Monday, October 27, 2014

Not "As if people were replicants." No.

Peter Dorman:

You may feel a gnawing discomfort with the way economists use statistical techniques.  Ostensibly they focus on the difference between people, countries or whatever the units of observation happen to be, but they nevertheless seem to treat the population of cases as interchangeable—as homogenous on some fundamental level.  As if people were replicants.
You are right.

Maynard Keynes:

In dealing with the theory of employment I propose, therefore, to make use of only two fundamental units of quantity, namely, quantities of money-value and quantities of employment. The first of these is strictly homogeneous, and the second can be made so. For, in so far as different grades and kinds of labour and salaried assistance enjoy a more or less fixed relative remuneration, the quantity of employment can be sufficiently defined for our purpose by taking an hour’s employment of ordinary labour as our unit and weighting an hour’s employment of special labour in proportion to its remuneration...

If Peter Dorman is rejecting homogenous treatment, he is rejecting Keynes. Come to think of it, he is also rejecting Adam Smith:

In that early and rude state of society which precedes both the accumulation of stock and the appropriation of land, the proportion between the quantities of labour necessary for acquiring different objects seems to be the only circumstance which can afford any rule for exchanging them for one another. If among a nation of hunters, for example, it usually costs twice the labour to kill a beaver which it does to kill a deer, one beaver should naturally exchange for or be worth two deer. It is natural that what is usually the produce of two days or two hours labour, should be worth double of what is usually the produce of one day's or one hour's labour.


Jazzbumpa said...

I don't believe Dorman is flatly rejecting homogenous treatment.

He is criticizing an approach to, and over-dependence on modeling which is built on subtle errors - not of math, but of concept.

I find the appeals to Keynes and Smith to be red herrings. Neither of them used models.


The Arthurian said...
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