Which courses are APPLIED economics?

[sevensilences]

Sorry to ask a silly question here. But I am not sure which courses can be listed as APPLIED economics. Obviously, Labor, IO, Health...but how about development economics? Public Finance?

[PriceTheory]

I think it depends on what you did in the course. If you had to read empirical papers from the research literature or look at a lot of data, it was applied.

On the other hand, in a sense all of economics is an application of basic price theory, so everything but Consumer Theory 101 could count as applied if you want it to.

[shootermcgavin7]

but how about development economics?

 

The developmental course here is a 2nd year course, that used to allow either an empirical or theoretical paper at the end of the course; now it is strictly theoretical.

 

I think development is slightly useless if it cannot be applied, but I think the micro aspect to the field should be stressed.

[Antichron]

I'm sorta under the impression that everything except for pure theory classes is considered to be "applied". I often hear the topics being categorized as "applied" topics and "applied theory" topics. Theoretical I/O is considered "applied theory," whereas empirical I/O is "applied."

[shootermcgavin7]

I'm sorta under the impression that everything except for pure theory classes is considered to be "applied".

 

 

Semantics by Academia, but good to know. Thanks.

[OneMoreEcon]

I'll second Antichron's comments about "applied theory" and "applied".

 

It sounds like you're filling out the departmental form that's part of the Berkeley application. I think you're basically supposed to list all econ courses that aren't pure theory (since, if I remember correctly, there's a separate part for pure theory courses).

[sevensilences]

I'll second Antichron's comments about "applied theory" and "applied".

 

It sounds like you're filling out the departmental form that's part of the Berkeley application. I think you're basically supposed to list all econ courses that aren't pure theory (since, if I remember correctly, there's a separate part for pure theory courses).

 

yes:)

[snappythecrab]

I think development is slightly useless if it cannot be applied

 

well, I think one could make that claim about all of economics.

[shootermcgavin7]

well, I think one could make that claim about all of economics.

 

 

I made that point a couple of months ago; but there's certainly poeple in academia to whom that thought never occurs.

[butler blue]

I made that point a couple of months ago; but there's certainly poeple in academia to whom that thought never occurs.

 

How sad that that is true. I guess some people just do econ because they enjoy tinkering with applied mathematical models.

[Antichron]

How sad that that is true. I guess some people just do econ because they enjoy tinkering with applied mathematical models.

 

I think that is a pretty cynical view of the economics profession, but not one that is completely unwarranted. I believe, though, that most people who are active researchers have some deeper belief that their work is somehow useful, even if its use is not immediately apparent. Greg Mankiw has a nice blog entry on the perceived pointlessness of economics research:

 

http://gregmankiw.blogspot.com/2006/11/whither-academic-economics.html

 

I particularly like his second point. (Stock versus flow.)

 

Ultimately, the subject of economics is only worth pursuing if it has some sort positive impact on society. Most serious researchers, I would imagine, share this view.

[butler blue]

I think what I was expressing is similar to what Mankiw writes in his fourth point. While my idealized view of academia is that it all research is done for the betterment of society, I also perceive a good deal of research being done for the sake of getting tenure and out of interest in tinkering with models. Not that it is unexpected that people will act in their own interest, it just gets away from the normative view I hold of the way things ought to be.

 

That being said, maybe I came off a little more cynical than I am. Though my location limits my interaction with active researchers, the interaction I have had with the economics academic community has been positive. Most seem to echo that "the subject of economics is only worth pursuing if it has some sort positive impact on society." However, I still do get the impression that there is a minority does not take this stance.

 

Also, thanks for the link to Mankiw's article. I think it helps give an explanation of why we may perceive most research as benefitting society little, not because it is intended to be useless but because of how difficult it is in coming up with new, useful ideas, especially when viewed in such a short window compared to the entire history of economics. I suppose it is for this very reason that I intend to go into the public sector side of econ rather than the academic side because I don't expect that any ideas I come up with will change the world. I'll leave that to MIT students. :) :)

[snappythecrab]

I made that point a couple of months ago; but there's certainly poeple in academia to whom that thought never occurs.

 

 

mental masturbation and all....that being said, I can't claim that I don't like having fun with semi-outlandish models. still, it is nice if they're somewhat grounded in the real world. as it is, the words "real world" seem to be kryptonite to some economists.

[OneMoreEcon]

Even though the subject has completely changed from the OP's intention...

 

I tend to be a very big critic of a lot of the nonsense that economists put forth. That being said, a good deal of the seemingly retarded outlandish stuff has useful implications. As any decent economist will tell you, no model is accurate... the issue is whether a given model provides some insight into the issue being addressed. Is a full-blown rational expectations assumption stupid? Yeah, of course. But does rational expectations provide us with a new way of approaching macro, with the possibility of thinking that certain individuals/firms have close to rational expectations while other individuals are far from it? Yeah, it does, and information asymmetries are a big deal. With gambling, the house always has the odds on their side. You can use the same idea in a model where the "house" has approximately rational expectations, and the gambler (individual) does not.

 

On a note related to another thread, I randomly picked up an 25-year-old edition of Econometrica today and thumbed through an 8-page publication that consisted of one page of economic theory and 7 pages of topology and related theorems and proofs (and borrowed a theorem from Truman Bewley's dissertation).

 

Do we make stupid assumptions to simplify models? Yes.

 

Do those models provide important insights? Sometimes.

 

Does it help society? Maybe.

