Almost Starting a PhD

Blogging has slowed down so much that almost every post starts with a list of excuses. This time I feel like it’s legitimate. Last Saturday I got married to the woman of my dreams. Believe it or not, weddings don’t just fall in to place. They require planning and that took up most of my time this summer. It was all worth it.

On top of slowing my blogging, the wedding took over time that I might have devoted to “math camp’ for my PhD. For those of you who don’t know, math camp attempts to bring all incoming econ PhDs to the same level of math. Since an economics PhD is heavily focused on math (check out some Minnesota lecture notes here or here), understanding the language of proof-based math is a must. It takes a full course plus more math to understand first year economics.

I decided the opportunity cost of the last few classes was too high and decided not to attend. Later I might regret my make-up work, but then it was the rational thing to do. Maybe I irrationally discounted the future pain it would cause… I wish I could write a proper summary of math camp, but I don’t feel qualified since I missed some of it.

Now I’m sitting in my new office (well not *my* office since I share with three others) thinking ahead to the next 5+ years. It is nerve-wrecking, exciting, confusing, and so many more things all at the same time. Over this journey, specifically the first few years, I hope to document the process through this blog. Think of this post as the start of that collection.

Here are a few things running through my mind pre-PhD:

Teaching

Minnesota might be unique because almost every first year is a teaching assistant. We start out in front of a crew of 18-year-olds on day one. From my understanding, many other places have first years as research assistants or they just do classes. We hop right into the teaching.

All the TAs here spent this whole week trying to prepare for that process of teaching. Our orientation was extremely helpful and combined with my earlier teaching experiences, I feel ready for a class. Of course I’m nervous, but I can overcome that.

First years see teaching as a blessing or a curse. After all I learned this week, I believe it will be a blessing. The most obvious reason is that I will gain teaching experience. Unless you are a top-tier researcher, most economists land in a job where their teaching matters, even to a very small degree. At some point I will have to teach if I want to be employable. I do want a job, so I need the experience. Minnesota puts that training at the (almost) core of the PhD.

Secondly, I also want to teach in the future and I can’t wait to lead my own classes. Teaching will be a blast. I’m pumped every day that I get to study economics. Economics surpasses all other subjects; it’s the coolest. I hope to spend a career instilling this love in other people and the most obvious way to do this is through the classroom.

But to teach a full class I need to take baby steps. TAing this year will help prepare me for that. My passion might not come out right away since econ 101 is highly structured at Minnesota. I won’t teach “Brian Economics,” what gets me pumped. Someday I will.

Also, teaching econ 101- to students who have likely never seen the subject- helps my personal understanding. If I want an 18-year-old to understand comparative advantage, I need to break the topic down to its core. That helps me further my understanding. Sometimes we need to ditch the math and just explain things like a real person. That’s a goal of this blog too. Econ 101 students will push me to do that better.

When thinking about teaching/TAing, it was fun to see other people’s thoughts on the process. Pete Boettke and Don Boudreaux both have some reflections on the benefits and purposes of teaching. We economics instructors have the coolest job in the world; we should show it.

Classes

Classes devour the biggest chunk of my next two years. The amount of time spent in actual lectures might not be much, but everyone warns of the difficulties of *cue scary music* problem sets.

For those of you who don’t know, problem sets are the (torture) mechanism that econ programs use to teach students. They involve proving theorems and solving problems. From what I’ve heard, they do not involve any economics, but I could be mistaken. I’m only half-joking. 50 pages of written solutions every week is not uncommon.

These problem sets have a purpose, so I’ve been told. To survive in the Samuelsonian world of academic economics, economists must communicate with each other. First year tries (by fire) to teach the language of economics. My coursework is all geared toward that. I plan on taking a math course in Real Analysis (so I can understand those lecture notes above), a micro course, and a macro course. I also want to audit econometrics so that I can start the second year in a better place. Most future courses require econometrics, so I want it right away. Maybe I won’t fit this all in, but that’s the plan now. All four courses are truly fundamental to academic economics. It’s the core at every university for a reason.

Hopefully, after the first year, we PhD students can understand a bit when they attend lectures in varying fields, such as micro theory, trade theory, or applied micro. The second year and beyond is about specialization. That is when we try to move to the forefront of our field. Year one attempts to put the foundation in place.

