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Stigler vs. Chamberlain


Don't know why I hadn't read it before, but I just finished Monopolistic Competition in Retrospect (1949), the short essay in which Stigler martyred Chamberlain's theory of monopolistic competition. At its core, Stigler's paper is methodological: for practical problems, use the economic theory appropriate to answer the question -- just not Chamberlain's. Stigler insists that Chamberlain's economic theory is incoherent, except for the analytically proper situation where you have multiple firms, all producing the same product, and all facing decreasing demand curves. That was pretty good.

And it's good that Chamberlain's influence has refocused serious research interest on trademarks and advertising product structure and evolution.

That's what a martyr is for.

[Update 1]: Hammond and Hammond dug into the Early Stigler-Friedman Correspondence. There's much on point starting on page 13, but on page 17 we get Friedman's statement of Stigler's Laws:

Stigler's Law: The gorgeousness of a theory varies with the range of phenomena it embraces and inversely with the number of its constants.

Stigler II: If businessmen deliberately adopt and persistently retain a practice, that practice is explicable in terms of maximum profits.

Stigler's Razor: In dealing with economic theory, always use the most advanced branch of mathematics you can apply.

[Reformatted from original]

I must note that the paper is online, for free, but the authors have marked every page "Not to be quoted". I take it they actually mean "Not to be quoted by scholars in serious, respectable publications". Hence I feel perfectly fine linking and quoting from T&B.

You don't say...

What do you mean, municipal wi-fi networks aren't the unalloyed good they were sold as?

Across the United States, many cities are finding their Wi-Fi projects costing more and drawing less interest than expected, leading to worries that a number will fail, resulting in millions of dollars in wasted tax dollars or grants when there had been roads to build and crime to fight.

I was recently in Pittsburgh, PA. Which has a downtown network that can be used "free" for two hours. I say "free", since I had to register. For the benefit of sending my info to the city, which I assume logged my IP and thus knew roughly where I was and more...I got slow service that could only be used in certain positions since the repeaters were weak and stationed poorly for coverage.

But, you know, it's hard to tell how these things will pan out.

Returns to being an Economist

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It must be good being an economist these days. As Chris Hayes details in his re-cast Nation article (re-cast, that is, from essentially the same framework of this one: rationality isn't perfect, the models don't explain everything, people are taught only one thing from the start, other opinions get too little notice, etc. etc., so on and so forth) there are a lot of people who, while arguing that economics is built on a cracked and crumbling foundation, wish desperately to be considered economists themselves.

Clearly, these are people who could be anthropologists, sociologists, demographers, public policy analysts, or any number of other things. But they are fighting tooth and nail with the economic establishment, and obviously wish to be part of a new generation of economists. Some are established names, some are names from outside the academy, some are newer names looking for recognition.

So why not go off to be something other than an economist? After all, political science has seen a dramatic turn to the quantitative and empirical over the past decades. Perhaps that would be a better perch from which to lob critiques.

Since so many people still wish to lay claim to the title "economist" (or some modified version thereof, like Social Economist Economic Sociology; the real crux being that the word appear somewhere in the title), but have such fundamental problems with the establishment, I can only conclude that there are greater returns to being known by others to have a command of economics or, even better, be an economist than they are to being known as something else.

Aside: The major problem I have with people arguing that the "neoclassical consensus" is manipulating the system is that they all seem to assume that there is value in a critique simply because it is a critique. Chris Hayes' article(s) are wonderful demonstrations that a critique may exist and yet provide absolutely no value to the overarching argument. End Aside

Question of the Day

Techdirt: How Much Would You Bid On eBay To Explain Market Economics To Sundance Festival Organizers?

My answer: nothing. I get some marginal benefit from seeing people get annoyed that self-satisfied movie stars pretend that they have any sort of insight on anything except, say, playing make believe in a social bubble for vast sums of money.


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