The Economic Method
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The Economic Method
A collection of articles that deal with the methodology of Economics and related disciplines
Curated by Graham Watson
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Justin Welby: Putting money in its proper place - BBC News

Justin Welby: Putting money in its proper place - BBC News | The Economic Method | Scoop.it
In a new book, the Archbishop of Canterbury questions society's obsession with money and materialism.
Graham Watson's insight:
Another thought provoking piece on what looks like an engaging book from the Archbishop of Canterbury. Unlike some, he's probably sufficiently other-worldly to know the price of almost nothing and the value of, well, you do the rest... 
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Autumn Statement: Feeling the pain of the forecasters - BBC News

Autumn Statement: Feeling the pain of the forecasters - BBC News | The Economic Method | Scoop.it
Will the Autumn Statement reveal more about the government's Brexit plans than about the economy?
Graham Watson's insight:
I rarely put anything on this board - but this article is ripe for it.

What to do about Brexit? I'm sure that the Office for Budget Responsibility (OBR) have been delighted by the Brexit vote, and I'm sure they don't feel under any pressure not to reveal what they think the future direction of travel will be.

As the OBR charter states:  'If necessary, where a long-term policy has not yet been set by the government, the OBR will set out the assumptions it makes in its projections regarding policy transparently.' Good luck with that, guys.
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Nobel economics prize won by Oliver Hart and Bengt Holmström

Nobel economics prize won by Oliver Hart and Bengt Holmström | The Economic Method | Scoop.it
Pair’s work is described as key to understanding contracts and institutions that hold today’s economies together
Graham Watson's insight:
The Nobel Economics prize has been awarded to Oliver Hart and Bengt Holmstrom, for their work on understanding contracts and how they affect productivity. This Guardian piece briefly summarises their work.
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It’s time to junk the flawed economic models that make the world a dangerous place

It’s time to junk the flawed economic models that make the world a dangerous place | The Economic Method | Scoop.it
Mainstream economics is terrible at understanding the reality of human behaviour. Now, even the respected thinker Paul Romer is calling for change
Graham Watson's insight:
Paul Mason writes - with great vehemence - about the fact that even mainstream economists, such a Paul Romer are losing faith in a discipline that seems incapable of revising its models to adapt to new economic realities.

It's a cause that's been newsworthy for the last three years - and to some extent the Core project is tackling this. But I would ask the following- if there's a problem with existing models surely those critical of them need to work pretty hard at coming up with alternatives.
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Has the way universities teach economics changed enough?

Has the way universities teach economics changed enough? | The Economic Method | Scoop.it
Universities came under attack for failing to predict the 2008 financial crisis, and students demanded change. Have economics departments risen to the challenge?
Graham Watson's insight:

It's started...albeit slowly.


For what it's worth, I've always thought that there's more to the study of Economics than dry theory - the reason it's such wonderful subject is because, like love, it's all around.


For my sins, I'm a great believer that students would be well-served to study bits of economic history but also consider how it's portrayed in fiction, for example.  

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Beware: the experts are usually poor forecasters

Beware: the experts are  usually poor forecasters | The Economic Method | Scoop.it
Graham Watson's insight:

Allister Heath talks about the simple truth of Philip Tetlock's brilliant "Superforecasting: The Art and Science of Prediction" - don't trust experts. And then with a miraculous bit of sleight of hand, moves conversation on to suggest that just because an FT poll of 100 economists revealed 76 to be against Brexit, we should, on balance, vote for Brexit - or words to that effect...


Devious, sir. Very devious. But fortunately, for the keen-eyed reader, rather ham-fisted. Whether or not the average Telegraph reader will spot it - or be inclined to spot it, I don't know

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Office Hours: Rule of 70

One of the of the practice questions from our "Growth Rates Are Crucial" video asks you to compare real GDP per capita for two countries that start at the sa...
Graham Watson's insight:

This Marginal Revolution clip has a nice laid back approach to solving a straightforward growth problem using the Problem of 70. Elegant, isn't it...

