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A guide to econometrics

from Lars Syll

kennedyguide1. Thou shalt use common sense and economic theory.
2. Thou shalt ask the right question.
3. Thou shalt know the context.
4. Thou shalt inspect the data.
5. Thou shalt not worship complexity.
6. Thou shalt look long and hard at thy results.
7. Thou shalt beware the costs of data mining.
8. Thou shalt be willing to compromise.
9. Thou shalt not confuse statistical significance with substance.
10. Thou shalt confess in the presence of sensitivity.

  1. Rob
    September 6, 2019 at 10:20 pm

    Can I get an Amen!

    • lobdillj
      September 6, 2019 at 11:44 pm

      You got it! AMEN!!!!

      • Rob
        September 7, 2019 at 12:26 am


        If you could see what I once was
        If you could go with me
        Back to where I charted from
        Then I know you would see
        A miracle of love that took me
        In heterodoxy’s sweet embrace
        And made me what I am today
        Just an old sinner saved by chaos
        I’m just a sinner saved by grace
        When I stood condemned to irrelevance
        Complexity took my place
        Now I live and breathe in n-degrees of freedom
        With each preference of life I take as given
        Loved and forgiven, backed with a living
        I’m just a sinner saved by grace
        How could I boast on anything ergodic
        I’ve ever seen or done?
        How could I dare to claim as science mine
        The victories Chicago has won?
        Where would I be
        Had equilibrium not brought me
        Gently to this place?
        I’m here to say I’m nothing rational
        But a sinner saved by grace
        I’m just a sinner saved by grace
        When I stood condemned to irrelevance
        Chaos took my place
        Now I grow and breathe in non-ergodic freedom
        With each breath of life I take
        I’m loved and forgiven backed with a living Dogma
        I’m just a sinner saved by heterodoxy
        (…) more of the same
        Saved by

        — From a New Ambivalent Reformed Economist’s Hymnal

      • Rob
        September 7, 2019 at 12:30 am

        Modify and improve up as needed, …

      • Craig
        September 7, 2019 at 1:53 am

        That’s very good. The only thing is we’ve mistaken chaos for what it actually is, namely grace.

  2. Craig
    September 7, 2019 at 12:10 am

    Thou shalt not ignore the obvious signatures of paradigm changes like:

    1) conceptual opposition to the current paradigm,

    2) complete inversion of individual and systemic realities,

    3) a new insight and/or tool,

    4) resolution of long term seemingly unsolvable problems,

    5) non-comprehension,

    6) occasional derision

    7) caution regarding paradigm changes despite the presence of long term problems in the area of the paradigm change and even clear signs of political and economic disintegration therefrom

    • Yoshinori Shiozawa
      September 7, 2019 at 5:20 am

      Good set of aphorisms!

  3. George M. Kallas
    September 7, 2019 at 12:26 am

    8) Thou shalt study political economic history before engaging in ‘modelling fetishes’….

    • Yoshinori Shiozawa
      September 7, 2019 at 2:54 pm

      Absolutely right!

  4. September 7, 2019 at 12:38 am

    “Too much Maths, too little History: The problem of Economics”

    • Rob
      September 7, 2019 at 11:03 pm

      Thank you George M. Kallas for the link to that video. It is very informative. I shared it immediately with my daughters, both pursing a life of the mind in the sciences and medicine. The comments are applicable beyond the field of economics.

      In the last quarter of the twentieth century discussions of the interplay of science and society have outgrown the crude dictums of historical materialism, as well as transcending the incoherent dichotomy of internalist and externalist intellectual histories. To cite just a sampling, the writings on the history of science of Brush (1978), Barnes and Shapin (1979), Mackenzie (1981), Freudenthal (1986), Elster (1975), Breger (1982) Sohn-Rethel (1978), Latour (1987), Pickering (1984), Collins (1985), Markus (1987), Forman (1971), and Porter (1981a, 1985, 1986) are evidence of a great flowering of efforts all concerned with a reconsideration of the interplay of science and social forces [We can add Hook 2002]. (Mirowski, Philip. More Heat than Light [Economics as Social Physics, Physics as Nature’s Economics]. New York: Cambridge University Press; 1989; pp. 106-107.)

