Maxine Udall makes a point I've often made, though in a way I wish I had phrased it:

Now add to this the promotion and tenure policies at even second rate economics departments that require and only reward publication in journals that favor morally vacant, mathematically rigorous, theoretically obtuse existence proofs that more often than not bear no relation to reality as we know it. One is then left with an economics literature that few people, including some who have majored in economics as undergrads, can truly understand, either in its content or in its relevance to the important moral and economic issues that confront us today.

Udall, in my view erroneously, believes that a 'reality-based' economics would be more Keynesian:

Keynes, who advocated that government play a role in moderating the effects of peaks and troughs in the business cycle through regulation of investment banking and automatic demand stabilizers (for example, unemployment compensation and jobs creation through public works) became conflated (perhaps intentionally) with "socialism" and "communism."...

Economics, mathematized and divorced from moral philosophy, was effectively neutered after WW II, at the point when its relevance to "serious economic argument" might have been established and developed. The outcome was perfectly aligned with market forces that would continue to shift the national narrative in ways that would finally succeed in convincing people that "government is the problem". It culminated in repeal of Great Depression era regulation, thereby freeing investment bankers for unfettered speculative gains supported by a seemingly unfettered single-payer credit default safety net.

Which is all fine and good, except for the fact that for Keynesian fiscal stimulus to work you need to waive away a number of real world complications. Non-mathematical theories can " bear no relation to reality as we know it" as well.

Udall also states:

World War II provided the massive Keynesian stimulus needed to haul us out of depression and to cement Keynes ideas about the roles that government could and should play both during economic downturns and to prevent them.

This neglects to take into account the evidence that U.S. military and foreign spending did not go up until 2 years of rapid U.S. economic growth.

Craig Newmark posts an excerpt from a Andrew Simms column:

Orthodox economics is based on simplifications that so distort the real world as to make it unrecognisable, yet its basic tenets are credulously repeated on an almost daily basis in national newspapers and on television news. A genuinely evidence-based approach to economic policymaking would not produce a system remotely like the one we have, the business-as-usual version that many climate sceptics seem so eager to defend. Given its task, the vast range of subjects covered, the thousands of scientists involved, and the sheer size of its reports, what's stunning about the IPCC's work is that comparing it to any economic analysis used to actually run the world is like comparing the complete Oxford English Dictionary to a guide to slang published by the Sunday Sport.

Newmark's reaction?

That's really a low blow. Mandatory two-point deduction. Your next foul, sir, you will have to forfeit the fight.

My reaction?

Simms has a point.

More specifically - there is a lot of really good applied economics research out there that uses realistic assumptions, real world data and produces useful outcomes. Then there are theory papers which are nothing but mathematics posing as economics. Models with assumptions such as:

• Heterogeneous agents.
• Absurd market demand curves (e.g. Demand is a constant r until the price p_r then it falls to zero.
• Input prices that do not vary with demand.
• No production externalities. Ever.
• Agents with perfect information (they know the cost structure, strategies and inventory levels of their competitors).
• Zero transaction costs.
• Long run marginal cost curves with a single local minimum.

That's just off the top of my head. I should crack open an issue of Econometrica and find hundreds more.

A fan of Milton Friedman's The Methodology of Positive Economics would respond that it does not matter how absurd the assumptions seem. All that matters is how valid and accurate the model's predictions are. But since most economics models (particularly in macroeconomics) are not easily directly testable nor easily falsifiable, I question how much value we should place on a model with absurd assumptions.

I get quite a few questions on marginal utility, so I thought I'd create a primer for those of you who are completely new to economics. Please see: Marginal Utility in Economics.

Stephen Gordon asks a question I continually asked myself as a Ph.D. student at the University of Rochester:

Why does anyone care about the distinction between convergence in probability and almost sure convergence?

I'm teaching two econometrics classes this term (master's and PhD), and I just covered the parts on asymptotic theory. In both lectures, I stumbled badly at explaining the difference between these two forms of convergence: my heart simply isn't in it...

I've never heard of empirical study where the distinction between the two forms of convergence made a difference...

Why do we force our students to learn these things?

As an aside, undergraduates in economics are often surprised how little economics there is in graduate programs outside of fields courses such as Labor Economics and Public Finance.

Although from an empirical perspective it probably doesn't make sense in the slightest to worry about the distinction between the two types of convergence, I am quite certain it makes a difference in theory papers. Unlike most economists, I tend to use 'theory paper' in a pejorative sense, because too many theory papers:

1. Make assumptions that cannot possibly be true and are not reasonable simplifications of the 'real world'.
   
   
2. Are non-falsifiable, do not make predictions, or have so many free parameters they can be used to predict anything.

You need to know this math in order to be able to publish 'theory papers'. The larger question should be, "why does the economics profession put any value on this work?"