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Keynes helped us through the crisis - but he's still out of favour

Keynes helped us through the crisis - but he's still out of favour | The Economic Method | Scoop.it
A brief burst of Keynes prevented a 1930s-style collapse that might have led to a more fundamental rethink of the status quo
Graham Watson's insight:

I'll offer Larry Elliott a different perspective: Keynes would have been horrified by the fact that stimulus measures meant puffing up the financial sector rather than the real economy. He'd have hated the rise in executive salaries relative to workers. He'd have hated the fact that a variety of governments have enriched buy-to-lettors, ideal shareowners and flash traders.

 

I don't claim to channel Keynes either. But I did play hockey with his great-nephew, who provided a definitive view on pronunciation...

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Are economics degrees fit for purpose? - BBC News

Are economics degrees fit for purpose? - BBC News | The Economic Method | Scoop.it
Why a growing number of students are demanding reform of university economics courses.
Graham Watson's insight:

This Peter Day article ties in with a programme going out on the World Service on Saturday evening - I might have to stay in! In it he looks at whether current undergraduate degrees are teaching the right sort of things or whether the Manchester University students who founded the Post-Crash Economics Society were right in trying to modernise the discipline and include more practical approaches to the subject.

 

Of course, at Winchester we aim for the best of both worlds, which is why Ruth Tarrant's talk on Behavioural Approaches was so welcome last night.

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Bruce Fellowes's curator insight, February 5, 2:12 PM

I have mentioned this many times before. We need to teach the historical theories as well as the modern day Behavioural Economics

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Labour’s economic rock stars will expose the Tories as a one-hit wonder | Anne Perkins

Labour’s economic rock stars will expose the Tories as a one-hit wonder | Anne Perkins | The Economic Method | Scoop.it
The Labour leadership is recruiting Mariana Mazzucato and Thomas Piketty to revolutionise thinking about the way the UK economy should work
Graham Watson's insight:

The love-in has begun - however, I 'scoop' this because, frankly, simply having the debate is a good thing. And I must confess, I thought that Matthew Lynn's depiction of these economic talks earlier in the week was disingenuous.  

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Andrew Tyrie blasts 'out of touch' Office for National Statistics

Andrew Tyrie blasts 'out of touch' Office for National Statistics | The Economic Method | Scoop.it
Treasury select committee chair said ONS lacked intellectual curiosity, was prone to silly mistakes and was unresponsive to consumer needs
Graham Watson's insight:

Andrew Tyrie seems to be a man who pulls few punches - and in this case he's taken aim at the ONS, reiterating the concerns of some at the Bank of England, that the statistics used in this country lag behind those of many of our trading partners/neighbours.

 

It is difficult to speculate on this issue - anecdotally, some leading figures have been broadly critical of the ONS, and it will be interesting to see what the Bean Review of the UK's statistics concludes. 

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The UK big data project playing Moneyball to build smarter cities

The UK big data project playing Moneyball to build smarter cities | The Economic Method | Scoop.it
The Future Cities Catapult aims to improve policymaking – be it for better flood defences, banking or medicine
Graham Watson's insight:

A rare entry into the Economic Method section but this excellent Katie Allen article looks at the application of big data to improved policy making in the public sector. It is linked, albeit tenuously to improving flood defences and also tied into to one of the big trends of the modern age - so read it. You never know: you might just find this sort of thing interesting. I know that I do.

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Tutoring start-up raises £1m to bring online tuition to mass market

Tutoring start-up raises £1m to bring online tuition to mass market | The Economic Method | Scoop.it
MyTutorWeb, which runs online classrooms, attracts investment from heavy-hitters in private equity
Graham Watson's insight:

Crikey! How the world changes - of course, the majority of people receiving tuition are probably a mix of those who need it least, those already in fee-paying education (in which case, please don't pay more for your education) or those for whom tuition is seen as a panacea.

