Comments on: Theory of Price Notes, Part I: Tastes

By: Daniel

Daniel — Sat, 12 Jul 2008 04:17:32 +0000

I read similar article also named y of Price Notes, Part I: Tastes at Awkward Utopia, and it was completely different. Personally, I agree with you more, because this article makes a little bit more sense for me

By: Admiral

Admiral — Thu, 15 May 2008 15:06:47 +0000

Is this paper by Jensen and Oster a piece of evidence for the taste theory? (h/t Cafe Salemba)

By: Politicians as Artists, Part II: Vaclav Havel « somewhere i have never traveled

Wed, 14 May 2008 05:08:24 +0000

[...] Havel once wrote something incredibly interesting about the meaning of truth in art. Is he a product of his time, when no truth could be had from a government run in Moscow? The extent of a culture’s influence is perhaps a subject best left to other domains at the moment. In any event, Havel strongly implies a transcendent value of truth in being and meaning: It seems to me that these thoroughly ideological and often semantically confused categories [capitalism and socialism] have long since been beside the point. The question is wholly other, deeper and equally relevant to all; whether we shall, by whatever means, succeed in reconstituting the natural world as the true terrain of politics, rehabilitating the personal experience of human beings as the initial measure of things, placing morality above politics and responsibility above our desires, in making human community meaningful, in returning content to human speaking in reconstituting, as the focus of all social action, the autonomous, integral and dignified human I, responsible for ourself because we are bound to something higher…. [...]

By: Admiral

Admiral — Tue, 13 May 2008 05:50:12 +0000

In response to your Theory of Price comments: I actually felt that section of the book could have been better. While I appreciated him mentioning it, I felt the discussion suffered for not discussing the real strengths of theory. I feel, as I read the book, that the author retreats too many times from the solid terrain that theory affords, as in the last full paragraph of p. 83, which contains some very GOOD statements but ends with disappointment for me.

By: Matt

Matt — Tue, 13 May 2008 05:37:18 +0000

Does the sitemeter catch RSS subscribers though?

By: Admiral

Admiral — Tue, 13 May 2008 02:23:17 +0000

As I alluded to before, I think there may be several interesting implications, some along the lines you mentioned. Checking the SiteMeter, it is evident that in the past day the only people coming to this blog are you, me, and Bob, heheh. That’s fine, I suppose.

By: Matt

Matt — Mon, 12 May 2008 22:48:05 +0000

I too checked out a copy of this text. I have been trying to find a used copy for sale online, but to no avail. (Eventually the UF library is going to want all of their books back….)

This text is indeed an undergraduate level economics text last published in 1987, first published in 1947. The text is intermediate level, although written for those without any economics background. I can’t be sure of the precise history, but my guess is that in those pre-1990 years, the curriculum was slightly more compact.

Friedman wrote a graduate level text, Price Theory, which has just been reprinted by Transaction publishers. In the preface he states that Stigler’s text is a sufficient prerequisite. There is a sort of natural progression in these Chicago school textbooks.

I am reading an even older “intro” economics textbook, The Economic Organization, by Frank Knight. Knight was Stigler’s PhD advisor and I read that Stigler used Knight’s text as a starting point for his Theory of Price. I’ll make some posts about this later.

On a side note, I just indulged and bought the rare second volume of the Variorum edition of Marshall’s Principles of Economics. I already had the first volume, which consists of the main text. The second volume consists entirely of footnotes, editor’s notes, and commentary. This edition was published in 1961, and I believe this is the last time Marshall’s work was published unabridged.

Anyway, I have only read the first chapter of Stigler’s text at this point. I enjoyed his brief methodological discussions. For comparison, I also opened up my copy of Pindyck and Rubinstein (5th ed), which I used for Intermediate Micro. As suspected, the P&R text lacks the full methodological discussion that Stigler gives. Instead they devote only about a paragraph to methodology.

If there is one part of economic study that is under-appreciated, it must be methodology.

Here is my summary of Stigler’s methodology discussion (apologies for errors, I do not have the text with me at the moment):

Theories must provide testable implications; statements like MR=MC are simply tautologies—not theories. [MM: Although the statement “firms set quantities such that MR=MC” is a theoretical prediction, not a tautology.] Theories should be judged based on their predictive power. A good theory is both general and true, a difficult task to achieve. By definition, general theories must ignore some aspects of the world and consequently cannot be fully realistic.

Those were the main points. I have yet to read any more though. Regarding the quotes given by Admiral: That is definitely an interpretation I haven’t heard before. Stigler essentially says that environmental constraints and evolution combine to define the tastes of most consumers. Economic growth allows us to overcome these environmental constraints and thus allows humanity access to a wider range of tastes. Very interesting.

I guess this kind of analysis would lead into work examining the “universe of preference relations” and the subset available to consumers, and how economic growth affects that subset. I’m not sure exactly what kind of implications that has, except that this is possibly another rarely discussed benefit of economic growth.