The Future of Economics

The Great Recession created questions about mainstream economic policies and the theories they are based on. Some economists have stood their ground, affirming that the market has not failed, while others cite how the profession was blindsided as a sign that change is necessary. This blog shares the discourse among professionals, journalists and academics on the future of economic study. 

SCEPA and INET are proud to present an online, semester-long economics class - advanced microeconomics - taught by Duncan Foley, the Leo Model Professor of Economics at The New School. The series includes videos of 14 class lectures, including Professor Foley's presentations and discussions with students. 

Class 01 Preliminaries. The first lecture consists of technical topics essential to the rest of the course, including philosophy of social science, Bayesian and Information theory.

At the beginning of the course, the philosophy of social science in correspondence to its deviation from the natural science is debated, focusing on if science should address people in a different way than animals. Moreover, the subjects of the meaning of frequency and probability are examined. Afterwards, an overview of the Bayesian Theory is discussed, complementary to its limitations reaching reality and how this view is linked to the econometric theory, which is based on the former. The first lecture ends raising the topic of elementary information theory (Shannon’s entropy) within a historical framework.

Advanced Microeconomics: Information and Behavior in Political Economy | Duncan Foley | Leo Model Professor of Economics at the New School for Social Research | Lecture 01 Introduction | Spring 2016

SCEPA and INET are proud to present an online, semester-long economics class - advanced microeconomics - taught by Duncan Foley, the Leo Model Professor of Economics at The New School. The series includes videos of 14 class lectures, including Professor Foley's presentations and discussions with students. 

Class 02 Entropy-constrained behavior. The central point of discussion in the second lecture is the basic economic framework of human behavior developed based on the entropy-constrained theory and its advantages over the marginal utility theory of economics.

The lecture begins pointing out the significant impact of the entropy theory on a variety of scientific fields. Moving on, the focus shifts to the economic approach and the audience is presented with two examples of the behavior model. In the first case an individual maximizes her pay-off function through a single choice, whereas, in the second case the payoff maximization occurs via a set of mixed actions. Afterwards, the utilitarian theory is contrasted to the mainstream marginal utility theory. The former advocates that the welfare is comparable among individuals, in contrast to the latter which argues that the interpersonal comparisons of welfare are impossible due to the inherently subjective aspects of welfare. This raises the ground to legitimately taxation of the richest people, in case that people approximately have the same temperature. The second class ends with some simple examples and applications of this theory.

Advanced Microeconomics: Information and Behavior in Political Economy | Lecture 02 Entropy Constrained Behavior | Duncan Foley | Leo Model Professor of Economics at the New School for Social Research | Spring 2016

SCEPA and INET are proud to present an online, semester-long economics class - advanced microeconomics - taught by Duncan Foley, the Leo Model Professor of Economics at The New School. The series includes videos of 14 class lectures, including Professor Foley's presentations and discussions with students.

Class 03 Applications of the entropy-constrained behavior model. The biggest part of third lecture dedicated to answering students questions essential to the topic and for the rest we are presented with applicable examples of the behavior model. This lecture provides fundamental information to anyone who wishes to comprehend the ideas that are discussed in previous lectures in greater depth.

At the beginning, the audience is presented with a detailed review of the entropy constrained behavior model, emphasizing on the description of the behavior temperature. Many important points are clarified, such as if the behavior temperature of people tends to be the same or if a fluctuation in behavior temperature changes the utility function, as well as how much will one’s behavior temperature would be affected if a tiger would appear in front of them! Moreover, in this lecture Gibbs distribution is examined more thoroughly. Afterwards, a definition of the expected utility theory is presented by using Von Neumann and Morgenstern’s lottery paradigm. Duncan Luce and Patrick Suppes attempt to experimentally prove the main point of the expected utility theory. However, the experiment did not show the sharp-step function behavior predicted by the expected utility theory. Thus, their experiment seems more precise with the use of the entropy behavior theory, where a choice with a greater payoff is just more plausible to occur. Additionally, some more mathematical applications are explained. In the end, the conversation zooms in the Gaussian method of analysis, which he uses in order to describe his foundation of normal distribution. The third lecture ends raising the question if the Gaussian method in astronomy works as well in social science.