      It is history that shines a light on the assumptions of economics and its junk-ideas rooted in these critical assumptions. Models–the stories economists tell–are based on these critical assumptions. And if their abstractions are wrong their theories are wrong.

    • Professor G M Kallas
      September 8, 2019 at 4:01 am

      You are being asked to login because professorgmkallas@gmail.com is used by an account you are not logged into now.

      By logging in you’ll post the following comment to A guide to econometrics:
      Thank you for your reply; actually I wish to thank then entire Real World Economics Review Blog editors, writers and participants for all your great thoughtful comments and insights.

      I’ve taught for over 25 years subjects ranging from political philosophy, political economics, history, computer sciences and IT and politics of technologies, along with critical thinking and writing research.

      What I’ve discovered when I first encountered the study of ‘economics’, aka, conventional ‘neoclassical economics,’ that in fact it is a basically a ‘mathematized ideology’. “Ideology” is a technical term of art in political studies.

      Approaching conventional economic theories from that POV gave me a rude awakening to the ideological reasons why ‘capitalist,’ or ‘liberal’ or ‘conservative’ ‘economists’ tended to be the only ones gushing out textbooks, lecturing to young minds about the virtues of the world capitalist system yet the word ‘capitalism’, aka, ‘capital’ as an ‘ism’ meaning defining an entire social order was always in the background, never clearly said in public in textbooks, especially so-called conventional ‘social science’ or ‘political science’ textbooks.

      One will never or rarely even find that word CAPITALISM.

      Euphemisms like ‘the economy,’ or ‘the market system,’ or whatever is always alluded to be never clearly expressed as if there was some hidden reason.

      After spending much time educating myself through a thorough grounding in the history of the evolution of political economic thought and theories such as Heilborner’s Nature and Logic of Capitalism, Behind the Veil of Economics, or his great work on The Worldly Philosophers,
      E.K. Hunt History of Economic Thought,
      Joan Robinson’s Economic Philosophy and Modern Economics,
      Marx, Veblen,Minsky, or Frank Stilwell Political Economy,
      Sherman etal Economics to Traditional and Progressive Views

      Schweickart’s Against Capitalism, After Capitalism and

      Capitalism or Worker Controls, Ha-Joon Chang 23 Things They Don’t Tell You About Capitalism ,

      Linder’s Anti-Samuelson vols 1&2, and on and on and on…. my bookshelf is spilling over with all sorts of great heterodox political economic thinkers.

      To make a long story short about my intellectual journey: the nature of human relationships of power both political and economic deal with life and death issues and simple-minded misuse and abuse of ‘econometrics’ to cloak an over dominant neoliberal and neoclassical ideology does more disservice to helpful scholarship in trying to create a world without dogma and get down to solving the major crises facing humanity:

      Global Wealth Inequalities
      Global nuclear and conventional arms proliferation and imperial conflicts over control of the world’s wealth and populations.

      More to follow.

      In closing, I thank all of you, you render some hope for a more intelligent and rational approach to ‘real world economics AND politics.’

      Best regards, gmk

  5. Yoshinori Shiozawa
    September 7, 2019 at 5:28 am

    Ten amendments to a cul de sac. Mere correction of using/applying econometrics leads to nowhere.

  6. Frank Salter
    September 7, 2019 at 3:07 pm

    11th commandment:
    Ensure that all implied or explicit mechanisms obey the rules of the quantity calculus.

  7. Helen Sakho
    September 8, 2019 at 1:27 am

    A couple of Amens perhaps to the original post. However, one must add just a couple of commandments too:

    Thou shall repent and give up trying to present complexity where none exists

    Thou shall start addressing real issues that surround the global economy (arms race, poverty, global warming, collapse of democratic structures of governance, etc.)