 

One wonders what the average tutorial wage is - speaking frankly, I'm not sure I'd want to be tutored by an undergraduate at a top university - there are plenty of teachers willing to do it. Either way, unless it's done in a particular fashion and the tutee doesn't just expect to be 'fed' resources, then I'm not a fan of this sort of approach.

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Economics teaching is still neglecting critical thought

Economics teaching is still neglecting critical thought | The Economic Method | Scoop.it
Students can go through their entire degree without being asked to express an opinion. Thankfully, things are slowly beginning to change
Graham Watson's insight:
Rare to have two scoops on this board in the one day - but this is just a reminder that there is a movement out there that calls for greater pluralism, and greater realism, in the teaching of Economics. And, I have to say, they have a point.
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Want to know why central bankers can't solve the world's problems? Read a book

Want to know why central bankers can't solve the world's problems? Read a book | The Economic Method | Scoop.it

Ever since the writer Thomas Carlyle coined his rude epithet about economics, the world of letters and the “dismal science” have circled each other warily. But in his new book about the history of the Nobel Prize, Avner Offer, a professor of economic history at Oxford University, says economics actually has more in common with literature than, say, physics. 

Graham Watson's insight:
Crikey! The portrayal of economics in fiction is the pretext for this Ben Wright piece looking at why central bankers have been unable to stimulate the economy in the wake of the financial crisis.

In it he looks at why Goethe's "Faust" has proved to be a good guide to contemporary monetary policy.
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Intro to Understanding Data

Researchers at universities, smartphones, web apps, the government, and more — they’re all amassing mountains of data. But what does all this data mean? And how can we use it to answer some of life’s most important questions?
Graham Watson's insight:
A very nice, simple introduction to data and the omitted-variable bias. All straightforward stuff, and worth three minutes of your time.  
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Econocracy has split Britain into experts and ordinary people

Econocracy has split Britain into experts and ordinary people | The Economic Method | Scoop.it
The ‘post-truth’ referendum campaign offered an alarming example of how the population has become alienated from economic discussion
Graham Watson's insight:
It's been a while since we've heard from the movement that seeks to make Economics more relevant to contemporary life - both at degree level and in shaping current debate. This take on the role of the subject in the light of the 'post truth' referendum campaign is interesting, if only because it highlights the fact that we need to communicate the subject better. I hope that I do to my students. 
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ONS review: Stats need to get digital - BBC News

ONS review: Stats need to get digital - BBC News | The Economic Method | Scoop.it
The Office for National Statistics needs to modernise the way it collects, and presents, the data it compiles to remain relevant, a review says.
Graham Watson's insight:

One for the anoraks: the ONS needs to move into the digital age, according to Sir Charlie Bean, the former Bank of England economist.


He's right: it would revolutionise economics teaching!

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Bruce Fellowes's curator insight, March 11, 4:54 PM

One for the anoraks: the ONS needs to move into the digital age, according to Sir Charlie Bean, the former Bank of England economist.


He's right: it would revolutionise economics teaching!

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Changing how economics is taught - BBC News

Changing how economics is taught - BBC News | The Economic Method | Scoop.it
How universities around the world are revamping their economics degree courses, to include more focus on real world problems.
Graham Watson's insight:
An interesting, if predictable response to Peter Day's earlier post about the nature of the Economics being taught at university from Professor Wendy Carlin. She is a leading light in the Core project, whose material is worth checking out online - it's all free - and she is right to suggest that the subject needs to be based in the here and now. It's certainly how I try to teach.
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Bruce Fellowes's curator insight, March 4, 3:17 AM
An interesting, if predictable response to Peter Day's earlier post about the nature of the Economics being taught at university from Professor Wendy Carlin. She is a leading light in the Core project, whose material is worth checking out online - it's all free - and she is right to suggest that the subject needs to be based in the here and now. It's certainly how I try to teach.
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We need a new language to talk about the economy | Tom Clark

We need a new language to talk about the economy | Tom Clark | The Economic Method | Scoop.it
The images used by politicians can simplify difficult theories, but they are also being used to mislead us
Graham Watson's insight:

This is a really interesting article that looks at the language that economists and politicians use in formulating their policy decisions and explaining them to the public. It is an excellent summary of a broad range of economic currents from the 20th century and the rhetoric that accompanies it, suggesting that policymakers today are constrained by the prevailing orthodoxy and that so far the Corbynite Labour Party haven't developed a credible alternative.  

