in your brains so that only the truly good ones survive. Success, however, is not guaranteed.
13. “I don’t know” is often the best answer that can be given.

(even if he cannot count, thereby showing that NotSneaky often overlooks his own admonishment about checking the math!)

Let me add a few of my own to make it a (real) round number:

12.  People everywhere are pretty much the same. It is the incentives and constraints they face that differ.
13.  Everything that an economist says today has been said before, typically in more elegant fashion, by an economist of an older generation. That makes them neither true nor false. It just suggests that what is new in our profession is the technique, not the insight.
14.  Beware when economists start to talk using metaphors ("shock therapy," "diagnostics," "big push" to use some recent ones from this blog). It is a good sign that they do not quite know what they are talking about.
15. When economists disagree about policy, it is most often because of implicit moral and political judgments, rather than economics per se.

Comments

[spencer]

The last one is the most important.

[Patrick R. Sullivan]

1. The most important decision is usually not 'what' but 'who [gets to decide]'

2. Always ask, compared to what?

[Joe]

"Everything that an economist says today has been said before..."

I can't agree more. Thus, we don't see "Wealth of Nations" in most economics reading lists --perhaps just to bluff students into thinking that modern economics is all about the economics of their professors!

[Michael Greinecker]

"13. Everything that an economist says today has been said before, typically in more elegant fashion, by an economist of an older generation. That makes them neither true nor false. It just suggests that what is new in our profession is the technique, not the insight."

That´s true but misleading. While something clever has often been said with the techniques of yore, often something stupid has been said too which cannot be said anymore.

[Joe]

Michael,

Cite just one of the stupid things "often" said with the techniques of yore that have been disproved with new techniques? Certain things said in the past have been disproved, like Malthus' view of population growth outstripping food production, but history has disproved it, not new techniques.

[notsneaky]

The "13" was for good luck.

And I really like your #12.

[notsneaky]

Also I took out a portion of 9 because it's ambigous and can be easily misunderstood.

[Michael Greinecker]

"Cite just one of the stupid things "often" said with the techniques of yore that have been disproved with new techniques?"

The Coase "Theorem"

the strict neutrality results in the model of voluntary contributions to public goods

the rotten kid "theorem"

the theory of the falling profit rate

the marginal productivity theory of income distribution

the results of Lucas and Barro on rules vs. discretion in monetary policy.

the more-markets-are-always better view on incomplete markets.

[paine]

no sycophant me

but dani..
your three trump
the nuzz fuzz
10 + (one )

a missing 11
and two 13 s
captures the wonderland
of it all quite well
-----------------
mg
"often something stupid has been said too
which cannot be said anymore."

don't be so sure ...
logic is no sides ally
t'is a whore

revival of self serving
logically "sound "
idiocy
is often
but one logic box
magic trick set of assumptions
away

recall your very barro and
lucas

or lionel robbins or or or
all the way back to malthus indeed

the technical game
can be well played
with both
the red and white pieces
despite whites
institutional advantage

whites move first
but red has counters

in the end its a draw
till the next new sequence

red and white pieces ???

the two great economic classes of course

translation into lib speak

"When economists disagree about policy, it is most often because of implicit moral and political judgments....."

which side are you on ???

we're class soldiers
despite our
surface intentions
"... rather than economics per se "

yup if economics is
rules of inference from
briary data
and just for the fun
of certainty logic tricks

a circus train
full of competing acts
of logical mystification
and wild data acts

wonders of
taming the exotic and ferocious "facts"
and forcing them
to perform
dutiful tasks

( and today we got what...
maybe
n rings worth ???)

and to think
we can pack
in the " thinking "rubes
with
our excitingly certain
"right before your very eyes "
logic acts
and data tricks ....

-----------------------

alas
the grapples
are always on the swampy plain of policy
where classes clash
like
army eeez
of the night

no great surprise
we get paid more for that
and only honoraria
for all our
"up there stuff"
up there
among the pure oxygen
of peak perfection

where
the self evident soars
and the truths
are not cloudy all day

[malcolm]

I have always loved the title of the book "New Ideas From
Dead Economists"...

[Ken Houghton]

I want to put together a "Heterodox Anthology" with the title Dead Ideas from New Economists.

[Michael Greinecker]

LOL

[Joe]

Michael, thanks for the food for thought.

I think, some of the old ideas are dead only in a relative sense. E.g.
"the theory of the falling profit rate" may be dead for a neo-classical economist, but not so for a Schumpeterian.

[Michael Greinecker]

To some degree, yes. I also think we can learn much from dead theories. But I think the more important point is that new techniques allow us to organize our knowledge in new and hopefully better ways. Of course a mathematical model will not sound eloquent but it makes comparison with other models and other ideas easier.

There are few ideas that were made only possible because of new techniques, but seeing the relation between ideas will often be improved.

[mik]

"12. People everywhere are pretty much the same. It is the incentives and constraints they face that differ."

Wow. Homo Economicus is alive and well, Karl Marx would be happy.

Statements like this make me wonder why we should listen to a bunch of pumpered mathematicians convinced that their over-simplified models have any relevance to human existance.