As most first years, these core classes are my greatest worry. It will take a lot of time and effort learning stuff that is not directly applicable to doing economics. One professor at Minnesota admitted that we will learn nothing applicable for the first year and a half. I hope he is also half-joking. We still need to go through as a right of passage. I hold Deirdre McCloskey close by as an inspiration.

There are many horror stories, but many people can make it through. Everything I heard this week made me more confident in the process. People likely exaggerate these stories and Minnesota already seems like a cooperative place to do work. Everyone is supportive. We are all on the same team to get through this Ph.D. Classes will be tough, but manageable.

Writing

One of the things that is almost unheard of in the first two years is writing. That seems odd since we are budding academics who make their living writing, but that’s not the emphasis. Most of the work, as I said above, is through problem sets. Solve this problem. Prove this theorem. It is not writing or research in the way that most economists use the term. We are still in training, not actually doing economics.

My goal is to keep writing on my own, beyond the classwork, trying to do a little economics. This will include Econ Point of View, a small book I’m working on (more coming soon I promise), and academic research, such as a paper I’m doing about the Panic of 1907.

For one thing, I find writing extremely relaxing when I’ve done a lot of reading or studying. It uses the brain in a different way. Instead of relaxing on Facebook, I hope to write. I’m weird like that.

More importantly, my job prospects depends on my writing. That’s how economists communicate. If I can’t write articulately, no one will want to read me. If I can’t research and write a coherent argument, I won’t publish. I need these skills to survive, so why not work from day 1? I’m sure someone will scold me along the way, but I want to write. It helps my thinking. Everyone has their own way and this is mine.

So those are a few of my thoughts staring a PhD in the face from 4 days out. Minnesota is a great place and I am happy a chose Minnesota. THe journey seems long from here, but I know it will go by in a flash. Taking some time to write like this will help me soak it all in. Hopefully, it will give insight to potential PhDs about the process.

Wish me luck!

Reflections on the Advanced Austrian Seminar at Mercatus

As I said in my review of Pete Leeson’s Anarchy Unbound, I am in Washington, D.C. at the Mercatus Center. Actually, I’m now in a hotel lobby. That’s not the point.

I came out here for the Advanced Austrian Economics Seminar, a 3 day conference/seminar for students interested in the ideas of Austrian economics, broadly defined. It was a gathering of around 20 students from around the world and faculty members from George Mason. Israel Kirzner, Pete Boettke, Pete Leeson, Larry White, and Chris Coyne gave lectures. Virgil Storr was also around and active in discussions. All of them know more economics in there pinky than I know in my body, to steal Pete Boettke’s cheesy line.

Any students interested Austrian economics should apply for next year’s program. The people are fun and Mercatus treats guests well. I’m talking putting us up in one of those places where the shower head is some weird set-up you’ve never seen before. Fancy stuff like that.

Plus, I got a lot of books as reading material, aka Christmas for me.

If I can go again, I definitely will.

The goal of the weekend was to show how modern research can use the ideas of Austrian economics. The presenters emphasized that Austrian economics is not a body of settled doctrine, but a framework for furthering economic science. Although we discussed the famous Austrian names (Mises and Hayek especially) quite often, the lens looked forward. We want to use these insights to move forward, not just look back.

The weekend started off with Israel Kirzner presenting on the market process.That talk sticks in my brain. First, for me Kirzner is a towering figure. The first few chapters of Competition and Entrepreneurship are a major reason I’m doing a PhD. I told Pete Boettke that I was like a teenage girl at a boy-band concert (with slightly less screaming). I was much more intimidated by him than even people like Robert Lucas, Ed Prescott, or Raj Chetty. Heck, I named my blog after Kirzner’s dissertation. And this is a guy that 99% of economists have (wrongly) never read.

Second, Kirzner brought an energy to the podium that I was not expecting. He’s no longer Mises’s young student, but still has pure passion and excitement for the science. Plus, I learned a lot. While I have watched lectures of YouTube from him on similar topics, this had a new bend. To get a flavor of his ideas and the talk, check out the video below.

How do we understand an open-ended world that cannot be collapsed down into a probability distribution? If you understand, let me know how. It’s tough. It’s also right at the heart of the differences between Austrians’ understanding of the market as a discovery process and non-Austrians’ framework. That’s what Kirzner has struggled with for 50+ years and still presenting on.

The rest of the weekend involved 5 more lectures and 2 breakout sessions. On top of that were meals and free time to talk about this subject that I love. I can’t express how fun that was for me.

