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November 12, 2003
Economics
If I were to find a million bucks in a briefcase (OK foot locker), I would buy a nice house in Pasadena, then go and study economics. There is something about building financial information systems for almost two decades that causes me to search for principles, but I don't know what they might be in the professional argot. So it comes as a pleasant surprise to find that I am something of a Chicagoan already according to this quiz. It's a rather stellar quiz and probably the best I've taken. It really forced me to think. Thanks to Pejman.
Clearly it's biased slightly towards the Austrian School, and I can see how the phrasing of those answers for which I chose the Austrian answer made it a more attractive and detailed answer. Still, there is much to recommend about the Austrian approach to evaluating the behaviors of classes of entrepreneurs. I simply don't believe that it scales. There are also times when the Chicago School seems wishy-washy, and there's nothing attractive about the way that the Socialist answers were worded. I find it difficult to imagine that true Socialists would even agree with those grafs.
My original score was {12,7,5,1} (Chicago, Keynes, Austrian, Socialist) and a lot of them were really close. I reviewed several that were toss-ups and I saw that I could have changed several of my answers to Chicago. My adjusted score then would have been {17,5,2,1}.
Still, I believe that the Austrian School makes better sense for a microeconomic view of things. If you study entreprenuerial thinking, their explanations are more reasonable. I also think that the Chicago School is a bit too contemporary: it recognizes that empirical studies have not advanced sufficiently to make principled calls. Finally, I am attracted to the idea I've never heard expressed before of 'merit goods' and 'demerit goods' which is why my Keynesian score is high.
I'm not so convinced that a policy driven economy is a good theory. So as 'monetarists', I probably part company with the Chicagoans. I think that we have reached a psycological limit with regard to the amount of stimulus that can be achieved by lowering interest rates. (I am wondering what kind of a curve, rates to stimulus, people have in mind when you are only 200 basis points from zero).
I am also skeptical that the economic rationality expected by the Austrian School is reasonable to assume of uneducated populations, which most of the planet is. This is what turned me towards Chicago when it came to matters of pricing. Consumer behavior is predictable in consumer economies. But most people are not consumers. I think that 'investor class' behavior is important in the US but not elsewhere, and I think that the existence of an investor class is important to consider.
Posted by mbowen at November 12, 2003 09:33 AM
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