Peregrine Bosler posted on Facebook that a friend of hers’ equates studying econ with the dark arts, although comparing it to the cruciatus curse may be a bit much. This got me thinking about what would have happened to a popular fiction series if instead of Hogwarts, J.K. Rowling had sent Harry Potter to the London School of Economics. So, with that in mind…….

“Harry Potter And The Sorcerers’ Lump Sum”
“Harry Potter And The Chamber Of Marginal Analysis”
“Harry Potter And The Prisoners’ Dilemma Of Azkaban”
“Harry Potter And The Coase Theorem Of Fire”
“Harry Potter And The Order Of The Invisible Hand”
“Harry Potter And The Half Blood Optimising Individual”
“Harry Potter And The Deathly Pareto Efficient Outcomes”

Ruffin and Gregory’s text on global warming

From Ruffin, Roy J. and Paul R. Gregory, Principles of Microeconomics, 7th Edition (Boston: Addison Wesley, 2001), p. 380.

Example 5: Global Warming—The Great Debate

The debate over global warming shows that no matter how much contrary evidence is presented, it does not matter. The popular sentiment by politicians, the press, and educators makes three disputable claims: (1) global warming is occurring, (2) global warming is caused by our consumption of fossil fuels, and (3) global warming is bad for our future. But every single one of these claims is disputed by reputable scientists. For example, the earth has gotten warmer over the past 300 years, but it is still on a cooling trend over the past several thousand years. A warm 1999-2000 winter is hardly conclusive scientific proof. Indeed, when a “scientific consensus” for global warming is presented in the press, that consensus is based on a group consisting largely of social scientists and educators who have no direct knowledge of climate science. There are in fact very few climatologists in the United States, and the majority of them are skeptical of global warming.

Most of the evidence for global warming is really based not so much on measurements but on models of global warming that predict it will occur. These predictions, however, have been systematically biased upward; each year the models have to be revised downward. When a model makes a false prediction, it should be rejected rather than used as a basis for policy. Actual measurements of atmospheric temperatures show no alarming trend.

It has been argued by some economists that even if global warming takes place, it may prove to be beneficial to society. Agricultural production may be stimulated, it will cost less to heat our homes, and we may spend more time fishing, swimming, and golfing.

But the biggest risk of doing something about global warming is that the costs of cutting carbon emissions will fall on the poorest members of our planet—the developing countries. Since economic development is energy intensive, raising the cost of using carbon resources will cut the economic growth rates of countries such as India and Mexico more than that of more advanced countries.

Source: http://www.cato.org/speeches/sp-jt011698.html.

My email exchange with Ruffin and Gregory

From: Yoram Bauman
To: Ruffin and Gregory, with a cc: to Mr Shea (someone at their AWL, their publisher)
Subject: Textbook
Date: Tue, 28 Nov 2000 16:13:11 -0800 (PST)

Professors, Mr. Shea: I have received a desk copy of the 7th edition of your Principles of Microeconomics textbook, and I must say that I am astounded by your coverage of global warming. To say that “the debate over global warming shows that no matter how much contrary evidence is presented, it does not matter” is completely unprofessional, bringing to mind conspiracy theories and black helicopters rather than reasoned analysis worthy of an academic text. It also happens to be wrong, at least according to voices you should find respectable (see for example the November 16th edition of The Economist).

I encourage you (and you, Mr. Shea) to recall this textbook as misleading and untrustworthy. For my part, I am going to spread the word about your textbook and Mr. Shea’s publishing house.

Sincerely,
yoram bauman
econ grad student
University of Washington, Seattle

From: Roy Ruffin
To: Yoram Bauman
Subject: Re: Textbook
Date: Thu, 30 Nov 2000 08:38:50 -0600

Dear Mr. Bauman: Received your e-mail. I think you must misunderstand the nature of the example on global warming. When we say that the issues are “debatable,” this simply means that there are disagreements among scientists not that the notions are untrue. We’re sorry to have alarmed you so much. Global warming is a serious issue, but one that should be addressed by scientific evidence and methods rather than a pros and cons approach that we seem to see. Global warming is certainly occurring. But there are questions dealing with its solution because the models themselves still need to be worked out until their predictions fit all the facts at our disposal–this is a point we have not yet reached. As a scientist, I believe that we must use testable and fully tested models of scientific questions. There is still the problem of the difference between atmospheric temperatures and earth-based measurements, and the models have not yet addressed this difference. This does not in any way deny global warming. Perhaps we should have used the word “controversial” rather than “debatable,” but its a big book and wrong words are often used. In any case, this will give you a chance to show just how smart you are compared to the authors! Thanks for your comments; hopefully, in the next edition there will be more closure on this issue. Best regards, Roy Ruffin

