[OPE-L:6208] Re: econometrics

From: Gerald_A_Levy (Gerald_A_Levy@email.msn.com)
Date: Mon Nov 19 2001 - 15:43:57 EST

Re Patrick's [6205]:

> Let's create a list of everything appropriated by neoclassical economics.
> 1. english
> 2. mathematics
> 3. statistics/econometrics
> 4. formal education
> 5. professional refereed journals
> Clearly, we cannot reject something just because neoclassicals have
> appropriated it.

The history of thought question here is whether econometrics was
'appropriated by' or 'created by' marginalists.  *If* one was to define
econometrics simply as statistical analysis by economists, then there
were certainly  pre- and non-marginalist  'econometric' studies.
Yet, I think this identification of statistical analysis with econometrics
is far too an all-inclusive understanding that does no recognize the
specific historical origins of econometrics as a field of study _per
se_.  I especially challenge your claim in [6202] that Keynesian and
institutional economics 'gave rise' to the intensive use of econometrics.
I think that the emergence of econometrics as a distinct field of study
can be traced back to the founding of the Econometric Society in 1930
which was a consequence of an earlier meeting of Ragnar Frisch of
Oslo, Charles F. Roos of Cornell and Irving Fisher of Yale. A pioneer
of 'statistical economics' was Henry L Moore.  So who appropriated
what? Both Fisher and Moore met Walras and Pareto on trips to
Europe and Moore had "innumerable trips to Europe -- seeking out
Walras in 1903, Pareto in 1908, Bortkiekicz in 1912, and others,
but maintaining correspondence only with Walras" ("Henry L. Moore
and Statistical Economics" in George J. Stiglitz _Essays in the
History of Economics_,  University of Chicago Press, 1965, p. 345).
The subsequent history of econometrics will also show, I believe, that it is
a field that was not only created by marginalists but has been dominated
by them from its earliest inception to the present day.  An examination of
the statistical works of non-marginalists like Kalecki and Kuczynski will
show that they produced statistical, rather than specifically econometric,
studies.  Not all number-crunching of economic data can be said to be
'econometric', can it?  If that were the case, then I had a former job as
an econometrician! (see below).

> Consider the simple regression coefficient b = cov(x,y)/var(x). Why is
> this  confined to neoclassical economics?

So far you don't have a specification of an econometric model. As one
continues on with the specification of a model and the parameters and
assumptions of the model, then marginalist concepts including factors
of production and production functions (and usually linearity) are
smuggled in.

> What's wrong with non-parametric estimation, which attempts to recover the
> functional form from the data rather than imposing the functional form on
> the data?

Nothing _per se_. It depends on the issue/data that one is

> Jerry, please know neoclassical theorists and libertarians often many of
> the objections that you are making. Theorists of all persuasions are often
> hostile to econometrics and any other quantitative analysis. Why? Because
> theorists enjoy speculating without the constraints of relevance!!! :):):)

To repeat: I don't have objections to quantitative analysis as such. Indeed,
I had a job once (for the UAW Research Department in Detroit) where
90% (or more) of my time was spent crunching numbers. btw, I even liked
it!  I've also taught statistics in the past -- and enjoyed that as well.
There's something quite enjoyable about occasionally descending from the
peak  of 'high theory' :-)  and getting one's hands dirty with some very

Yet, when you refer to theorists who 'enjoy speculating without the
constraints of relevance'  you *must* be referring to econometricians
themselves rather than the critics of econometrics!

I have an empirical test for you: ask your students to go to the university
library and read any econometric article from any economics journal.
Then ask your students how many of  them considered the article to be
'relevant'!  Indeed, one could argue that econometric studies often are
striking and glaring examples of the utter *irrelevance* of mainstream
theory. What's worse -- they are not only irrelevant (by and large) but
(generally) *boring* to the point of  causing tears to be shed (you could
also ask your students whether they thought the econometric article was
'boring' or stimulating. I have my intuitions about what their responses
will be).

I have no doubt, though, that your working paper combining evolutionary
game theory with econometrics and Marxian theory will be anything but
boring or irrelevant. Could you tell us more about it? (you might even
consider posting it for comments from those on the list. I even promise
to be in my 'listening'  [i.e. 'lurking] rather than 'talking' mode).

In solidarity, Jerry

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