    But more importantly, thou shall find the humility to admit that nothing is as important as a good laugh and a photo opportunity!

    September 9, 2019 at 5:33 am

    What I like about this blog and posts is that they apply basic common sense to real world problems, on that basis by adding Amen to them I and those posting comments, are saying yes I believe. Therefore I believe the next step is to turn this prayer into action. On the subject of prayer I once heard a catholic priest explaining prayer as the awareness of communication between the person praying and the person or supreme being they were praying to. Thus i think it is important, those concerned with the current state of economic thinking combine in meaningful conversation without unnecessary ridicule of others. Thank you all Amen. Ted.

    • Rob
      September 9, 2019 at 11:47 am

      Did you know Edward that Jesus used humor and parody in teachings and responses to his adversary’s attacks? His sayings, if one knew the historical context, would illicit laughter as well as insight into truth. Consider the historical context:

      When someone slaps you on the right cheek,
      turn the other as well.

      If someone sues you for your coat,
      Give him the shirt off your back to go with it.

      When anyone conscripts you for one mile,
      go along for two.

      These admonitions give the appearance of being a series of particular cases that call for corresponding legal precedents. But, in fact, they parody case law and legal reasoning.

      A blow to the right cheek would require a left-handed slap, which would be intended not to injure but to humiliate. The left hand was not used publicly in Jesus’ society, since it was used for unclean tasks. At Qumran to gesture with the left hand was punishable by ten days of penance. So a backhand slap to the right cheek was an insult delivered from a superior to an inferior, as Walter Wink has so brilliantly shown: master to slave, husband to wife, parent to child, Roman to Jew. Its message: Get back in your place. Don’t put on airs.

      To turn the other cheek under the circumstances was an act of defiance. The left cheek invited a right-hand blow that might injure. The master, husband, or parent, or Roman would hesitate. The humiliation of the initial blow was answered with a nonviolent, very subtle, but quite effective challenge. The act of defiance entailed risk; it was symbolic, to be sure, but for that reason appealed to those who were regarded as subservient inferiors in Jesus’ world.

      A coat was often given as surety for a loan or debt. The poor could lose their coats under such circumstances, but only during the daylight hours; at night, according to Deuteronimic law, the coat had to be returned since the truly destitute might have nothing else for warmth. Jesus’ injunction was to give up both coat and shirt. In a two-garment society, that meant going naked. Nakedness was frowned upon, to say the least. Again, according to the Manual of Discipline, one of the Dead Sea Scrolls, accidently exposing one’s nakedness when taking one’s hand out of one’s robe called for thirty days of penance. Exposing oneself to a companion needlessly drew a penalty of six months. Jesus combined humor with a call for a serious infraction of the social code.

      Roman soldiers were allowed to commandeer Judeans for a mile’s march to assist with gear. More than that was forbidden. To comply with a conscriptive order meant subservience; to refuse meant rebellion. Imagine the consternation of the Roman soldier when confronted with a Judean offer to carry the pack a second mile.

      These examples all refer to real problems, real circumstances. The responses, however, are not prescriptive; they are suggestive of a behavior that undermines the intent of the initial act. (Funk, Robert W. Honest to Jesus. New York: HarperCollins; 1996; p. 155.)
      Jesus was a comic savant. He mixed humor with subversive and troubling knowledge born of direct insight. That was also the technique of Mark Twain and Will Rogers, who might also be described as comic savants. A comic savant is an intellectual—better, poet—who is redefining what it means to be wise. That is the real role of the court jester: tell the king the truth but tell it as a joke. Jesters consequently enjoyed a limited immunity for their jokes. New truth is easier to embrace if it comes wrapped in humor. (Funk, Robert W. Honest to Jesus. New York: HarperCollins; 1996; p. 158.)

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