Advanced Microeconomics: Information and Behavior in Political Economy | Lecture 03 Applications of the Entropy Constrained Behavior Model | Duncan Foley | Leo Model Professor of Economics at the New School for Social Research | Spring 2016

SCEPA and INET are proud to present an online, semester-long economics class - advanced microeconomics - taught by Duncan Foley, the Leo Model Professor of Economics at The New School. The series includes videos of 14 class lectures, including Professor Foley's presentations and discussions with students. 

Class 04 Social Interaction (Part Α). The fourth class consists of a review of the entropy constrained behavior model, the completion of the expected utility theory and an introduction to the Social Interaction behavior.

The fourth lecture begins with a brief summary of the entropy-constrained behavior model and moves on to re-examining the expected utility function via Von Neumann and Morgenstern’s lottery example. Additionally, two more applications of the entropy-constrained theory are analyzed and visualized graphically. One is able to comprehend the weakness of the econometric models via this analysis. The econometric models ignore the constrains of real life and assume an asymmetry in error deviations, which cannot always lead to accurate results. The lecture ends with the explanation of the basic ground of the social interaction of the models and how this framework could be introduced in economics, something that until now has not been resolved by the mainstream utility theory.

Advanced Microeconomics: Information and Behavior in Political Economy | Lecture 04 Social Interaction (Part A) | Duncan Foley | Leo Model Professor of Economics at the New School for Social Research | Spring 2016

SCEPA and INET are proud to present an online, semester-long economics class - advanced microeconomics - taught by Duncan Foley, the Leo Model Professor of Economics at The New School. The series includes videos of 14 class lectures, including Professor Foley's presentations and discussions with students. 

Class 05 Social Interactions (Part Β). The fifth class studies the functionality of the canonical social interaction model and examines a major topic in Political Economics – The Tragedy of the commons.

The fifth lecture begins with an analytical presentation of the canonical social interaction model. The model integrates social interaction into economics and answers the question of what would happen in a social coordination case, in which all people gathered together and decided what to do. The subject of what is the best response for each individual in a variety of cases is also examined. After the theoretical analysis, the lecture focuses on the mathematical framework of the model and an accurate graphical visualization is given by presenting on what extent the certain parameters can affect the model’s fluctuation. Through this approach, they are able to explain in which cases there is a strategic complementarity between agents and in which cases there is not. Prisoner’s dilemma is just a subset of this theory. In the last part of the class, the major topic of the Tragedy of Commons in Political Economy is discussed as an example that integrates this model into real life.

Advanced Microeconomics: Information and Behavior in Political Economy | Lecture 05 Social Interaction (Part Β) | Duncan Foley | Leo Model Professor of Economics at the New School for Social Research | Spring 2016

SCEPA and INET are proud to present an online, semester-long economics class - advanced microeconomics - taught by Duncan Foley, the Leo Model Professor of Economics at The New School. The series includes videos of 14 class lectures, including Professor Foley's presentations and discussions with students. 

Class 06 Social Interaction (Part C). The sixth class consists of various examples through which they examine the results that could be reached by modifying the canonical social interaction model.

At the beginning of the sixth lecture, the canonical social interaction model and studies are reviewed and different cases are visualized graphically in order to precisely define the meaning of the strategic contementarity and the strategic substatibility in the model. In the former strategic, the more the people that follow the same action the better the result, whereas in the latter, the more the people that follow an action, the less the chances are that one would wish to follow the same strategy. Additionally, an accurate description is given based on the quantal decision response. The Hawk and Dove cases are also presented as an algebraical example of how a biological chain of these two species tends to be in harmony and why none of the two species has an evolutionary advantage over the other. In the end, the audience is presented with examples of a strong strategic contementarity, in which the path dependence determinates to a great extend the winners.

Advanced Microeconomics: Information and Behavior in Political Economy | Class 06 Social Interaction (Part C) | Social Interaction Model | Duncan Foley | Leo Model Professor of Economics at the New School for Social Research (NSSR) | Spring 2016

Yanis Varoufakis delivered SCEPA's annual Robert Heilbroner Memorial Lecture, "The Future of Capitalism" on Monday, April 25th, 2016.