The passion differed from other seminars I’ve been to. Everyone there loves economics with a fervor. Mercatus, particularly the Hayek program there, is daring to be different, following the recommendation of James Buchanan.

This weekend was especially unique for me personally because it was the first time I had ever talked with an academic Austrian economist. Literally, I have never talked with people who want to do research in this field.

I didn’t realize that until the first night. It hit me. I am around people who actually share my interests. Now, I was able to talk with other academics interested in the ideas. It overwhelmed me for a moment.

Beyond what I’ve mentioned, the highlights for me were:

  • connecting with a whole new set of economists. I know have a larger network of interesting young scholars.
  • the food (both for the seminar and outside of it). I had my first Pakistani meal and my first meal off a “hidden” second menu.
  • discussing Austrian economics and political economy over beers and whisky.

However the seminar wasn’t without some disappointments. Mainly, it disappointed me to see the collective lack of understanding of non-Austrian models from us students. There were a few situations where I felt like we didn’t arrive at a proper understanding of what non-Austrians are saying on an issue.

For example, Larry White asked a fairly simple question about Keynes’s model. I forget the exact question. No one, myself included, knew the answer. Upon reflection, I remembered the point, but I had no internalized the model well enough to even answer a simple question quickly. That’s disappointing to see. Most people were happy to sneer at Keynes, but didn’t know the model.

In other discussions, less glaring examples came up. I don’t think we had a correct understanding of how and why other economists use words like information or rationality. People were slaying strawmen. If Austrian economics is going to interact with the rest of the profession, the Austrian economists need to at least be able to understand others. That’s a necessary condition for minimal conversations.

Maybe this is me looking for a negative thing to write so this post isn’t just “GO AUSTRIANS.” Maybe not. Who knows. Overall, the weekend has been what I hoped for and more. I can’t praise the seminar enough. If anyone involved at Mercatus ever reads this, thanks for the weekend.

So if anyone is even remotely interested in the Austrian school of economics, apply to attend next summer here.

Anarchy Unbound, Economics Unbound

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It takes something special for an author to claim the book isn’t arguing much and then spend 200+ pages not arguing much. My guess is the author is understanding the size of the case.

Such is the case with Pete Leeson‘s Anarchy Unbound. His simple thesis is that “anarchy works better than you think. (1)”  That is about as low of a bar as an academic can set. Leeson himself acknowledges that this is an extremely simple task, especially for an academic work that includes 10 essays. While I’m at Mercatus at the moment for an Austrian economics conference, I find it fitting to write-up my thoughts on the book.

Even though Leeson claims he is not making a radical argument, many people will see this as a radical book. As soon as a book has the word “anarchy” in the title eyes are going to roll.

I experienced this reaction first-hand. The confused looks I got when I read this book around campus or up at the lake cabin was evidence of people’s gut reaction to word, just the word. As with all words, it can be used to dismiss another’s argument out of hand (such as that is socialist or that would be anarchy) or it can be used as a descriptive tool. That is how I want to use words.

To be used properly as a tool for helping conversation, Leeson and readers must first come to agreement on what the word means, or at least what it will mean in this book.

Leeson takes a fairly academic definition of anarchy, not the popular definition. Anarchy is not a state of chaos, as most people use the word. Instead, anarchy simply means no government.  That’s all. Anytime a government is not around to enforce contracts, protect citizens, whatever it is that governments do, Leeson calls that anarchy.

But this definition really begs the question. Now readers are left wondering, what is government? That’s harder to pin down. Leeson wrestles with it a little, but leaves it open. I bet some authors have spent a whole book on this question. Anarchy Unbound is about moving beyond that argument.

Leeson’s defines government somewhere between Potter Stewart‘s definition of porn, “I’ll know it when I see it”, and Weber’s classic definition of government as a territorial monopoly on violence. For this review, that is a good enough definition. You know it when you see it. If you want a more complete explanation, check out the first chapter. He is slightly more nuanced.

Without government, what are we left with? What structure remains when there is not a monopoly on force. Leeson argues that other rules arise to fill the void left when government is absent.

This allows Leeson to distinguish government and governance. Government is only one form of governance. Throughout the book Leeson works to show readers forms of governance that emerge without government. He applies rational-choice theory to understand this topic.

Rational people, through following incentives, develop forms of governance to improve their lives. As always in economics, actors do so because it is in their interest to. They expect life to be better with a form of governance than without one.

