Coppola Comment

Gabriel Sterne complains about economists' loose use of mathematical terminology:  Of course, it's not just economists who use "increase" and "accelerate" interchangeably. But economics is a mathematical discipline, and in mathematics, "increase" and "accelerate" mean different things. So is Gabriel's observation true, and if it is, is it a problem? To test Gabriel's hypothesis, I ran a little Twitter test. I asked this question:  This was of course far from rigorous: the sample was self-selecting, there was no way of restricting it to economists (though I did ban finance tweeps from answering), and it all depended who was on Twitter this morning. And the terminology I used was itself confusing - deliberately so, since this is how economists often write.  But the results were nevertheless interesting. Most non-economists got the answer right. Physicists, in particular, understood it straight away. But most economists who answered

The Lightning network is being touted as the solution to Bitcoin's scaling problems. If lots of transactions can be taken off the main chain, the thinking goes, then Bitcoin can still take over the world despite its considerable performance problems. Lightning enthusiasts say that when fully enacted, the network will be able to process millions of transactions at, er, lightning speed, without compromising decentralisation, security or transparency. But there are dissenting voices. For example, in this piece , Jonald Fyookball disputes the claims of the Lightning enthusiasts on the grounds that the mathematics doesn't stack up. Predictably, the Lightning geeks have fought back: the pseudonymous "Murch", a software engineer at the Bitgo cryptocurrency exchange, describes Fyookball's analysis as "laughable". Fyookball describes the Lightning network thus: To send or receive bitcoins, you need either a payment channel with that specific user, or a

“What do they teach them at these schools?” wondered the Professor in C.S. Lewis's The Lion, the Witch and the Wardrobe.  The Professor, of course, was concerned about logic. But I wonder too - not about logic, but about maths. Especially among journalists writing about life expectancy and other long-term trends. Here is the FT proclaiming "Average life expectancy falls". This is the headline for a chirpy piece about how reduced life expectancy could make things easier for pension funds facing big deficits.  There's only one problem with this. Life expectancy isn't falling. And the report the FT cites does not say that it is. This is how the press release from the Institute and Faculty of Actuaries summarises the findings of their report: Recent population data has highlighted that, since 2011, the rate at which mortality is improving has been slower than in previous years However, mortality is expected to continue to improve and there is signifi

Collected here are my posts about the changing nature of economics. Olivier Blanchard says "there is room for art as well as science". In these posts, I develop the concept of economics as art: vague, conceptual, imaginative, complex, and subjective. In other words - human. I should make it clear that I am mainly talking about macroeconomics, although microeconomics is also changing for other reasons. The problem of mathematics When the Nile floods fail The failure of macroeconomics The necessary arrogance of elites Spurious precision No, please don't show me your model

Unsurprisingly, on my post " The Art of Economics ", which attempted to put the mathematical models beloved of mainstream economics firmly in their place, is a comment defending mainstream mathematical models. Here it is, in part: Secondly, you definitely don't need obscure heterodox models to predict a financial crisis. I've cited it before, but for instance Kiyotaki-Moore  basically sketches out how a crisis like this can occur. There are actually plenty of examples of perfectly fine mainstream papers on this topic. And it wasn't just heterodox economists that predicted it. People like Dean Baker, Roubini or even Krugman didn't exactly rely on post-Keynesian or Minskyian economics, their logic was fairly straight forward. Stiglitz has some great models on bank failure, which are essentially mainstream info-asymmetry economics. I also think Minsky is useful but not that useful, and it's not especially scientific. He doesn't really have any kind

Over at Bloomberg View, Noah Smith has a pop at what he calls “heterodox economics”. By this he means the new ideas in economic thinking that have sprung up since the 2008 financial crisis but so far haven’t made it into mainstream economic journals. Noah starts by admitting that mainstream economics abjectly failed to predict the crisis and gave little or no guidance on how to deal with it. Because of this, according to Noah, “many people have looked around for an alternative paradigm -- a new way of thinking about macroeconomics that would have allowed us to avoid the pitfalls of the Great Recession.” Indeed they have.  Though some of the ideas are not so new – Hyman Minsky’s “ Financial Instability Hypothesis ”, for example, dates back to 1992. According to Noah, the search for alternative thinking inevitably attracted people who – for whatever reason – “felt shut out” of the mainstream. And as an example of one of these so-called “heterodox” economists, he cites me. Here’

It has been a horrible week. A post on Pieria was the cause of a series of really rather nasty personal attacks both in the comments on the post and on Twitter. It seems that some people didn't like me criticising one piece of sloppy work by an academic econometrician whose other work they admire. I find this bizarre. One piece of poor work does not invalidate someone's entire output. When I was at the Royal College of Music, I attended a Stravinsky Festival at the South Bank. It went on for weeks and covered Stravinsky's entire instrumental output. By the end of it I never wanted to hear another piece of Stravinsky ever again. But one of the things I learned in the course of this was that great composers are fallible. Igor Stravinsky is a great composer. The Rite of Spring is one of the greatest orchestral pieces ever written. But that doesn't mean that every piece he wrote is great. Far from it. Some of his output is frankly rubbish and should be consigned to the