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Friday, May 09, 2014

Even I Can Edit the Wikipedia

I read the Wikipedia a lot. Usually I just google something and the Wikipedia article is the first hit. I am amazed by the breadth of the content and the accuracy of the small fraction of it which overlaps with my own knowledge.

I know of the case of the economics professor who was only briefly puzzled that half of the answers [this is false see below] on a test were clearly based on the assumption that Ricardian equivalence implies that a temporary increase in government spending has no effect on aggregate demand. The test asked about a simple two period case and included the unhelpful hint that the economy displayed Ricardian equivalence. The alert professor correctly guessed that the Wikipedia article on Ricardian Equivalence contained this elementary error. I think that he or she corrected it. OK now I'll google.

The prof. is Kevin Quinn who wrote of his experience in "The World Wide Web of Misinformation" (HT ProGrowthLiberal).

Yes the world wide web does contain some misinformation, but google told me I vaguely remembered a Wikipedia edit by Kevin Quinn. Also the web is self correcting. This post claimed that half of Quinn's students made the mistake. In fact Quinn's post said "say 10%" did. Ooops.

So I just edited the Wiki on "The Phillips Curve". I am feeling that I have been aggressive, but pleased to find that, yes indeed, even I can edit the Wikipedia.

My edits in Italics

In the years following Phillips' 1958 paper, many economists in the advanced industrial countries believed that his results showed that there was a permanently stable relationship between inflation and unemployment [citation needed -- this claim is not supported by any evidence and is contested see [5] ].

5. Note that a claim about "many economists in the advanced industrial countries" was made without the citation of any economist. Intellectual history is important enough for the Wiki, but demonstrating claims about intellectual history isn't. The linked working paper makes a very convincing case that very few economists ever wrote any such thing (IIRC the top example was from a white paper submitted to the Ontario Commission on Price Stability but do click the link).

Again just below a claim is made without evidence

One implication of this for government policy was that governments could control unemployment and inflation with a Keynesian policy. They could tolerate a reasonably high rate of inflation as this would lead to lower unemployment – there would be a trade-off between inflation and unemployment. For example, monetary policy and/or fiscal policy (i.e., deficit spending) could be used to stimulate the economy, raising gross domestic product and lowering the unemployment rate. Moving along the Phillips curve, this would lead to a higher inflation rate, the cost of enjoying lower unemployment rates [citation needed].
Then again

In the 1970s, many countries experienced high levels of both inflation and unemployment also known as stagflation. Theories based on the Phillips curve suggested that this could not happen, and the curve came under a concerted attack from a group of economists headed by Milton Friedman [citation needed].
No evidence is presented that any theories which "suggested" that ever existed. This claim should not be made in the Wikipedia without citation of a document which presented such a theory. I do not think this is a careless oversight. I think no such document exists.

Immediately following

Friedman argued that the Phillips curve relationship was only a short-run phenomenon. In this he followed 8 years after Samuelson and Solow [1960] who wrote " All of our discussion has been phrased in short-run terms, dealing with what might happen in the next few years. It would be wrong, though, to think that our Figure 2 menu that related obtainable price an unemployment behavior will maintain its same shape in the longer run. What we do in a policy way during the next few years might cause it to shift in a definite way. " [7]
"Analytical Aspects of Anti-Inflation Policy" Paul H. Samuelson; Robert M. Solow American Economic Reivew Vol. 50, No. 2, Papers and Procedings of the Seventy-second Annual Meeting of the American Economic Association (May, 1960), 177-194. Notably, the Wiki did not contain any reference dated between 1958 (Phillips's original article) and Friedmans 1968 Presidential address. All but four references are to documents published in 1995 or later. Those citations include The General Theory of Employment Interest and Money [1936] which, by the way, includes a warning not to trust any Phillips curve that one might find which was as clear as might be hoped, given that it was published 22 years before Phillips [1958], Phillips [1958], Friedman [1968] and a 1973 reprint of the 1926 Irving Fisher article describing the Phillips curve 32 years before Phillips [1958]. Claims about what "many economists" believed in the years between 1958 and 1995 are made without presenting any evidence that any economist believed any such thing. This is actually quite important. The Wiki correctly explains why the intellectual history is important. It is more or less accurate as claimed that

Since 1974 seven Nobel Prizes have been given for work critical of the Phillips curve. Some of this criticism is based on the United States' experience during the 1970s, which had periods of high unemployment and high inflation at the same time. The authors receiving those prizes include Thomas Sargent, Christopher Sims, Edmund Phelps, Edward Prescott, Robert A. Mundell, Robert E. Lucas, Milton Friedman, and F.A. Hayek.[6]
I have no idea what Sims is doing on that list. Mundell was awarded the prize for his work on optimal currency zones. F.A. Von Hayek was awarded the prize for enunciating a pro market ideology (balancing the award to Myrdal). But Phelps, Sargent, and Lucas were definitely awarded the prize in large part for refuting the permanent stable Phillips curve hypothesis. The claim that there was such a hypothesis should be of interest to the Nobel committee. The complete absence of evidence that any prominent economist ever believed that there was a stable long run Phillips curve is relevant. But there is also a hint of a much more important issue
There are at least two different mathematical derivations of the Phillips curve. First, there is the traditional or Keynesian version. Then, there is the new Classical version associated with Robert E. Lucas, Jr. The traditional Phillips curve[edit] The original Phillips curve literature was not based on the unaided application of economic theory. Instead, it was based on empirical generalizations. After that, economists tried to develop theories that fit the data.
The old approach of looking at data, finding patterns and only then trying to develop theories was almost entirely replaced by the new approach of making assumptions, developing a model, deriving testable implications, testing them (and then arguing that rejection of the implications of the model is of no interest, because models are false by definition and the model might still be a useful approximation, then assuming that the model is a useful approximation). It is very clear (based on first person recollections eg by Paul Krugman) that the failure of the permanent expectations augmented Phillips curve hypothesis played a central role in the methodological change. If no such error was made by any prominent economist, the case against the old methodology is very weak. The complete absence of success of macroeconomics based on the newer approach might have caused a methodological counter revolution were it not for the power of made up intellectual history which is presented in places much more influential than a Wiki.


Anonymous said...


Peter said...

Krugman just the other day:

"...Consider the somewhat similar debate in the 1970s over the “accelerationist” hypothesis on inflation — the claim by Friedman and Phelps that any sustained increase in inflation would cause the unemployment-inflation relationship to worsen, so that there was no long-run tradeoff. The emergence of stagflation appeared to vindicate that hypothesis — and the great majority of Keynesians accepted that conclusion, modifying their models accordingly."

So nobody claimed there wasn't a long-term trade-off and Friedman-Phelps made a straw man argument?

What explains the persistence of the myth?