Friday, January 25, 2013

Very good sentences on what it means to be an economist

Brad DeLong, talking about debt hysteria:
"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."


  1. 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 least get to the deeper issue of whether these are "market" prices.



All anonymous comments will be deleted. Consistent pseudonyms are fine.