We all know Varoufakis as the former Greek Finance Minister and media sensation who stood up to Europe in the fight against austerity. His lecture highlighted themes his new book, "And The Weak Suffer What They Must?," including the origins of a crisis that has affected not only Greece, but all of Europe.

The lecture was followed by a panel discussion featuring New School Professor of Economics Mark Setterfield and economics student Ebba Boye.

Follow the conversation on Twitter with @SCEPA_economics using #YanisTNS.

Varoufakis’ career has spanned academia, public service, and the private sector. After three decades in academia, he was elected to the Hellenic Parliament in 2015 as a member of the Syriza Party and became Minister of Finance in Alexis Tsipras’ government. He currently serves as professor of economics at the University of Athens and as a consultant for the Valve Corporation.

SCEPA's Robert Heilbroner Memorial Lecture on the Future of Capitalism:

The Heilbroner lecture honors the work of Robert Heilbroner, who was both a student and a professor in the economics department of The New School for Social Research. This event is dedicated to understanding questions of economic justice and how the profit-seeking activities of private firms might also serve broader social goals. To use Heilbroner’s words, “capitalism’s uniqueness in history lies in its continuously self-generated change, but it is this very dynamism that is the system’s chief enemy.”

The event was free and open to the public.

Sanjay ReddyNew School Economics Professor Sanjay Reddy is known for his multidisciplinary approach to economics, looking at the mathematical and philosophical underpinnings of economic theories and policies. It’s no surprise, then, that his new INET blog post, “Externalities and Public Goods: Theory OR Society?,” investigates these two concepts from all angles.

The essay is part of Reddy’s “Reading Mas-Colell” blog series, for which he and New School PhD student Raphaele Chappe provide critical commentary on the widely used microeconomics textbook “Microeconomic Theory” by Andreu Mas-Colell, Michael Whinston, and Jerry Green. In this installment, he explores the historical development and competing definitions of the concepts of externalities and public goods.

Many economists view externalities and public goods as technical concepts with precise definitions, but Professor Reddy reminds us that social issues are generally subjective. “The extent to which public goods are provided depends on who we see as part of ‘ourselves’ and what we see as ‘ours.’” Policy responses to simple externalities, such as congested roads or localized pollution, are relatively straightforward. But solutions to epochal challenges like climate change require social, political, and institutional perspectives. In these cases, the “right” answer is more elusive.

New School Economics Professor Sanjay Reddy is offering a free online course in microeconomics in collaboration with the Institute for New Economic Thinking (INET). Titled, "Advanced Microeconomics for the Critical Mind," the class will transcend the narrow and technical nature of modern microeconomics to present a holistic survey of the discipline. The course will engage students in a wide range of topics so they can better understand the foundations and implications of modern microeconomic theory.

Professor Reddy received his PhD from Harvard University in 2000. His research focuses on Development Economics, International Economics, and Economic Philosophy. Teaching Assistant Rafaele Chappe received her LLM from New York University, and came to The New School after eight years as an attorney in the financial services industry. Her research focuses on finance, risk management, and the political, social, and economic implications of the 2008 financial crisis. 

Classes begin October 12th. The course is free and registration is open to anyone interested.

Scott Carter

On March 17, 2015, Scott Carter, New School economics alumnus and Professor of Economics at the University of Tulsa, discussed the need to make public Piero Sraffa’s unpublished notes on his book, “Production of Commodities by Means of Commodities: Prelude to a Critique of Economic Theory.”

Piero Sraffa (1898-1983) was an Italian economist at the University of Cambridge known for his criticism of mainstream economics. Citing an insight made by Ajit Sinha, Carter noted that the Prelude's text can be considered as a ‘masterpiece of minimalist art.’ At only 99 pages, it fueled the neo-Ricardian school of economic thought with a critique of the neo-classical theory of value.

Written over 30 years and originally comprised over 7,000 pages, Carter is working to assemble the work into an online timeline and database.