Economics Questions

Re: Food for Thought

cognitivist — Wed, 18 Aug 2010 03:33:50 GMT

Mainstream economist = less risk of appearing wrong to the competition which also employs mainstream economists to judge market conditions. </thread>

Re: Food for Thought

Jeremiah Dyke — Wed, 18 Aug 2010 03:24:36 GMT

Many reasons,

Over half of all the economists employed are employed for government, or government sponsored, think tanks or bureau’s
The facts that big companies higher mainstream economists does not correlate to the statement that mainstream economic analysis makes big companies money, wealth seems to float in and out of large companies pretty fast. Just look at the S&P of 30 years ago compared to today.
You can cloak a lot in mathematics and confused MBA’s are forced to acquiesce to their opinions since they don’t have the tools to debate them
But the biggest reason is that there is money in playing the game of faulty economic policy. Inflation is not dispersed equally and if, through mainstream economic policy, a company can position itself to inherit new wealth before inflated they stand to win.
Aside, establishing barriers to trade via government intrusion is an excellent way to solidify a monopoly and income…why would any big company seeking rents want to hear about Austrian Economics theory of free markets?

Re: Food for Thought

z1235 — Wed, 18 Aug 2010 02:27:16 GMT

EconomistInTraining:
Presumably if Austrians have correct analysis more often than other economists firms would profit from employing them. So why don't they?

To ensure success/profit, first you must make sure you're in the minority.

Re: Food for Thought

Mike — Wed, 18 Aug 2010 01:28:08 GMT

there is a long long list of "mainstream" economists with incredibly wrong predictions. the most famous I believe was Irving Fisher weeks before the crash of 1929 saying that the business cycle is a thing of the past and that there is nothing but prosperity for as long as the eye can see. let us not forget about the dozens of totally ridiculous predictions of the maestro amongst so many others

Re: Food for Thought

yessir — Wed, 18 Aug 2010 00:47:47 GMT

It is also better to be more specific...which economist in what position at which firm?

Re: Food for Thought

yessir — Wed, 18 Aug 2010 00:46:12 GMT

your confusing Austrians beef with economic theory vs the work that a economist AS A business person does!

No austrian (i think) would have problems with a econometrician using his model to try to predict demand for apples. What they have problems with is calling the prediction economic theory.

In regards to austrians predicting better. We are again talkbing about broad MACRO issues. IE an austrian might say "due to xyz i see the market crashing eventually (2,5, maybe 20 years). That is largly useless for business folks.

Re: Food for Thought

Smiling Dave — Wed, 18 Aug 2010 00:31:59 GMT

I'm not sure, but my guess is that a businessman's area of competence is not in evaluating economists. So he goes to people who are considered experts at evaluating economists, meaning top universities, and asks them to provide him with an economist.

So the question has changed to why do universities not recognize AE as being superior? And I think the answer is because they are paid by the govt to encourage those who believe the govt should spend spend spend and thus save the world.

Re: Food for Thought

Caley McKibbin — Wed, 18 Aug 2010 00:09:49 GMT

I can assure you that my father really does get paid what's written on his pay check.

You said that they must bring something to the firm. I'm not talking about their wages.

Well, financial econometrics is a different from regular economics that uses completely different tools.

The pertinent point is that financial econometrics is not what Austrians would call economics. Professional Austrian economists know that stuff. But they would not be doing it in the name of AE.

Re: Food for Thought

EconomistInTraining — Tue, 17 Aug 2010 23:44:06 GMT

Prove that they "bring something in", not that they get paid. It's a rhetorical challenge because it is impossible to prove even if true. But you believe it nonetheless.

Sorry? I can assure you that my father really does get paid what's written on his pay check. Of course it's possible to know what the going rate is for an academic economist, just look at what firms are willing to offer them. Even for those not from a great grad school, firms are willing to shell out somewhere in the hundreds of thousands p.a.

There is a lot of accidental overlap between the statistical models used in businesses and the models used in economics because they don't conceive of a clear distinction between the fields.

Well, financial econometrics is a different from regular economics that uses completely different tools.

Re: Food for Thought

Caley McKibbin — Tue, 17 Aug 2010 23:28:51 GMT

I just mailed you my father's pay check, enjoy.

Prove that they "bring something in", not that they get paid. It's a rhetorical challenge because it is impossible to prove even if true. But you believe it nonetheless.

Most schools have entirely different departments for finance and economics (with the former earning considerably more). Moreover the two have separate journals, PhD programmes and meetings. I think you'd be hard pressed to argue that they get confused, of course, there's work on the border of macro and finance currently being done, but that's a little different to getting them completely confused.

I didn't say that finance and economics are considered entirely the same by everyone. There is a lot of accidental overlap between the statistical models used in businesses and the models used in economics because they don't conceive of a clear distinction between the fields.

Re: Food for Thought

EconomistInTraining — Tue, 17 Aug 2010 22:10:04 GMT

The mainstream of economics does a lot to cause that conflation. The reasoning is: economics has numbers and graphs. Finance has numbers and graphs. What is the difference?

Most schools have entirely different departments for finance and economics (with the former earning considerably more). Moreover the two have separate journals, PhD programmes and meetings. I think you'd be hard pressed to argue that they get confused, of course, there's work on the border of macro and finance currently being done, but that's a little different to getting them completely confused.

Feel free to prove that they are.

I just mailed you my father's pay check, enjoy.

Re: Food for Thought

Caley McKibbin — Tue, 17 Aug 2010 21:40:56 GMT

Presumably if econ PhDs are being paid hundreds of thousands a year (and they are) then they must be bringing something to the firm.

Feel free to prove that they are.

Probably because much of their training consists in statistical methods that are useful regardless of the economic theory attached to them, and it isn't their theoretical background they are hired for but market analysis of trends as established via statistical techniques?

Most people do not know the difference between financial statistics and economics. The mainstream of economics does a lot to cause that conflation. The reasoning is: economics has numbers and graphs. Finance has numbers and graphs. What is the difference?

Re: Food for Thought

Jon Irenicus — Tue, 17 Aug 2010 21:40:14 GMT

Probably because much of their training consists in statistical methods that are useful regardless of the economic theory attached to them, and it isn't their theoretical background they are hired for but market analysis of trends as established via statistical techniques?

Re: Food for Thought

EconomistInTraining — Tue, 17 Aug 2010 21:36:10 GMT

Presumably I wouldn't need to convince my boss of anything if he saw profit in employing Austrians then he would do so. I'm not arguing that they would exploit such profit opportunities instantly, but Austrians have defined themselves apart from the mainstream for, what, thirty odd years now? Even if no Austrians are employed for ideological reasons, why are mainstream economics employed? Presumably if econ PhDs are being paid hundreds of thousands a year (and they are) then they must be bringing something to the firm.

Re: Food for Thought

Jon Irenicus — Tue, 17 Aug 2010 21:26:35 GMT

He's almost as generous in making broad, sweeping (baseless) assertions as you are. ;)