Tag: debates

In Praise of Debates

It’s been a few years since I’ve taught a course in behavioral finance, but back when I used to teach it, one of the first few lectures would always be this excellent debate between Fama and Thaler:

The video is excellent for many reasons, here are some of them:

  1. It’s a good way to help students realize that the question (are markets efficient) is far from settled, one way or the other. Hey, if the Nobel prize winners can’t agree…
  2. There is a way to disagree. Disagreement need not mean that the other person is vile, evil or an idiot. It simply means that the other person has a different take than yours. And that’s fine. This is an important, and currently very underrated lesson.
  3. Regardless of which side of this debate you personally favor, there is much to learn by watching two experts express and defend their stance.
  4. Reasonable dialogue, the purpose of which is to arrive at a synthesis, is a worthy way to engage in debate. This is worth repeating: the purpose of a debate is not to win it, but for all sides to arrive at a happy medium. Medium need not mean agreement, but it certainly can (and should) mean acquiring an appreciation of the other’s viewpoint.
  5. Listening to two people debate is infinitely more entertaining, motivating and informative than listening to one person drone on for eternity

The reason I bring this up is because Pranay asked an excellent question on Twitter recently:

It is excellent (this tweet), not just because it helped me write this post, but because it received some excellent replies – please do go through them.

And while I am not sure if Pranay intended this, but it also serves as an excellent reminder that there are ways to have debates in public. Civil disagreement is possible, and when both parties engage in good faith, crucial and desirable. That is how society learns and moves forward – through debate, disagreement and dissent.

Speaking of which, here’s your word for the day: erisology.

Underrated Ideas in Economics

I and Anupam Manur had a lot of fun in a session we conducted for the Takshashila Institute yesterday. Credit to Anupam, it was his idea. And what an idea it was:

Come up with five weird/underrated ideas in economics each, and get the other person to respond to each. Have a bit of a discussion, and then have the participants take the discussion forward.

Here’s the list of ideas that we ran past each other (you may have to open the image in a new tab):

These notes were taken as we spoke, but they cover only a small part of the entire conversation, naturally. Alas, it was not a recorded session, and I cannot share it with you. But it was so much fun!

  1. Discussions work better than lectures. Anytime you want to host a session for students of any age, getting two people to argue in front of an audience is always better than getting one person to deliver a monologue.
  2. For at least me (and I suspect for Anupam as well), coming up with our five ideas was a lot of fun. It forced me to step back and think about economics and what I’ve been working on related to economic theory in a much more introspective fashion, and when is that ever a bad thing?
  3. We ended up agreeing with each other, alas! Why do I say “alas”, you ask?
    • Your arguments become far sharper when you have to defend them, particularly against a worthy “opponent”. If you want to learn better, find someone awesome to argue with.
    • The space for civil disagreement shrinks daily in front of our eyes, and I was hoping to get lots of it from Anupam. The noun (disagreement) is in plentiful supply everywhere we look, the adjective (civil) not so much, and the combination not at all.
    • Given what you know about a field, optimize for being surprised in conversations. Which means you should hear something counterintuitive in a discussion. Unfortunately for me (and for Anupam), both of us ended up picking points that may have been counterintuitive to others on the call, but not for the two of us. My personal lesson: think harder the next time around!
  4. More of these conversations need to happen, and more people need to see them. Not, to be perfectly clear, conversations necessarily involving me or Anupam in particular, but involving people who have some amount of expertise in a particular field (and said people are willing to talk, debate and discuss underrated ideas from said field). This is my favorite example.
  5. Let’s make more of these “debates” happen!

Argue, Why Don’t You?

We had an excellent class recently (my students and I) on how to define markets.

That’s a whole other blogpost in itself, and I have a friend to thank for helping me discover that the legal world’s definition of markets is very different from the one that economics textbooks supply us with (if at all they do so in the first place).

But the students and I had a lot of fun talking about how to define a market, and at one point of time, the class turned into a very passionate debate about a particular case. The debate lasted for about an hour, a lot of fun was had, and all was well with the world.

After the class, one of the students came up to me to apologize. They wanted to apologize because they had argued with me, and had ended up debating about an issue.

