I'm not too well versed in economics, but am starting to learn a bit about the different schools of thought. I wanted to pole this forum just as sort of an experiment.

The pole will be private, there will be only two choices.

If you ascribe to neither, please just select the closet one for simplicity. Also, feel free to post what you actually ascribe to and how it is different, and just any general information if you feel like it. Whatever you feel like posting is fine.


Thanks.

Austrian - with additional state care for poor and disabled people.

imo AE better explains the past and makes more correct predictions about the future.

You missed a bunch of schools.

Chicago (the one I most identify with) is probably the most popular one you missed.

At least put a choice of 'Other' besides the two you put.

Yeah, you missed a bunch of schools. I would at least add the chicago school, the marxist school, and an "other" option.

Personally, I think the austrian school is the only one doing science.

I only included two options for simplicity, and to polarize the choices. As I said, if you ascribe to neither, then choose the closest. If you are unable to do that, then you can feel free to not vote, and post instead, or whatever you feel like doing.



Can you please elaborate on this?

Aren't the only school who claims they're not?

Austrian economic theories can be tested and confirmed, and countless historical examples can be used as tests that confirm said theories. This isn't true of other schools, much the opposite in fact.

Although to be fair, the chicago school isn't that bad, but in my opinion, in all the areas where they are correct, their theories are indistinguishable from austrian theories, except in terminology.

No. That's a misunderstanding. But austrian economists would be wise to stop saying you don't need empyrical confirmation. Because obviously they use empirical confirmations for their theories every day. What they mean when they say this is that a single example where the expected result doesn't follow from the theory doesn't invalidate the theory, because all the theory says is that X will happen all other things being equal. So that can only be interpreted as a tendency. You're not the only one who misinterpreted this, most people do, especially those who are not very familiar with austrian economic theories. So I agree it's a dumb thing to say, and they tend to not explain it well enough.

I'm mainly just going from what I've read from the ACists on this board. Well, a little reading myself (and results from 'questionaires' that try to determine the school of economics to which one subscribes)

The two choices is oversimplifying FWIW.

I'm no expert on the Austrian School but this has would be my take on that:

Austrian School

Quote:

Methodoloty

Austrian economists reject empirical statistical methods, natural experiments and constructed experiments as tools applicable to economics, saying that while it is appropriate in the natural sciences where factors can be isolated in laboratory conditions, the actions of human beings are too complex for this "numerical" treatment as passive non-adaptive subjects. Instead one should isolate the logical processes of human action. Von Mises called this discipline "praxeology" – a term he adapted from Alfred Espinas (but which had been in use by others).[43]

The Austrian praxeological method is based on the heavy use of logical deduction from what they assert to be undeniable, self-evident axioms or irrefutable facts about human existence. The primary axiom from which Austrian economists deduce further certain conclusions is the action axiom, which holds that humans take conscious action toward chosen goals.[44] Austrian economists focus on goal-directed action and say that it is undeniable because in order to deny action, one would have to employ action in the act of denial.

Methodology is the one area where Austrian economists differ most significantly from other schools of economic thought. Mainstream schools such as the neoclassical economists, the Chicago school of economics, the Keynesians and New Keynesians, adopt empirical, mathematical and statistical methods, and focus on induction to construct and test theories—while Austrian economists reject this approach in favor of deduction and logically deduced inferences. According to Austrian economists, deduction is preferred, since if performed correctly, it leads to certain conclusions and inferences that must be true if the underlying assumptions are accurate. However Austrian economist Robert Murphy has stated that those using Austrian theories can still err in their interpretations of history, even if based on a theory formulated by deduction.[45] Caplan makes a similar point about quantitative significance, explaining that a theory, such as one which logically relates minimum wage and unemployment, tells nothing of the approximate quantity of change in unemployment one can expect upon minimum wage increases.
Austrian economists hold that induction does not assure certainty like deduction, as real world economic data are inherently ambiguous and subject to a multitude of influences which cannot be separated or quantified, one cause or correlation from another. Austrians therefore claim that mainstream economics has no way of verifying cause and effect in real work economic events, since economic data which can be correlated to multiple potential chains of causation.[46] Mainstream economists counter that conclusions that can be reached by pure logical deduction are limited and weak.[47]
Critics of the Austrian school contend that by rejecting mathematics and econometrics, it has failed to contribute significantly to modern economics. Additionally, they contend that its methods currently consist of post-hoc analysis and do not generate testable implications; therefore, they fail the test of falsifiability as prescribed by the scientific method.[10][48] Austrian economists counter that testability in economics is virtually impossible since it relies on human actors who cannot be placed in a lab setting without altering their would-be actions.

