Professor Mark J. Perry's Blog for Economics and Finance
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I think we are in the Copernican era of finance. We know that capitalism isn't the center of the universe, but we don't have an alternate theory yet. If we find it, then it will take 500 years for conservatives to forgive us.
So if economics and finance are not science then is financial speculation science? Making financial speculation a science is the premise of the fascinating blog Daily Speculations.BTW, the article cited the book Devil Take The Hindmost. Edward Chancellor writes a great narrative of the history of financial speculation and bubbles. The chapter on the Dutch Tulip mania may be the best ever written on the subject. I am currently reading this book.
Sounds like a good book, I'll have to get it.Science comes in various qualities. If you had true knowledge, then it would not be speculation. Right now, it is like medicine in 1800: try something and maybe it will work.
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Perhaps there are two ironies in the statement. Economists can be subjective given the usual human proclivities. But I believe economics is really, at it's heart, a set of methods to measure collective psychology. A physicist deals with measurements and error and the laws of the universe will never be altered by a finding or discovery. However, economics will forever change as more information is gathered and studies and theory are presented: The presentation of the measurement affects future results. (A slight variation on The Heisenburg Uncertainty Principle)
It's easy to predict outcomes after they happen.
jason:Chaos is hard to study and make sense of, but not impossible.
Jasson raises a good point. What if we develop economics to the point that it is determinsitic, like gravity.What would be the result?We would all agree on one set of rules and go play the game, instead of endlessly arguing over dogma of the day.
"What if we develop economics to the point that it is determinsitic, like gravity."That will be possible when you understand human nature completely and can predict with 100% accuracy how a person, or group of people, will respond in every possible situation.
Hydra, economists are not trying to measure chaos, they are trying to measure human response. Humans defy measurement.
"Humans defy measurement....can predict with 100% accuracy how a person, or group of people, will respond..."=================================I don't think so, Right now we can measure and predict lots of things, but with a pretty low precision.Like lowering taxes increases revenue by growing the base.
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Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.
Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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