My kind of exam

Irwin Collier’s excellent, excellent blog had a post recently that I wish I could assign as homework to everybody studying economics today (myself included).

The post is about the semester end examination for a course called “Methods of Economic Investigation”. Said exmaination for said course took place exactly one hundred and twenty years ago (yup, not a typo). While the blog post contains a couple of other very interesting points, I want to focus on just the examination:

If you are a student of economics, no matter your level of specialization, no matter your major, and no matter your love for datasets, I’d strongly urge you to try and write a response to any one of these questions. Feel free to take your pick of the lot, feel free to take your time, and we’re civilized folks around here – of course you can make use of the internet while you write your essay. Take a month to write a single answer, if you like, and more, if you prefer. Speak to your professors, your batchmates, your mentors about your topic, read widely about the topic based on these conversations, and keep polishing your essay as you go along.

Better still, there is no need to submit it anywhere, nor is there a need to put it up for review. Treat it as a way to get better at the study of economics.

Best of all, ask yourself what other questions you can add to this list to make your study of economics even richer. A particularly fun way to get started might be to ask GPT3 to answer one of these questions, and treat its response as a starting point for your own essay. Maybe critique the AI’s suggestion? Or maybe build upon it? Reject it out of hand, perhaps, and explain why?

Here’s its response to the fourth question, for example:

An economic law is a general principle that describes the behavior of economic agents, such as individuals and firms, in response to certain economic conditions. Economic laws are similar to scientific laws in that they are based on empirical evidence and describe a regular pattern of behavior that is observed in the real world. However, unlike scientific laws, which are typically based on physical phenomena, economic laws are based on the behavior of human beings.
One of the key characteristics of an economic law is that it is universal. This means that it applies to all economic agents, regardless of their individual characteristics or circumstances. For example, the law of supply and demand is a universal economic law that applies to all markets. This law states that, all other things being equal, the price of a good or service will rise when demand for it increases and will fall when demand decreases. This is a regular pattern of behavior that is observed in all markets and is not influenced by the individual characteristics of buyers and sellers.
Another characteristic of an economic law is that it is based on economic principles. These principles are general theories or ideas that are used to explain economic behavior. For example, the principle of utility is the idea that people derive satisfaction or pleasure from the consumption of goods and services. This principle is used to explain why people make certain choices in the marketplace, such as why they are willing to pay more for a luxury item than a basic necessity.
In conclusion, an economic law is a universal principle that describes the behavior of economic agents in response to certain economic conditions. It is based on empirical evidence and economic principles, and is used to explain regular patterns of behavior in the economy. (My very first AI citation, yay!)

Here are five questions you might want to think about after having read this “essay”:

  1. Is there a possibility that the behavior of economic agents can violate these general principles? If yes, under what circumstances, and why? If not, why not?
  2. How does your answer impact the first sentence in the second paragraph? What does it say about the world we live in, and what does it say about the assumptions we need to make about such economic laws?
  3. Is the law of demand truly universal? Can you think of exceptions? Are these exceptions fully explained within the domain of economics, or do we need to expand our field of study and enquiry? (Hint: if the only answer that pops into your head is “Giffen goods!”you need to read more widely outside of economics)
  4. If we have empirical evidence that a law is violated under certain conditions, does that mean the law is invalid? Should we update our beliefes about the power of the law, or should we ask about how realistic and practically replicable are the conditions under which the law was recorded as being violated?
  5. What is missing from this essay? What would you choose to include to make the essay better?

Have fun writing these answers out, and I do hope you will consider writing ’em!

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