I'll just add that a lot of basic economic theory is/was done on the assumption that humans are rational and act in their own self interest. There's been a lot of economic research into quantifying human behavior in economic matters due to the fact that many believe that the assumptions about rationality and self interest are too simplistic thus they only take modeling economic activity so far. More in depth analysis is needed on human economic behavior in order to come up with better models (for lack of a better term).

this

Can you cite a few examples?

I'm not trying to grill you, I'm merely a layman looking to learn more.

The Chicago school is a free market school, correct?

Capital accumulation and general standard of living in China, Vietnam and Singapore when they were mostly socialist/communist countries 40 years ago, and now, after severely reducing taxes and State controls. Also The Soviet Union and India more recently.

The artificial expansion of credit in the US started in 1913 with the founding of the FED and the loosing of fractional reserve lending standards resulted in the respective depressions of 1920 and 1929 to correct the malinvestment of resources.

Germany's money printing to pay off the debt imposed by the Treaty of Versailles lead to hyperinflation. See also Argentina in the 70's and 80's and Zimbabwe in the late 90's and 2000's, and the Roman Denarius's debasement from 27BC to 294AD. Also, the whole world has experienced inflation since entering the Bretton Woods agreement in 1944, or more significantly since the US went off the gold standard in 1971 and every country was effectively left using paper money backed by nothing.

Price controls lead to scarcity in countless societies from Ancient Egypt to modern Venezuela.

Minimum wage laws created massive unemployment in American Samoa in 2007-2009 when their average wages were forced to more than double.

it depends who you ask. I'm not well versed in Chicago theory, but a book like Milton Friedman's Free to Choose isn't too intimidating.

(add: come to think of it, Milton Friedman's ancestors were far more radical free market)

Nobody but Krugman still believes Keynes' theories work.

don't tell Max Raker. LOL

soontobepro, I think I found an example. Now, I do not know if it is an austrian economic theory or model or whatever, but it is indeed a case of free markets creating prosperity, and government regulation stalling an economy.

What is it?

The online poker economy!


During the online boom, the online poker markets were free. Players could freely deposit, even with a credit card. There were plenty of sites to choose from. You even had people coming from online casinos to poker. The economy was very healthy, and growing steadily, and a lot of people made a lot of money.

Then the government passed regulations, the UIGEA of course, which restricted deposit options, restricted competiton, and completly stalled the economy.

The market could not self regulate, in regards to AP/UB, because there was no competition. And now here we are 3 months after black friday, more govenrment intervention, and the online poker economy in the US is all but dead.

amidoinitrite?

and, now in MN you can't even go to the cardroom, which means that you either have to go without or play at a homegame over here.

neither are perfect, and reality probably lies somewhere in between the two. i think subscribing to the ideology of either is a mistake.

I hate when schools of economics are identified in terms of whether they are for or against a free market (or the poor, etc). Economics is a science. It can only tell you what would happen in various scenarios. Whether someone's for or against a free market depends on what you want to happen.

The choice between schools should be made wrt predictive and explanatory power, coherence, parsimony and the like. Of course, in reality, people will prefer whichever school is more likely to support conclusions they like. I think you can accurately predict someone's political and moral beliefs based on whether they think Austrian Economics, Keynsian Economics or something else gets it right. Kinda sad.

Though I have a bsc in econ, I'm only familiar with mainstream/textbook economics, some of which I think is well supported.

Perfect.

on the other hand I do think you have to start with a theory before you can interpret facts, even if it's as small of a theory as "supply side" or "demand side", people generally do have to start somewhere.