From: Yoram Bauman
To: Roy Ruffin (with cc: to Gregory and Shea)
Subject: Re: Textbook
Date: Sat, 2 Dec 2000 16:37:55 -0800 (PST)

Professor: Thanks for your reply. I am not at all troubled when you say that global warming is debatable; disclaimers such as “the balance of evidence suggests that…” appear everywhere. What troubles me is when you say that global warming is _not_ debatable, and that is clearly the message of your sidebar, beginning with the opening sentence: “The debate over global warming shows that no matter how much contrary evidence is presented, it does not matter.” I cannot interpret this sentence (or the sidebar as a whole) in any way that is even remotely consistent with what you say in your email (”Global warming is a serious issue…”; “Global warming is certainly occurring…”; “[We] simply mean that there are disagreements among scientists…”).

I hope that you and Professor Gregory (and Mr. Shea, your publishing representative) will recognize this inconsistency and act accordingly. Your suggestion that this “misunderstanding” could be cleared up by using the word “controversial” rather than “debatable” is quite odd, if for no other reason than that words like “debate” appear only twice in your sidebar: once in the title (”Global Warming–The Great Debate”) and once in the opening sentence (quoted above). Thereafter your sidebar features not equivocations but declarations (”There are in fact very few climatologists in the United States, and the majority of them are skeptical of global warming”). These declarations are based on a single suspect source (see my postscript below for details), appear to contain major factual inaccuracies, and are at odds with what you say in your own email.

I would suggest that your reputations as scholars (and Addison-Wesley’s reputation as a trustworthy publishing house) are at stake here in much the same way that Paul Ehrlich’s reputation was at stake in his ill-fated bet with Julian Simon. To his credit, Ehrlich at least had the honor and good sense to acknowledge his error and pay the cost. It will be to your credit if you do the same and recall your textbook.

Sincerely,
yoram bauman

PS. In your book you dismiss the “scientific consensus” on global warming as one “consisting largely of social scientists and educators who have no direct knowledge of climate science.” Yet your own sidebar is based entirely on a lecture by the director of the Cato Institute’s program on natural resources, a man who may himself have no direct knowledge of climate science. (He didn’t return my emails, so I don’t know for sure.) What I do know for sure is that some of his claims fail to stand up to scrutiny. For example, he says that “4,000+ scientists (70 of whom are Nobel Prize winners) have signed the so-called Heidelberg Appeal, which warns the industrialized world that no compelling evidence exists to justify controls of anthropogenic greenhouse gas emissions.” I have located various copies of the Heidelberg Appeal on the web (for example, at www.heartland.org); all of them feature the identical text, and that text makes no mention of greenhouse gas emissions.

From: Paul Gregory
To: Yoram Bauman
Subject: Re: Textbook
Date: Sat, 2 Dec 2000 22:50:43 -0500 (EST)

Dear Mr. Baum:

Your approach does not encourage discourse on the subject of global warming. I imagine that 99 out of 100 reports that reach the general public assert without doubt that global warming exists and will have dire consequences. When we cite an article that states that this may not be true, we are labelled as seeing “black helicopters” and declared “ignorant.” We may reach the point soon where anyone who raises such questions will be penalized and punished. It is rather extreme to ask the withdrawal of a book that consists of almost 800 pages of good economic analysis because of a sentence that you disagree with. The offending sentence simply says that contrary evidence has been and continues to be ignored.

I truly hope that this is not your position. If so, it does discredit to the position that you espouse and suggests a witchhunt.

Regards

From: Yoram Bauman
To: Paul Gregory (with cc: to Ruffin and Shea)
Subject: Re: Textbook
Date: Mon, 4 Dec 2000 07:15:14 -0800 (PST)

Professor: Thank you for your email. At some point I hope that you and your coauthor can move beyond denial and anger and reach acceptance. What I hope you will accept is this:

1. It is not scholarly to say things like “I imagine that 99 out of 100 reports that reach the general public assert without doubt that global warming exists and will have dire consequences.” Academic discourse, and especially academic publications, should meet a higher standard than that found in the media, and a much higher standard than that found in our imaginations.
2. It is your approach, not mine, that “does not encourage discourse on the subject of global warming.” It is your writings, not mine, that claim that “the debate over global warming shows that no matter how much contrary evidence is presented, it does not matter.” It is your text, not mine, that dismisses contrary viewpoints. And, though it was my email that raised concerns about seeing black helicopters, it is your text and your email that highlight those concerns by asserting a scientific conspiracy, by imagining a media conspiracy, and by seeing a witchhunt when in truth there are only tough questions and solid criticisms.
3. I am asking for the withdrawal of your textbook because I see no better option. An errata sheet would be fine, but I don’t think that you or your publisher would support something that focuses attention on your sidebar, and in any case I doubt that a suitable message exists for such an errata sheet: a “clarification of intent” would be duplicitous, and a substantive clarification would be too uncomfortable. The only other alternative that I see is to sweep it under the rug and make changes in your next edition, but I hope that you and your publisher will find this dishonorable and distasteful.

