"Economists do not look at quantities only but at prices. That is the very point of being an economist: to not simply be some operations-research material-balance accountant of product flows but to look deeper and take market prices as indicators of Lagrangian multipliers associated with the appropriate social-welfare maximization problem."
Friday, January 25, 2013
Very good sentences on what it means to be an economist
Brad DeLong, talking about debt hysteria:
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Why, thank you...
ReplyDeleteBrad DeLong
Is the rent in a rent-controlled building a good indicator of the associated Lagrange multiplier? If we fix the price of gas at $1, is it a good indicator? Come on.....at least get to the deeper issue of whether these are "market" prices.
ReplyDelete#disappointed