Economics 2010a Fall 2003 Ed glaeser Lecture 1
Economics 2010a Fall 2003 Ed Glaeser Lecture 1
1. Introduction a. General observations about economics Defining the Field i1. The Use of Economic Theory iii. Traditional ideas in economics b Choice Theory c. Rationality d Weak Axiom of Revealed Preference e. Application: Ultimatum Games
1. Introduction a. General Observations about Economics i. Defining the Field ii. The Use of Economic Theory iii. Traditional Ideas in Economics b. Choice Theory c. Rationality d. Weak Axiom of Revealed Preference e. Application: Ultimatum Games
Defining the Field-what do you think that economics is? (1) Subject Matter Based Definitions (2)UItra-pragmatic definitions( what economists do) (3)Methodology Based Definitions This much is certain a. Economics pretty much includes all topics related to human society Money supply, international trade, public finance, economic growth But also, fertility, crime, the marriage market hate terrorism riots This is a tremendous opportunity for us
Defining the Field—What do you think that economics is? (1) Subject Matter Based Definitions (2) Ultra-pragmatic definitions (“what economists do”) (3) Methodology Based Definitions This much is certain: a. Economics pretty much includes all topics related to human society. Money supply, international trade, public finance, economic growth. But also, fertility, crime, the marriage market, hate, terrorism, riots …. This is a tremendous opportunity for us
b. Economists at least like to think that the discipline follows Popperian scientific methods Stylized Facts Hypothesis Formation Testing Hypotheses Remember that Popper would tell you that hypotheses can only be proven false empirically, not proven true. This should keep us humble C. Hypothesis Formation- The Theory Step of this Process-In Economics this means using the language of Mathematics to formalize one's assumptions Why is this so valuable? Some critics of economics say that our models are too simplistic. We leave too many things out
b. Economists at least like to think that the discipline follows Popperian scientific methods Stylized Facts -> Hypothesis Formation -> Testing Hypotheses Remember that Popper would tell you that hypotheses can only be proven false empirically, not proven true. This should keep us humble. c. Hypothesis Formation— The Theory Step of this Process—In Economics this means using the language of Mathematics to formalize one’s assumptions. Why is this so valuable? Some critics of economics say that our models are too simplistic. We leave too many things out
That is true-we do leave many things out But it's better to be clear about an argument Failing to formalize a theory does not mean that you have been more general and holistic, it just means that you have been less rigorous Other social sciences have inevitably followed economics into formalization and the social scientists who have not, have had trouble. I think that early formalization gave economics a huge edge over sociology Economics does not have an edge in generating stylized facts-almost surely we are bad at this We also do not seem to have an edge at creativity For these reasons--it makes sense to be more aware of other disciplines
That is true—we do leave many things out. But it’s better to be clear about an argument. Failing to formalize a theory does not mean that you have been more general and holistic, it just means that you have been less rigorous. Other social sciences have inevitably followed economics into formalization and the social scientists who have not, have had trouble. I think that early formalization gave economics a huge edge over sociology. Economics does not have an edge in generating stylized facts—almost surely we are bad at this. We also do not seem to have an edge at creativity. For these reasons—it makes sense to be more aware of other disciplines