Author Topic: So Stupid!  (Read 10841 times)

rb

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Re: So Stupid!
« Reply #50 on: April 04, 2018, 08:01:10 PM »
Disclosure: basically uneducated in "economics" and hoping to hear from rb, but will submit the following:
Standard macro models can be useful but tend to over-simplify and assume perfect competition and an ideal rational world.
Ok, this is off topic but I wanted to talk about this for a while and you have hit the nail perfectly. Yes standard economic models are simplified but are very useful, easy to use, and make up a lot of the heavy lifting.

You also mention that you're uneducated in economics. That's the other thing. These models weren't intended for general consumption but for use by economists. They are tools. As you get educated in economics you also learn about the limitations and weakneases of these models. So you learn how to use these tools. But today these models are brought into the mainstream. So you have someone who reads 3 articles in the paper and thinks he's an economist. Then he finds some flaw with a model and goes "This is bullshit. These models are crap." But that's like someone picking up a wrench, tries to drive a nail with it and goes "This tool is bullshit. You can't even drive a nail with it."

There are also more complicated models that deal with specific situations but those don't get a lot of airtime and or are a lot more accurate. But you don't read a lot about microfoundations and other stuff like that on marketwatch or businessinsider. It'll drive away all of their readers. Btw, in my opinion, if you understand the big models really well you don't need to bother with stuff like microfoundations.


Cigarbutt

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Re: So Stupid!
« Reply #51 on: April 04, 2018, 08:24:13 PM »
Thank you.
That's was a very interesting answer.
"You can observe a lot just by watching"
From Yogi Berra, a well known economist, who helped me understand the difference between uncertainty and risk. :)