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When economists ignore the human factor, we all pay the price | Timothy Garton Ash

When economists ignore the human factor, we all pay the price | Timothy Garton Ash | The Economic Method | Scoop.it
Economics is not a hard science, and mathematical models won’t explain why people behave as they do. A much broader perspective is needed
Graham Watson's insight:

Crikey! It appears to be a day of navel-gazing and reflecting on what the subject is about. It happens from time to time. In this article, historian, Timothy Garton-Ash, argues that in overlooking the human, neoclassical economists risked turning the discipline into a form of mathematical obscurantism rather than the broad church that it should be.

 

Another interesting read - but, of course, what many people don't know is that - as Andy Bell once sang "It doesn't have to be that way". "The Theory of Moral Sentiments" - Adam Smith's real masterpiece was acutely aware of the behavioural nature of the discipline.

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Investors Europe Stock Brokers's curator insight, February 13, 5:16 AM

Following the great crash that began nearly a decade ago, there has been some soul-searching about what economics got wrong. Probably the self-criticism should have been more far-reaching, both in academia and banking, but it’s there if you look for it. @Investors Europe Stock Brokers

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If having more no longer satisfies us, perhaps we’ve reached ‘peak stuff’ | Will Hutton

If having more no longer satisfies us, perhaps we’ve reached ‘peak stuff’ | Will Hutton | The Economic Method | Scoop.it
Societies must learn to use economics to help provide purpose and fulfilment
Graham Watson's insight:

Will Hutton challenges us to embrace a world where there's more to life than material things, and that might mean that, for many of us in developed economies we've effectively resolved the issue of scarcity and actually have too much stuff.

 

Quite where Will Hutton met my wife, I don't know but he must have some inkling about the state of her study.

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John Maynard Keynes 'a great economist but poor currency trader'

John Maynard Keynes 'a great economist but poor currency trader' | The Economic Method | Scoop.it
Study of Keynes’s foreign exchange dealings between the first and second world wars reveals a chequered record
Graham Watson's insight:

An interesting aside on the career of Keynes: better with stocks than with currency trades, it would seem.

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What does a management consultant do anyway? - BBC News

What does a management consultant do anyway? - BBC News | The Economic Method | Scoop.it
What exactly do management consultants do and how can those at the top use them effectively?
Graham Watson's insight:

I've 'scooped' this because despite the well-written nature of the article and having read the CUP history of management consultancy, amusingly entitled "The World's Newest Profession", I'm still not convinced that consultants are worth the fees that they generate. I'm afraid that if you put clever graduates, straight from Oxbridge, into firms and ask them to make decisions based on a few case studies and the 'McKinsey Way' then they've no experience of running a business or the human cost of their decision-making.

 

And yes, at one point I probably would have considered working in the sector. More tellingly, a friend of mine went from being a management consultant to the clergy. They're both 'religions' of a sort.

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Be a better forecaster by challenging your assumptions

Be a better forecaster by challenging your assumptions | The Economic Method | Scoop.it
One of the most dangerous tendencies exhibited by investors is confirmation bias
Graham Watson's insight:

Excellent Tom Stevenson article over the weekend, arguing for the need for greater humility and greater scepticism regarding our ability to see into the future. He presents a mainstream view of the next 12 months and then dares to be different presenting some offbeat scenarios that might just happen.

 

The problem in Economics is that we often extrapolate into the future, which serves as some sort of guide - and quite often it's not a very accurate one. However, having then adopted a position we find it difficult to change.

 

We should: when the facts change, it's often pretty ignorant to still hold onto the same view that we had previously.

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