To take one example, even when plundering ships on the open sea, privateers had an incentive to not destroy their potential loot. If I’m going to steal your ice-cream cone, I really don’t want to hit the cone into the ground in the process. That would be a loss for everyone. It is in my interest for you to hand over the ice-cream cone without violence.

Privateers faced with this incentive developed a system of governance to reduce these deadweight losses. Ransom and parole developed as a form of “Coasean contract.” Leeson explains:

After overwhelming a merchantman, such a privateer offered its victims the following bargain: for a price it would allow the merchant vessel, its cargo, and its crewmembers their freedom. If the price was right, this arrangement was mutually beneficial. Provided the price agreed on in the plunder contract was higher than what the privateer expected to earn if it plundered its victim traditionally and thus had to incur the costs discussed earlier, it was happy to enter such a contract. (76)

Leeson shows that even in the worse of scenarios (people who live off of stealing), some rules developed to reduce costs. Governance does do something. It is not all violence like we imagine the Hobbesian jungle.

Again, it’s straightforward economic reasoning. Rational people don’t like chaos. It is expensive to deal with chaos. These rational actors develop forms of governance even when academic economists with their narrow framework don’t believe they will. They make anarchy work better than you think. QED. Well not quite. Leeson has more of an argument to make. Continue reading

A Mediocre Counter-Factual

The hardest part of judging policies is the dreaded counter-factual. Basically, we want to know what would have happened if that policy didn’t happen. Unfortunately, since most policies are not done in a lab, we rarely see a true counter-factual. The minimum wage raises or it doesn’t. We only see one of the two.

Since we rarely have a counter-factual, what is someone with an interest in policy to do? Well, we do have some tools, but it can be rough.

Most of the fancy econometric tests are just trying to build this missing counter-factual. They attempted to reconstruct what would have happened under a different policy. If we have our best guess of what would have happened under a different policy (from the counter-factual), then we can start making some judgments about the relative outcomes.

As I said, this is really hard, I mean really hard, like perfect run in Mario hard.

We all struggle to find the right counter-factual. Sometimes we come quite short. In my Twitter feed, I came across a tweet and article which thinks it has the missing counter-factual. Continue reading

Well Put My Friend

The following comes from page 54 of New Directions in Austrian Economics. It’s an essay by Mario Rizzo called “Praxeology and Econometrics.”

We do not have a choice as to whether we shall make methodological decisions. Our choice, rather, is whether we shall make them explicitly, examining the various implications and subtleties of meaning, or whether we shall make them implicitly, blind to everything but technique.

We can ignore the questions about what it means to do economics. That doesn’t mean the questions and problems go away. This is our science and we should know what we are doing as scientists. We can be more clear (at least to ourselves) about what good economics involves.

Which School of Thought are YOU?

Labels aren’t always helpful in academic discourse. When they serve as short-hand, they help. If I say I am an Austrian, I can convey a lot of information in one word. Not all the information is right, but it takes time an energy to explain a full set of views.

When labels dismiss others, they hurt. People too easily dismiss those crazy X economists.

Still. This is a cool chart.

It picks which school of thought you belong to. It doesn’t help me understand my own views; I don’t need a chart for myself.

However, it puts the schools into perspective with a glance. There are multiple diverse approaches to economics. That’s a good thing. (Click to expand.)

schoolsofthought

(Update: I did not create this chart, but found it from John Aziz.)

Sometimes I take approaches to econ for granted. Not everyone sees economics as exchange. To me that’s weird. It’s good to be reminded that not everyone believes this. Besides the differences, there is plenty of overlap and possible work between the schools.

Also, while I consider myself a reader of diverse economics, this picture also reminds me that I have neglected some (possibly) good economics from behavioralists and developmentalists. I’ll take a look after finals…

In case you are wondering, I guess am a Neoclassical-Austrian-Institutionalists. It’s not too surprising, since my banner is Austrian and Chicago-school economists. Readers can guess which title comes from which row.

What kind of economist are you?

HT: @azizonomics

Economic Writing

Writing

Most economic writing hurts. The English, my goodness, is painful. It doesn’t take Deirdre McCloskey to realize this. The following quote shows my point.

Relatively, this isn’t that bad. But its competition isn’t fierce.

For example, few writers on economic methodology recognize that the activities of formulating economic models and investigating their implications are a sort of conceptual exploration. Instead, most mistakenly regard these activities as offering empirical hypotheses and assess them in terms of some philosophical model of confirmation or falsification.

