Re: [Pen-l] On the mediocrity of Heterodox Economics

[Jim Devine <jdevine03@xxxxxxxxx>]

Hendry is a really good econometrician.

On Sun, Mar 1, 2009 at 4:14 PM, michael perelman
<michael@xxxxxxxxxxxxxxxxx> wrote:
>
> Regarding the term heterodox, I can assure you that for Portes heterodox
> meant the left; certainly not the Austrians.
>
> Regarding Friedman as an econometrician:
>
> Malabre, Alfred. 1994. Lost Prophets: An Insider's History of the Modern
> Economists (Boston: Harvard Business School Press).
>
>
> 734: "Toward the end of the "monetarist decade" (1975-84), David Hendry and
> Neil Ericsson presented an explosive critique of Friedman and Anna
> Schwartz's Monetary Trends (1982).  Titled "Assertion without Empirical
> Basis," they concluded that Friedman and Schwartz's "assertions "were
> "devoid of credibility .... rigorous evaluation of empirical claims seems a
> necessary first step towards taking the con out of economics" (Hendry, David
> and Neil R. Ericsson. 1983. Assertion without Empirical Basis: An
> Econometric Appraisal of Monetary Trends ...in the United Kingdom by Milton
> Friedman and Anna Schwartz (London: Bank of England): p. 82; see also their
> 1991. "An Econometric Analysis of U.K. Money Demand in Monetary Trends in
> the United States and the United Kingdom." American Economic Review, 81
> (March):pp. 8-38.).  The London Guardian of 15 December 1983 reported the
> Hendry and Ericsson paper under the title "Monetarist's guru 'distorts his
> evidence."'  Friedman was incensed and wrote to Hendry requesting that he
> disown the account in the Guardian. But Hendry replied that "if your
> assertion is true that newspapers have produced 'a spate of libelous and
> slanderous 'articles 'impugning Anna Schwartz's and [your] honesty and
> integrity 'then you must have ready recourse to a legal solution" (letter
> from Hendry to Friedman, 13 July 1984; quoted in Hammond, J. D. 1996. Theory
> and Measurement: Causality Issues in Milton Friedman 'Monetary History
> (Cambridge: Cambridge University Press): p.199).
>
>
>
> Jim Devine wrote:
>
>
> For example, Milton Friedman's work
>>
>> would never be considered to be "mediocre" by the Chicago school of
>> economics, even though his econometrics is often dreadful and his
>> theory clearly ideological. (One of my colleagues once worked with MF
>> and I always thought of as a Monetarist. Nowadays, his econometrics
>> (the true center of his loyalty) tells him the MF's stats were often
>> bad.)
>>
>> It's true that there are some more sophisticated people within the
>> economics profession (e.g., Arrow or Sen). However, the ideological
>> nature of the profession is reflected in the fact that the vast
>> majority of its products is mediocre -- but still gets published. If
>> you agree with the majority of the profession's informal consensus,
>> then you don't have to be smart or sophisticated or as math-oriented
>> as Arrow or Sen. The bar is lower than for those who agree with the
>> consensus.
>>
>> And the ideology gets reflected in that consensus (e.g., "free trade
>> is always good" or "something that does not have a price is
>> worthless") which in turn is reflected in the textbooks. The ideas of
>> Arrow or Sen do not.
>>
>> Michael Perelman writes:
>>>
>>> Consider his list of Heterodox economists.  Herbert Simon?  There is some
>>> overlap there, but he ceased to do economics and moved on to other
>>> fields.
>>>  Joe Stiglitz did good stuff before he became active in public debates,
>>> but
>>> I think most economists would regard his more policy-oriented work as
>>> belonging in top journals.  Amartya Sen also does interesting work, but
>>> has
>>> he ever been associated with the left.
>>
>> Since the usual definition of "heterodox" economics includes the
>> "Austrian" school, it's a mistake to equate heterodox with "the left."
>>
>> What is the definition of "heterodox"? I think that we should reject
>> the currently prevalent grab-bag version of that concept, so that the
>> "Austrians" are booted. The concept of the "orthodox" should be
>> replaced with "textbook economics," a clearly empirical concept that
>> can be verified by reference to (say) the top ten best-selling
>> economics textbooks. Then, heterodox economics would be defined as
>> that kind of reasonable economics (fitting empirical evidence, etc.)
>> which does not appear in textbooks. It would not include astrological
>> economics and the like.
>>
>> The ideas of the Austries appears in the textbooks, by the way, often
>> as a dynamic dimension of the essentially static neoclassical
>> orthodoxy (forming a shot-gun marriage) while many books see
>> "entrepreneurship" as a "factor of production" along with labor and
>> capital goods.[*]
>>
>> If I remember correctly, at the ASSA convention, Terry McDonough
>> described the Austries as "pretenders to the neoclassical throne"
>> rather than being truly heterodox. Whether I got the quote right or
>> not, it's apt.  Was it "ruling paradigm in waiting," Terry?
>
>
> --
> Michael Perelman
> Economics Department
> California State University
> Chico, CA
> 95929
>
> 530 898 5321
> fax 530 898 5901
> http://michaelperelman.wordpress.com
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-- 
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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