Matt Nolan

Economics, theory, and data

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This post was titled “Why data alone is not enough for economic inference”.  I was all prepared to write a post on the fact we need data and theory in order to do economic inference and create knowledge. I had links (*,*,*,*,*).  Then Noah Smith wrote this like really good post on the issue, so I’d suggest reading that.

On the other side there are those who are “too in love” with theory without any reference to data, or prior literature (which is a way of building a case for inference between theory and data).  A clear example of that comes from some of the comments that specific physicists moving into economics make – and Chris House has expressed that here.

I’d note that Read more

Infometrics

Are we reaching “peak Jetstar”?

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Benje Patternson has been keeping an eye on the air travel statistics, and found that Jetstar’s share of the New Zealand domestic market in the December year was down on the year to June.  This raises the question, have we reached peak Jetstar and what does this mean (Infometrics link)?  After noting that there is only so much we can read into the change, especially after the phenomenal growth of recent years, Benje notes it is more important to think about these issues with regard to the domestic economy as a whole:

Regardless of whether you are an Air New Zealand loyalist, or just choose whichever airline is cheapest, it is to be hoped that Jetstar’s recent set back is not the beginning of a slow decline for the airline.  After all, for consumers and businesses alike, the competition between these two airlines is vital for keeping domestic air travel prices low and regional air connectivity high.  Even in regional centres where Jetstar does not fly, a lid is still kept on Air New Zealand pricing by factors such as the proximity of main-trunk airports with low-cost connections and even the threat of Jetstar investing in its own regional turboprop capacity.

Matt Nolan

Economists and inequality: Is it true we’ve been ignoring it?

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In a recent interview with Piketty about his book Capital, the interviewer had some questions I found … strange:

Your book fits oddly into the canon of contemporary economics. It focuses not on growth and its determinants, but on how the spoils of growth are divided.

…

For much of the last century, economists told us that we didn’t have to worry about income inequality. The market economy would naturally spread riches fairly, lifting all boats.

Now Piketty does not suggest that economists haven’t been looking at the issue, his answers pretty clear and on point.  My problem is with the myth being pushed by the interviewer.

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Matt Nolan

My copy of Capital hasn’t arrived yet

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So I can’t start reviewing it.  I am very excited, as I’ve told readers before my first economics book (which I didn’t read particularly well) was Das Kapital, so my formative experience with economics was one about factors shares.  To get myself ready I have been reading around the issue – on top of the usual reading I’ve been doing on income distribution work I’ve been trying to catch up a little bit on the factor share stuff.  So I’m excited about my book finally turning up.  One of the issues with living in New Zealand I guess!

However, I’ve seen some people discussing it on twitter, and I was a bit upset about this part of the book:

As I said:

I hope this is not representative of what happens in the book.  It betrays one of two things:

  1. a fundamental misunderstanding of what economic modelling is and why it is used as a tool
  2. a straw man attack (a particularly arrogant one) used to take away attention from any inadequacies in his own argument

Given Piketty is several orders of magnitude smarter than me, it has to be the second – which is a very disappointing rhetorical play to roll out when discussing economic issues 🙁

He is legitimizing a view of the discipline that is frankly false and not helpful for us trying to answer questions to create knowledge – economists have the role of discussing trade-offs to help us consider what is going on in the world around us, waving our disciplinary wang in each others faces to try to win an argument without proper discourse doesn’t help this!

Matt Nolan

Discussion Tuesday

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A statement that is becoming increasingly popular – but is it true?

Taxing capital, which is wealth, is the right way to address fundamental inequalities of opportunity in society

Once again, remember that these are points for discussion – I am not saying I agree or disagree with them.

Matt Nolan

St Patrick’s day

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Today is St Patrick’s day – as it is a Monday I’m not sure people will be celebrating, which is a pity.  I know that I will be at least.  I’ll do my typical thing and link to this song:

Frik me that is enormous, sorry I don’t know how to make it smaller!

If you want any commentary about it, I’m sure I’ve written about it in the past, it’ll come up by searching St Patrick’s Day on the blog.  Still I won’t really be around today, I’ll be reading a bunch of essays by old Irish authors starting with a reread of this one.