Iâm very happy to announce that my friend James Montier has restarted his behavioral investing blog. From my understanding he will be writing short essays unrelated to his role at GMO. Take a lookâŚhis latest post is titled Barbie does economics!
Introduction (via James Montier)
http://www.simoleonsense.com/
Introduction (via James Montier)
The sheer hubris of many in the economics profession never ceases to amaze me. Take for instance a recent paper by Kartik Athreya of the Federal Reserve Bank of Richmond[1] entitled âEconomics is Hard. Donât let Bloggers Tell You Otherwiseâ. In a move that is eerily reminiscent of the controversial talking Barbie of the early 1990s who fatefully uttered âMath class is toughâ[2], Athreyaâs short paper essentially lays out a quite staggering claim :- that economics should be left to those with a PhD in the subject!My favorite bits:(via James Montier)
Athreya describes himself as âa worker bee chipping away with known toolsâ. He goes on to say âwriters who have not taken a year of PhD coursework in a decent economics departmentâŚcannot meaningfully advance the discussion on economic policyâ[3]. Youâve got to love the âdecentâ in that sentence â it wreaks of intellectual snobbishness of the highest order.
Economics starts from a far worse place. It isnât a science, and often seems more interested in twisting the facts to fit a theory rather than the other way around. In fact, as Nassim Taleb has pointed out, economics is more akin to medieval medicine than its current practice, âMedicine used to kill more patients than it saved â just as financial economics endangers the system by creating, not reducing, risk.[5]âMiguel Barbosa
Indeed many of those who warned of the problems ahead did so because they werenât constrained by the kind of training that an economics PhD suffers. I did my own training in economics a long time ago now, it included a fair amount of equation bending but I was incredibly fortunate that it included generalist topics such as Marxian and post-Keynesian economics, subjects that are oddly absent from the vast majority of syllabi.
Modern day economics is much like these poor animals. Many economists have learnt to become helpless. They would rather lay down and whimper and whine about how unfair the world is, and mutter that everything would be alright if only people behaved like their models, than seek to look outside the narrow confines of their obsession with rationality and mathematics to see if others might just have some useful insight.
Click here To Read: James Montierâs Latest Post: Barbie does economics
http://www.simoleonsense.com/