Finally, I must point out that I have never declared you to be “ignorant”, and I do not intend to. I think you have made a mistake, and I hope you take appropriate steps to acknowledge and correct that mistake.

Sincerely,
yoram bauman

From: Paul Gregory
To: Yoram Bauman
Subject: Re: Textbook
Date: Mon, 4 Dec 2000 10:31:34 -0500 (EST)

Your colleague declared us ignorant, not you. We don’t seem to be progessing with these exchanges; therefore, this is my last one.

Emails from the economics editor at Addison-Wesley

From: Victoria Warneck
To: Yoram Bauman
Subject: Ruffin-Gregory
Date: 11 Dec 2000 11:38:58 -0500

Dear Mr. Bauman:

Thank you for your recent query to our web site. David Shea has forwarded me your messages regarding Ruffin-Gregory and the example on global warming. I am sorry that the authors’ treatment of this subject has offended you, and thank you for bringing this issue to our attention.

We are in the midst of reviewing the material in question. If you have further thoughts on this topic, please feel free to write to me at this email address. Written correspondence may be sent to the address listed below.

Again, many thanks for your valuable thoughts on this topic.

Sincerely,
Victoria Warneck
Economics Editor
Addison-Wesley

(My side of this email exchange is not at all interesting, so I’m skipping it…)

From: Victoria Warneck
To: Yoram Bauman
Subject: RE: Ruffin-Gregory
Date: 18 Dec 2000 09:21:42 -0500

Dear Mr. Bauman:

Thank you for your message and for your concern about our coverage of this issue. I will let you know the outcome of our discussions. It would be helpful if you could send to me (in a single email, if possible) the comments that you have gathered from climate scientists. I do not doubt the validity of your point of view, but having informed opinions from scientists may come in handy. Is there a chance that you could forward these to me by Monday afternoon?

I appreciate your willingness to assist us. I will be in touch soon.

Sincerely,
Victoria Warneck

From: Victoria Warneck
To: Yoram Bauman
Subject: RE: Ruffin-Gregory
Date: 24 Dec 2000 13:33:29 -0500

Dear Yoram:

Thank you for forwarding these email messages. I appreciate all of your efforts! We will indeed modify the book’s coverage of global warming in the next (i.e., third) printing.

Very best wishes for the holiday season–

Sincerely,
Victoria

Postscript

Many thanks to all those who took the time to write to Ruffin and Gregory and/or to me about this issue–it seems like we’ve had some success!!! Someday I hope to come across the new printing of Ruffin and Gregory’s textbook; if and when I do I will post their updated treatment of global warming…

So unless you live in Portland (where you can see it at the Reed library) or in Seattle (where you can borrow my copy) you’re out of luck except for the following info:

• my thesis didn’t have any original research it because that was beyond my abilities as an undergraduate math major (and probably beyond my abilities, period :);
• it was about Abelian curves and how they can be used to solve Knight’s problem; and
• it was reasonably funny, e.g., it had a copy of “Math riots prove fun incalculable”, a 1993 Chicago Tribune article about Fermat’s Last Theorem, which was solved using Abelian curves.

But in fact I was not shocked, or even surprised. You and your colleagues in the Obama administration have been quite active in redrawing the line between the public and private sectors, and it would not have been rational for me to expect that economics comedy would be immune from the onslaught.

Now, I could take your comedy endeavors as a threat and respond by hiring lobbyists to protect my turf, or by making an appearance on Fox News as “Joe the comedian”. But unlike plumbers or insurance executives or most other private sector businesses, stand-up comedians oppose barriers to entry. Although it pains me to remember the times I was crushed in comedy competitions by high school drop-outs telling fart jokes, I also remember that those crushing defeats made me stronger.

So I welcome the competition, even from the government (heck, especially from the government!) and in fact this letter is an open invitation for you to come join me in performing at the American Economic Association humor session in Atlanta on January 3, 2010. The humor session is free and open to the public, and will also feature Hugo Mialon of Emory University, Jodi N. Beggs of economistsdoitwithmodels.com, and country music legend Merle Hazard. University of Wisconsin professor Ken West will be emceeing, so you can RSVP to him or to me, or just show up unannounced and wait for Ken to invite you onstage. We even have a title for your presentation: Stand-Up Economics: The Public Option!

