Thursday, January 27, 2005

 

Good Ideas in Economics

My belated appreciation of one of Tilman Ehrbeck’s good ideas (which I will post above) makes me think of the general topic of good ideas in economics. I think they can be classified as follows.

1. Good ideas which you can find if you read The Wealth of Nations carefully. The whole idea that this is a worth while field of inquiry has a lot to do with the fact that one of the first books in the field was brilliant.
2. Good ideas which you can find in Marshall’s principals.
3. Good ideas which are roughly implied by the work of Walras
4. Good ideas which you can find if you can translate the General Theory into economic theory
5. Good ideas which you can find if you can translate the Schumpeter into economic theory
6. F. Von Hayek is a reactionary but he had some interesting things to say.
7. This is an implication of standard neoclassical theory, that is, maximization under constraint. Therefore it is to be found in the collected writings of Paul Samuelson.
8. Milton Friendman mentioned it in passing while reflecting on the wonders of the quantity theory of money.
9. This has something to do with game theory. Von Neuman mentioned it to Morgenstern but it was formalised by Nash.
10. This has something to do with asymmetric information so check the collected writings of Joseph Stiglitz. He has published five to ten papers based on this idea.
11. Read the collected writings of Robert Solow. As a Spencer Tracy character said of a Katherine Hepburn character “there aint much of it but every bit is cherse (choice)”.
12. This isn’t really economics, it is sociology, Akerloff thought of it.
13. This isn’t really economics, it is psychology, Kahenman, Tversky or Herrnstein (see point 6 above) thought of it.
14. This idea is not found in any of the writings of the authors listed above. It is an excellent idea in economics. Clearly Kenneth Arrow thought of it. You can only hope that he never bothered to write it down.

Tilman Ehrbeck’s good idea falls into category 8.

posted by Robert permalink and comments5:56 AM