 

 

As for the comment about much research being done to obtain tenure... blame the profession. We don't set up the rules; we only abide by them. If it means doing some seemingly trivial or useless work in order to be taken seriously on issues that really matter... so be it. It's not neccessarily cool or fair or desirable, but it's reality.

 

Having made a long rant, I should probably read the Mankiw blog and edit my comments. :)

[OneMoreEcon]

And I also want to say that we shouldn't take so much for granted. I know that my math background has given me a real appreciation for MWG, while others in my class don't have the same opinion. Really, you can't just assume that you can maximize a utility function... it works because of a lot of mathematics that probably seemed totally obscure and irrelevant at the time. Even the stuff that's totally detached from reality may one day be applied in such a way that drives the field in a new and totally relevant direction.

[sevensilences]

After reading the discussion, my conclusion is: SILLY questions are REALLY important!:hmm:

[butler blue]

And I also want to say that we shouldn't take so much for granted. I know that my math background has given me a real appreciation for MWG, while others in my class don't have the same opinion. Really, you can't just assume that you can maximize a utility function... it works because of a lot of mathematics that probably seemed totally obscure and irrelevant at the time. Even the stuff that's totally detached from reality may one day be applied in such a way that drives the field in a new and totally relevant direction.

 

Agreed. I'm personally glad that graduate schools require everyone to go through a standardized, rigorous representation of economic theory. I don't want an economist out there who doesn't know the inner workings of what he's talking about just like I don't want to go to a doctor who doesn't know the organic chemistry to understand what's going on when he gives me meds.

 

And yes, apologies to sevensilences though it would seem that the original question was answered. Thank you for the question that sparked our discussion.

[dafrk3in]

And I also want to say that we shouldn't take so much for granted. I know that my math background has given me a real appreciation for MWG, while others in my class don't have the same opinion. Really, you can't just assume that you can maximize a utility function... it works because of a lot of mathematics that probably seemed totally obscure and irrelevant at the time. Even the stuff that's totally detached from reality may one day be applied in such a way that drives the field in a new and totally relevant direction.

 

You should read Mas-Colell's book on differential geometry and equilibrium.

[ssendam]

Agreed. I'm personally glad that graduate schools require everyone to go through a standardized, rigorous representation of economic theory. I don't want an economist out there who doesn't know the inner workings of what he's talking about just like I don't want to go to a doctor who doesn't know the organic chemistry to understand what's going on when he gives me meds.

 

True. The danger, however, is that like the drunk looking for his keys under the streetlamp, economists will ignore phenomena that can't fit into their mathematical assumptions and thereby avoid working on things that people actually care about.

[Antichron]

True. The danger, however, is that like the drunk looking for his keys under the streetlamp, economists will ignore phenomena that can't fit into their mathematical assumptions and thereby avoid working on things that people actually care about.

 

Granted, we don't exactly have flashlights, but I think we're pretty good at building new streetlamps wherever we need them.

[Cph]

Dixit has a nice example of how useless fiddling with math may become useful. The whole paper is here:

 

http://www.princeton.edu/~dixitak/home/dixitwrk.pdf

 

I cite the relevant passage here for convenience:

 

-----------------------------------------------------------

How can you know if you do have the real drive to do research on a particular topic? Perhaps the surest sign is that the work is fun. Richard Feynman, in a wonderful collection of anecdotes from his life ("not an autobiography," he insisted) gives a classic example of this. Some students in the cafeteria were tossing around a dinner plate like a frisbee. It was wobbling, and the red Cornell medallion on the plate seemed to be revolving faster than the wobble. Feynman set out to calculate the relation between the two rates and found a remarkably simple two-to-one ratio. He showed his work to a senior colleague, Hans Bethe.

`He says, "Feynman, that's pretty interesting, but what's the importance of it? Why are you doing it?"

"There's no importance whatsoever. I'm just doing it for the fun of it." ... And before I knew it ... I was "playing" -- working, really. ... It was effortless. There was no importance to what I was doing, but ultimately there was. The diagrams and the whole business that I got the Nobel Prize for came from that piddling around with the wobbling plate.'

Feynman uses a very revealing word: "playing." If your work is as enjoyable to you as play, that is a good sign that the topic suits you.

-------------------------------------------------------------------

[shootermcgavin7]

like the drunk looking for his keys under the streetlamp,

 

 

FYI, This is much harder than it sounds.

[butler blue]

Dixit has a nice example of how useless fiddling with math may become useful. The whole paper is here:

 

http://www.princeton.edu/~dixitak/home/dixitwrk.pdf

 

 

 

Interesting paper. I do think that Dixit's point about being genuinely interested in your work is correct. A theorist who is working out of obligation rather than enjoyment is going to be a fairly useless theorist. That said, I've come to believe that in an ideal world each person should be doing work that is both interesting to them and useful to the world. Pursuing only the former is triviality and pursuing only the latter is unduly burdensome. You need both. Thanks for the reading, though. Dixit's point that one rarely knows the eventual importance of one's research is more valid now that I think on it. I don't expect that it will make me a theorist, but it helps me to understand those of you who plan to become theorists better.

 

I also thought he had some good points relating to the "drunk searching under the lamp." It is rather ironic that theorists must be totally immersed in an academic tradition when their ultimate goal is to reorient that tradition.

 

Finally, I thought his suggestion that Paul Krugman's research capability has been held back by his beard was uttlerly hilarious. :tup: