Sunday, May 22, 2022

Is Economics useless? Students vs Academics debate

Hello everyone my name is Ravina and i'm a finally an economics student it is an absolute honor to be chairing the debate for today and I hope you are as excited as I am we have a very interesting motion which is this house believes that economics is useless I love economics but this is one question that really needs to be .

Answered without further ado I would like to invite we have the senior lecturers from the School of Economics who would be arguing for the notion the ASCO argument would be that economics is useless and for that we have operas and amarant and on my right with the challenging mission to debate against these very experienced lecturers we have .

Three students who are James Murray and so on assisting me in my role today would be the timekeeper Roshan which is right before we get into the formal business of debating let me first inform you of the rules for today's debate each speaker on the proposing team or the lecturers team would have seven and a half minutes to speak as they are a .

Smaller team while the students or the opposing team would have five minutes to present their arguments speakers may offer or take points of information which are additions to arguments from opponents during the debate speakers have one minute of protected time at the start and at the end of the debate and the opposing team can only offer points .

Of information during this time the timekeeper would remind you by holding placards or by ringing the bell if the bell is rung once at the start of the debate he it means that the opposing team can now ask questions if the bell is rung once at the end of the debate it means that the opposing team may no longer ask any .

Questions beyond this point if the bell is rung twice it means that the speaking time is over and the speaker should wrap up the arguments and lastly no offensive remarks shall be made during this debate as audience we would love to hear what you think as well so feel free to ask your questions to the audience but it will only be once the formal debate is .

Over or in other words once all of them have finished speaking I will let you know when the floor is open to your questions before I invite the first speaker from the opposing team to present their arguments let me first take a vote to know about your put perception is about the motion I will be repeating this vote again later to see .

If any of you were convinced by our very talented speakers this voting method is known as the swing vote the site that collects more votes by convinced by convincing a larger proportion of the audience through both sides would be considered as the most convincingly so would those who are for the motion or those who think economics is useless .

Please raise your hand and against the motion awful thing economics is useful please hand he raised it for useless now I'd like to invite the first people from the opposing team I've been told we have to do an abstain vote so with those who have refrained from voting please carry up your hand so now .

I'd like to invite the first speaker from the opposing team James to present the main point that I will be espousing today is economics isn't just a discipline it's actually a framework a perspective that it gives that actually brings many virtues I think are actually not only more beneficial to us .

Personally but more beneficial for us as a community so if we were to go back to the beginning and foundations of economics I think it could be one could be made that it's more of a of bringing about of the town of liberalism in the late 18th century with Adam Smith's being the father but the the virtues of espouses of rationalism and critical .

Thinking I'm really questioning where did you come from and I think the point could be made that actually it's more about not only solving problems and what issues is it that were currently facing it's more so with you know the first page in your textbook which I don't know if anybody .

Reads it says the economics comes from two words in Greek which together that mean home management I don't think that this is necessarily reflected in modern economics as it's grown at a time but as we've gone from you know the the original form of capitalism to going to Marx's and it's going back there's so many different questions that we've .

Asked ourselves how is it that we can actually improve the world in which we're living its society actually benefiting am i benefiting personally and I think these are all reasons why we can turn to economics even on top of other humanities we're actually basis itself off of which I don't think you used to get leads to and access it I .

Think it's something rather different and it also likes to with its own form of language it likes to make itself very elitist in some instances as we probably some of us aim to become those who aid policymakers but yeah studies the often I shall be expelled through its its turn of thought and it's really you know questions of the really us thank you .

James a nod I would like to call upon the lecture from the opposing team to his any arguments all right so all right thanks so this is going to require some audience participation eventually not right now because I believe in happiness so have your cellphone's ready and open the .

Browser go to Manta calm and open up that code and I'll give you some instructions in a bit so okay so I'm gonna begin by helping out the opposition a little bit by giving you a few reasons to think that economics is useful because we know economics is useful because economists have successfully predicted nine out of the .

Last five recessions we know we also know that is useful because it's the only field in which two people can guess I know Bell Prize for saying the opposite thing and that's not actually just a joke you can win a Nobel Prize for but you can share the singular Prize for saying lots of things that happened in 1974 when Hayek and Murdoch shared .

The stained Nobel Prize and we call it a science so economics what what else what are some of the most important tools and economics I would argue that perhaps the single most important concept that you can learn in economics is the idea of how to compare costs and benefits appropriately in order to make the correct decisions and to that and what's .

Especially important is the idea of opportunity cost if you have learned one thing in your economics degree it should be the idea of opportunity costs that is by far the most useful thing that you can learn in economics the idea that any cost of course is it's the value of your next best alternative so now what I'd like to do is I'd like to offer you the .

Following test so on minty calm use that code you'll see the following question and I want you to answer this question the question is you have won a free ticket to see Eric Clapton I knew you guys are too young he's a musician okay this ticket has no resale value Bob Dylan is performing on the exact same that's their next best alternative .

Activity so you could either sit Clapton or you can see Dylan tickets to see Dylan costs $40 but you'd be willing to pay $50 okay you'd be would thank you obviously doing if you want to see him you at the bike ticket that cost $40 you have a free ticket to see Eric Clapton so the question is what is the opportunity cost of seeing Eric Clapton .

That's the question so I want you all to put in like 30 seconds to finish up you're not turns I can't give you too much time because so all right let's see all right so seventeen percent of you got the right answer the right answer it's $10 and I also want to point out that there's a fair number of well you .

Know the net benefit of seeing Dylan is $10 you worth $50 per cost $40 there's no financial process in Clapton if you want to see pop now that means you can't see Dylan which is worth $10 it's not a complicated question but don't feel too bad because the same question was asked if 200 professional economists in 2005 and a meeting of the about half of these .

People work from top 30 departments these are some of the best departments in the world these not scrubs we're talking about 60% of them had taught economics at the introductory level okay and yet less than a quarter of them got the answer right that is worse than random monkeys would literally it's worse than that okay but the same .

Question was asked of undergraduate students about 400 refugees some of them had no background economics and it turns out that the ones who have no background did better than the ones who that the ones who had some background I want to point out that there's no statistically significant difference in this in this study between the proportion of correct .

Answers between people who had no background whatsoever in economics and professional trained economists who are teaching economics courses that's a disturbing result what do we take from this one you know economics all these studied economics – and sure enough study economics takes Mickey what is that the people who offer the study .

Karate and Taylor they conclude with the rhetorical question Karen economists be relevant in the world of ideas and policy if we cannot answer simple a bit contrived opportunity cost questions and you know I'll leave you to answer that question yourselves in the remaining time I'd like to be a little bit more person okay I'm a development economist .

And I'm not going to say and there anything special about my particular field we are also useless so let me just try to try to convince you of this umm cats come I do a time five minutes 20 seconds okay two minutes I get down so in development economics this is the field which is prone to fads like fashion okay .

In the 50s and 60s day off the comments were all about the big push import substitution central planning in the 70s and 80s it shifted to a more market-oriented approach we were all about liberalisation the Washington Consensus then in the 90s in the 2000s we started to say actually institutions are really important oh yeah that's a .

Great insight really brilliant okay by the way we can't change institutions but it's really important the rule of law is really important and these days you know control now we have to do is we like to randomize with that you know say let's distribute some bad Nets here and let's start up some self-help groups and let's see what that does to the dog ok this is .

The kind of thing that developing the audience has been back it's been very fetish now let's compare that with the results in agreeing what you see is the global population in red over time in the last 200 years is the number of people who are living in absolute poverty less than a dollar a day that number has been decreasing dramatically .

In the last 30 years a real miracle what kind of game development economists take for that none that's contribution has been driven almost entirely by East Asian countries these are the same countries that have been most excellent at ignoring the advice of Western economies what if Western mainstream economist .

Antonio they've been telling them liberalized do you regulate liberalize your trade do you want to regulate your industries prioritize your industries countries like Taiwan South Korea China had done none of these things and those precisely been the countries that have grown the most and lifted the most people out of poverty so inclusion I .

Would like to paraphrase Winston Churchill by way of Dani Rodrik to say that economists are not humble Bunch yet we have a lot to be humble about and let me just say thank you so yeah I meant from the principal opportunity cost for a question that .

Really is just bad learning English but Oh opportunity cost oh there's so much more I think no one here yet pays taxes but the fact that we want lower taxes makes us realize that those taxes could be used for things like health care sending your kids to school so if you realize or if you take the opportunity cost and .

Apply it to more relevant things not music concerts I think it proves – it starts to prove quite a useful tool in economics and it's right that's the first thing everyone learns in their economics textbook in first year along with that economics has also given us things like marginal utility which I'm sure all of you know helps you make .

Decisions given your but given how much money you have at the moment this might be used for things like whether you pay for priority boarding or speedy security checks at airports it might not be something I might want but someone else might have a different preference for that I think also economics is useful in achieving social efficiency I think in .

This day and age where a country should try to achieve social efficiency for all their citizens given given you know all this talk of how Trump is changing his policies or how the Beggs is leaving for their own good sorry how that UK is leaving the EU for their own good you always have these market failures in the economy which should be targeted and I .

An example of my of this might be when you have a congestion tax or our traffic tax driving into London sometimes takes two hours from Canterbury a simple solution for this would be to charge people say 10 pounds the people that don't want to pay it a little longer drive in you don't have to wait in traffic that way you get rid of the .

People that don't really value this driving into London making your commute much easier so for things like these I think economics is very useful in understanding these so policy is both I had a personal level and had a societal level furthermore I think government intervention the guest speaker spoke about it as well as to .

What extent they should intervene in the economy this might be things like the NHS which I'm sure everyone here has used at some point in their life if you didn't have the economists you'd be paying to visit a doctor every time and I'm guaranteed if you've tried to get an appointment or you've waited for hours and they told you come back in six weeks .

That wouldn't happen if you didn't have these sort of if you started that this wouldn't happen if you would have planned it up properly coming to conclude that I think everyone here for some reason has chosen to study economics can I just get a show of hands who here has chosen it to make money at some point in their life bring you back .

To this point I'm guessing you guys want to work in finance or economics so eventually I think you can almost gives you the tools to work in whatever you want no offense to anyone but there's a reason we study economics not Business Studies because it's the best social science you can learn any career in your life and hence why you if you look at .

Any of the most successful CEOs in this world they all have an economics background or some extent as it tilt lets you understand people in the world have markets now I'd like to invite the second speaker from the proposing team to present his arguments hi I'm I'm really stuck I'm really lost because when I saw .

The motion and I and I found out what side I was gonna be on I thought it was the fad and so I read the question again oh that's right they're not gonna be arguing that useful they're gonna be arguing that it's evil and my job would just be to a rescue it from evil and bring it closer to useless by providing some nice things about it .

Right but now damn it be reading The Guardian too much so thinking of likely those avocados have a and so we're going to respond to the first two speakers thank you so I want to talk about economics in the home economics in everyday life I tried to spend a year living the way economics papers tell me to it and everything that .

I'm going to say is from a paper in economics I just tell you a couple of stories only two the first one well I know I'm a finance professor I teach finance and there's a wonderful paper in the journal of political economy about stability of marriage and finance the author argues and finds empirical evidence in support of the following .

Proposition families where the two spouses have diversified income streams uncorrelated income streams or negatively correlated income streams stay together longer this is really helpful for my life dammit I married an economist that's too late yeah we've made this terrible mistake .

How we gonna rescue this married but what are we gonna do if the income of economists or if the pound Falls or Britain does something completely stupid I suggested maybe one of us we would still be economists they'd still be a little bit of correlation but if one of us moves to France we'll move to Canada that at least would .

Be able to hedge our currency risk right that'll be great that'll be helpful when one of us if the power went down the other one will be doing fine but could consumption smooth that be that would be amazing so I woke up really cold on the couch damn it I feel bad but I went back to the paper just counted some of expected utility from consumption market .

Income those things haven't changed we're still eating the same dinners they're still making the same money well I feel bad this isn't an immoral so I'm gonna move along to Christmas there's a wonderful paper about Christmas and wonderful you cannot expect about Christmas indeed weight loss of Christmas and it tells us that Christmas .

Is completely stupid because we get lots of things we don't know and we buy lots of things that people wouldn't buy them for don't like and we'd be much better off if we just gave them money give them cash transfers know that this is the latest fad in development the idea stuff is bad money is great so I communicated with my family had .

Some initial discussions first family apprentice you know look we need some some cash transfer mechanism gifts are stupid I don't like any of the things that you bought me so far I'm sure you don't like you when I go to the house and I go to your house you're you're clearly so I said let's do cash instead and then my finance always gets more .

Dangerous so I thought well if I'm giving my family and friends money and they're giving me man that exposes us to some unnecessary risk in transactions costs this counterparty risk what if they become unemployed or something won't get any money but I'll give any money .

That'll be terrible we have to write a check who does that extra check or get cash all sorts of terrible things so what what I thought was maybe we should be engaged some knitting arrangements so we'll just call each other up in advance early December I'm planning to give you a hundred .

How much do you plan to give me let's just subtract the difference and then well you know there's still a lot of bilateral exposures there's still some kind of virus maybe maybe someones gonna give me a lot more than you I still might not get everything that I want for Christmas so we decided we can anoint a as father Christmas if you will .

Or a father a central counterparty for Christmas or father Christmas central counterparty we couldn't find a FCC p XD CCP Jersey but we could find that cccp Jersey so we could that was appropriate sorry that we all pay the money they ran off with it that's the end of my economics in the household it didn't work out for me I'm .

Gonna move on to the bigger questions so how do we actually I might change track a little bit I'm going to talk about opportunity cost so if you were going to say that something is it's bigger tenant as opportunity cost and economics maybe it's the idea of marginalism that's it okay okay well just think about this there's no reason to think that society .

Is not producing enough economists we're probably producing about the optimal amount of economists so the relative cost of your training in economics is similar to the relative cost of your training in English literature society would benefit similar amount of its of the optimum I'm not saying that economics is useless but your degree in .

Economics and lastly I would like to invite someone without speaker from opposing so I'd like to start off by just questioning and I was surprised to see that most academics at the bank actually raised their hand when they were agreeing with the motion so it really makes me question why I'm pursuing this .

Degree the point I'd like to make reference to the first speaker that we had dr. James Warren at the beginning of the talk where he said economics useful economists useless so at the beginning I'd like to start off by saying that I cannot economics is a lens it's a way that we can view the world and I'll be it is a an effective one to quote my .

Econometrics professor from second-year time-series Mandy on average with a certain set of assumptions we are correct but again that comes with that certain set of assumptions so you need to take that in mind and be aware that you're not going to be correct most of the time so in the future we could use economics to distribute resources in a .

Way that's more timely and more efficient can intervention be useful in the future can automated systems actually help us in finding meaning with people's lives rather than you know having people do arduous jobs that are more bureaucratic and inputs blah blah blah same things to do every day and so on so forth but there are new fields in .

The field of economics that actually could be very helpful behavioral economics is one thing that has come across within the past decade or so and gained popularity and the founder of this field Richard Thaler has actually won a Nobel Prize recently first book nudge theory and many of his works with nudging to give an example he started .

Off the book by saying by giving the example of the cafeteria school cafeteria simply by moving the unhealthy foods away from sight from the children you could actually find the 40 to 50% I'm not sure about the number exactly but you could actually reduce the amount of unhealthy foods consumed by these children simply by moving it .

Not by increasing the price not by you know doing anything else just by making it less visually accessible and that actually increased the amount of you know healthy food consumption again behavioral economics tries to you know fuse psychology with economics I'm not saying that economics has all the answers it doesn't but that's not the .

Motion we're trying to argue that economics is useful but thank you for that point of rebuttal other new ways that we could you know merge other fields with economics is by using chaos theory by using theories of complex adaptive systems one of the main axioms that classical economics follows is that we have equilibrium which in reality we .

Don't the economies are in constant states of flux there is no equilibrium that we tend to follow and most economies follow operates far from equilibrium there are many unexplained dynamics and structures in economics and we are in no way saying back and almost has all the answers one good example of a phenomenon .

That has increased efficiency open-source software we're not claiming that economics invented open source software but it's a way in which we can view marketplaces not just of products but of ideas that could radically make products cost efficient it could radically make the transmission of information a lot faster and there would .

Be new forms of value production or better yet to say a new Cambrian explosion technologically speaking so to quote an anonymous source I don't know who said this but he said new infrastructure often matures when separate solutions merge and the parts reinforce the stability of the whole so again like when these separate systems .

Keep operating up to a point where they can enlarge themselves and alert them like merge then that's when we have more of an efficient and operating system but to end I'd like to say that economics can only remain relevant as long as it can provide deep engagement with the current and contemporary reality overly simplified models and problematic axioms .

Cannot guide us forward and on that note I'd like to say the economics is useful when taking those things into mine that was very exciting the formal debate is now over and it's your turn to ask questions if you have any you may direct questions to the team as a whole or to a specific speaker please raise your hand to ask a question and also specify which .

Team or speaker your question is directed at it used to be that economics was a study of markets then we decided that economics was a study of the allocation of scarce resources and now people think of economics as a study of human behavior which shows the limitless .

Arrogance of our profession remember in my talk I talked about developments for example is faddish it's not that it's growing over time it's it's cycling over different fashions not learning from itself Linda you talked about how you know in in the late 19th century Ricardo showed that protectionism is bad .

But it's back again we can't even learn from the things that we've known for a hundred years you know at one point in time we understood that austerity was not a good response to financial crises but European Central Bank's that's still you know that's still a widely-used policy so I don't see the learning from from the mistakes that you've seen other .

Disciplines scientists are great economics not science ok just just to square the circle on why we became an economist it the only reason why anyone would do a PhD in the field is if you think that everyone else is doing it wrong so we can hold both of these reviews and in a sense agree that progress is possible but is is in the .

Present tense and economics is useless yeah mechanics might not be in the future saying well you know the problem with with iconic models is that they're to rely on assumptions exactly the opposite I think they are Oh singer I kept going back to you was if you were to tap all the problems that we faced and what would you use if not .

Economics and when it comes to our models we need some basis from which to make some prediction I mean yes it will not be accurate and vast majority of the time but nobody has a crystal ball with which they can say with certainty that explains that we definitely happen and dr. bill Collier was talking with earlier said that you know nobody nobody .

Calls it a crisis because you saw it economists make predictions within a forecast like a specific forecast error like a margin so we're not claiming that we have all the answers but within a certain margin you know that's what follow then that's the answer we can give them we don't believe that we know .

there's like a social difference there's no reason at all to believe that we're not at the optimum here there's no first-order benefit of switching one sociologist to an economist or vice versa if we move along .

This path at the margin so we just say well I'm a big believer like all economists sociologists statistically speaking you're gonna see more more ads with more quantitative like economics you know those eyes are often gonna say that degree in mathematics or statistics is also fine .

In our pursuit of true science and also you know similarly useful if you had a degree in those things yes that is true so we have time for one last question we'll probably be serving to the robot overlord well however much we like to try and confine in our lovely little models that humans will reacts at least a certain stimuli in a predictable .

Manner unfortunately we're not and you can't program robot to understand human nature it's something that I mean we as humans understand intuitively from one another it's an emotional intelligence you can't program the robot so I think you're safe I think this is this is an area where we can actually learn a lot from historians .

So we in economic models would find it very very difficult to put in technologies that we don't yet know and so then we certainly can't make any forecasts but historians take along the sweep of history and there are very disruptive technological changes asset that have been observed in the past and historians can tell us how societies .

Have adapted and how we still have jobs and work today even though these disruptions have happened in the past so I know we have a district historian in the audience and I mean I think this is an area where history I certainly spend a lot of time in my classes trying to teach a lot of calculus and and programming and that's .

So that at least you have something to fall back on now that all of you have your answer your questions answered and hopefully made your mind about the motion let me take the final vote to see if the original word count still remains so with those who are for the motion all the things economics this year's first please raise your hand .

and those who are against the motion and who think economics is useful please I'm glad we're not wasting our time I know but I also feel like the academics did this on purpose just to make us feel better the timekeepers just finalizing the what comes and we should wait for him .

Watching this re s talk by Orion upon the era but what economists actually do it's a great talk it's a long YouTube video but half of it is question-and-answer so the first half is is great and if you're feeling a little bad about yourself and what you've done this hopefully will make it you feel a little better so the results are I've .

Been in forms of the results and I should say this was a very entertaining debate and all of you were amazing the whole point of this segment is not about winning but more about having a good time discussing about a subject that you'll really like and also to know about what everyone thought in general so instead .

Of announcing our winner I would like to call the team who garnered the largest number of votes as being the most convincing team and that team is I hope you have all enjoyed the debate session


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