This doozy comes from a JEL article by Daniel Hausman. I recommend the article. He got the ideas right, once I understood him.

To be fair Hausman writes on philosophy. It’s a rule: philosophy cannot be comprehensible to us simpletons. Nevertheless, economics and philosophy are better advanced through writing well.

It doesn’t take much. Continue reading

Trade is not War

I’m sorry the blog has been a little slow. On top of finishing up my Master’s (we turned in our thesis last week, phew) and getting ready to head back to Minnesota, I have also been working on a little book, released this summer. More on that will come. One chapter is about the benefits of exchange. Some people forget this lesson.

I had to come back to respond to a post by Neil Irwin at Upshot. It’s called “Why We’re All Crony Capitalists, Like It or Not.” It is a good read and worth an analysis by all of my readers.

While there is much to talk about in the post, I want to focus on one part. He explains why the case for shutting down the Ex-Im Bank isn’t a slam dunk:

And there’s the rub for those who want to shut down the Ex-Im Bank. It’s all well and good to assail crony capitalism and to say that taxpayers shouldn’t be subsidizing private industry. But it also would amount to unilateral disarmament on the international stage, essentially putting American exporters at a clear disadvantage compared with European and Asian competitors. (emphasis added)

Continue reading

Reforming Empirics in Econ 101

© WealthyHabit.org

I have a confession to make; I have no idea how to fix the economics profession. For people who don’t follow many economics blogs, that statement is no big deal. For people who follow many economics blogs, that statement is rare to find.

Recently, modest proposals to transform the whole economics profession have flooded to blogosphere. If you just read some newspaper accounts, you might think that economics needs a revolution along the lines of the Bolsheviks.

Those who are slightly more reserved have plans to just transform the whole economics educational system. Everyone seems to be a master designer, like the blogger who thinks Washington D.C. would work if the fools would “JUST LISTEN TO ME.” If only most economics course taught post-Keynesian/Austrian/Marxists/Behavioral economics, everything would be swell.

Now, I’m skeptical of “mainstream,” “neoclassical,” “Samuelsonian,” or whatever you want to call popular economics and will never defend every aspect of it. I would like to see reforms, such as more history of thought. The system clearly falls short of perfection, as do all human activities.

However, this does not make me confident in my own ability to understand such a complex system as the whole profession. I think I know what is wrong with others’ proposals. The system needs to change, but I don’t know how to do it. Maybe I take this stance because the critic’s job is easy. I’d like to hope I’m echoing (reportedly) H.L. Mencken

The fact that I have no remedy for all the sorrows of the world is no reason for my accepting yours. It simply supports the strong probability that yours is a fake.

Continue reading

What the heck is economics?

What the heck is economics? Wait, is this a philosophy post? Why are we opening up with such a question?

It turns out that the answer to this simple question determines what you will believe are insights, goals, and benefits of studying economics. However, Jacob Viner´s quip that “economics is what economists do” is not satisfying enough. We need to figure out what economics is, before we can use it to improve our lives. That is ultimately the goal. It is not just for the entertainment of a few people with fancy degrees.

The Study of Wealth

For many years, economics was consider the study of “wealth and wealth creation”. Adam Smith´s monumental work has the title The Wealth of Nations. Now wealth is a noble thing to study. When given the choice between more wealth and less wealth, people choose more wealth. Studying how people and therefore nations become wealthy will greatly help improve people´s lives. If I can learn how to make people wealthy, I will gladly learn.

This framework helped improve societies and led to many insights. Adam Smith and his followers showed that wealth is not measured in amount of gold or money that sits in a vault, but goods and services that actually improve lives. Wealth and money are not the same thing. Boom, one insight from economics. A society shouldn´t increase the amount of gold, but increase the amount of goods.

The classical framework, through the work of David Ricardo, also showed the benefits of trade, a principal called comparative advantage. Even if Lebron James is a great chimney sweep (do they still exist?) it does not make sense for him to climb up the fireplace. People are better off if Lebron sticks to basketball and advertisements and he lets someone else sweep his chimney.

As useful as this is, it is terribly narrow. There is more to life than wealth. If economics is going to help us, it has to be about more than wealth. Economics is not finance, accounting, or personal investing. Econ has more to offer. Thank goodness the discipline has developed. Continue reading