Which, as you might guess, was just too horrible a thought for me to contemplate. What a world to live in – one in which we have a culture where students come up to apologize for having debated an issue in class.

I’d much rather live in a world where students come up to apologize for not having participated in a debate in class – that ought to be the default, dammit. A student who has the enthusiasm, the passion, the willingness and the desire to go up against the prof in a spirited debate, dishing out as good as they get is a great example of an awesome participant in a class discussion! Why apologize for it – that’s your job as a student!

And the reason this needs to be said is because if you are a student reading this, you need to know that arguing in class is A Very, Very Good Thing.

And you don’t have to take my word for it: listen to Adam Grant make the point very persuasively.

  1. Argue as much as possible in class, but always respectfully.
  2. Disagreement is fine (it’s great!), disrespect is not.
  3. That cuts both ways – it is equally fine for the prof to disagree with you, but always respectfully.
  4. Don’t argue to prove that you are right, argue to learn the truth. (Adam makes the same point early on in that podcast)
  5. I don’t always succeed at this, and I probably fail more often than I succeed.
  6. But I work at this, and try and get better at it, and I invite you to do the same.
  7. Arguing with somebody forces you to make your arguments and line of thinking clearer, and that alone is worth the debate. Ditto for writing.
  8. Adam makes the point that growing up in a household where your parents are arguing respectfully is good for you, and I’m happy to report that my wife and I have unknowingly been great parents in this regard.
  9. Adam has a great line in the podcast: the pen might not be mightier than the sword, but it lasts for longer. Whatay.

But bottom-line: please, pretty please. Argue more!

Links for 22nd March, 2019

You might have been hearing/reading about MMT recently. Today’s set of links is really one place to read a lot of back and forth between two economists about what MMT means in practice – plus an additional bonus link, and a Twitter thread.

You absolutely should read each of these links if you are a student of macro. You probably should read these links if you are interested in the economy – but in this case, feel free to skip some of them. I leave it to your judgment.

  1. “OK, Lerner: His argument was that countries that (a) rely on fiat money they control and (b) don’t borrow in someone else’s currency don’t face any debt constraints, because they can always print money to service their debt. What they face, instead, is an inflation constraint: too much fiscal stimulus will cause an overheating economy. So their budget policies should be entirely focused on getting the level of aggregate demand right: the budget deficit should be big enough to produce full employment, but no so big as to produce inflationary overheating.”
    Paul Krugman gets the ball rolling by explaining what Abba Lerner’s work was all about, why it made sense then, and perhaps doesn’t now.
  2. “Outside of the so-called liquidity trap, Krugman adopts the standard line that budget deficits crowd out private investment because deficits compete with private borrowing for a limited supply of savings.The MMT framework rejects this, since government deficits are shown to be a source (not a use!) of private savings. Some careful studies show that crowding-out can occur, but that it tends to happen in countries where the government is not a currency issuer with its own central bank.”
    Stephanie Kelton responds by pointing out what she sees as the flaws in Krugman’s argument. I have had difficulty in understanding this part myself, which is why I have highlighted it.
  3. “So let’s be clear here: Are MMTers claiming, as Kelton seems to, that there is only one deficit level consistent with full employment, that there is no ability to substitute monetary for fiscal policy? Are they claiming that expansionary fiscal policy actually reduces interest rates? Yes or no answers, please, with explanations of how you got these answers and why the straightforward framework I laid out above is wrong. No more Calvinball.”
    Of the questions that Krugman raises by way of response, it is the second one that strikes me as being at the heart of the issue. Expansionary fiscal policy reducing interest rates boggles the mind – well, my mind, at any rate.
  4. “#3: Does expansionary fiscal policy reduce interest rates? Answer: Yes. Pumping money into the economy increases bank reserves and reduces banks’ bids for federal funds. Any banker will tell you this.”
    I have read Stephanie Kelton’s response, and re-read it, and I find myself confused even then. Expansionary fiscal policy, she says, does reduce the federal funds rate. I found this confusing…
  5. Until I read this twitter thread by Paul Krugman…

    As it turns out, the route taken by the government to conduct expansionary fiscal policy matters. You learn a little more macro every time you read about it.