Regards, and hope to see you in Atlanta,
yoram bauman phd, standupeconomist.com
“the world’s first and only [private sector] stand-up economist”

Abiotic Oilers: Related to creation scientists, these folks believe that oil is not a “fossil fuel” but is generated deep in the earth by mysterious geological processes. No really. There’s plenty of oil, we just have to put on our tin foil hats, drill deep down into our Flat Earth, past the underground cities of reptile aliens who control our secret Zionist world government, down into the petroleum-rich “Creamy Nougat Center” of the planet.

“… to extreme paranoia.”

Doomers: We are so completely screwed that it’s not even worth planting a community garden. We are headed for the neo-neolithic ages, so better get ready to fight tooth and nail for a good cave. Complete collapse of the grid will be followed shortly by roving hordes of cannibal former-suburbanites.

Read the whole post here.

William is an economics professor at a small university in Pennsylvania. He specializes in taxation, but has been having trouble getting published. Unfortunately, the theoretical knowledge of the impacts of taxes was of little use in practice. He made a few critical mistakes on his taxes forms and got in some legal trouble.

William’s friend, Paul, is another professor at the university. He mostly teaches law, but also teaches a course in Austrian economics. Due to Paul’s background in law, William decided to bring him along for the hearing.

This decision turns out to be costly for William. Paul sees a chance to strike a blow against the government. Instead of simply explaining how William made a mistake and getting him off with nothing but an obligation to pay his back taxes, Paul gives a lecture on the anarcho-capitalist’s view of taxation. He starts off with a rather dry explanation of dead-weight loss and perverse incentives, but his passion escalates as he characterizes taxation as a form of theft whose existence persists only because of the state’s monopoly on force. He finally reaches a fiery crescendo and calls William a warrior for freedom for standing up to the state.

A second friend of William, Steven, is an eccentric econometrician. He has a theory that if stock prices follow a random walk, then they can only be predicted by a random number generator. After running thousands of regressions, he found a set of numbers that had a statistically significant correlation with market returns for the past 6 months. Steven puts all of his money in the stock market, expecting to strike it rich using the random numbers.

The media starts to take an interest in the case. The IRS sees a chance to make an example of a tax evader and ideological enemy, Paul sees a chance to preach his Austrian views to a larger audience. William, the only one with anything really at stake in the trial is caught in the cross fire.

When William brings this problem up with Paul, Paul responds “in for a penny, in for a pound, there is no turning back now.” William initially rejects this as a sunk cost fallacy, but when his new found fame has resulted in academic journals taking interest in him, he changes his mind and decides to embrace Paul’s attempt to protest against taxation. While in prison, William writes “Civil Disobedience in the 21st century.” This publication and his high profile trial turn him into a libertarian folk hero.

Meanwhile, Steven’s investments have not worked out and he lost his house. He has been living in William’s apartment and is taking care of it while William is in Prison.

The IRS realizes that William has been receiving a lot of popular support and don’t like the public continuing to hear Paul’s anti-state speeches. They realize that if they finish the trial, they are more likely to create a martyr than set an example for would be tax evaders. They offer to let William go if he agrees to pay his back taxes. William accepts, much to Paul’s dismay.

As the season closes, Paul is upset that he could not strike a fatal blow to big government, Steven is still living at William’s place, and William is dreading the prospect of paying his debts to the government. Paul proposes a solution that would respond to all three problems; Steven should try to marry William. They could attempt apply Steven’s capital losses to William’s tax bill and hence solve their financial problems, and Paul could continue in his crusade against a government that will not allow two consenting adults to get married.

• Humorous articles, such as Leijonhufvud’s “Life among the Econ”, (Economic Inquiry, 1973), Gregor W. Smith’s “Japan’s Phillips Curve looks like Japan” (Journal of Money, Credit and Banking, 2008), or my own “Principles of economics, translated”, which is available in text format (Annals of Improbable Research, 2003) or on YouTube. (See below for a semi-complete list of funny articles.)
• News headlines, real or imagined, such as a 2004 CNN.com article that was originally headlined “Iraqis polled: War did more harm than good but worth it.”
• Original economics jokes, such as “You might be an economist if…” Please don’t send me “assume a can-opener” or other jokes that are online, e.g., on JokEc.
• Cartoons, anecdotes, and other funny stuff. I’ll even consider amusing excerpts from rejection letters, such as the 2003 referee report by a reviewer who failed to notice that the 20th century was over.

See the list below for my stab at a compendium of economics humor, and note some of these articles (and many others) can be found in Clotfelter’s On the Third Hand: Wit and Humor in the Dismal Science. If you have additions to this list, please let me know!

Instructions for submissions

If you have a joke or cartoon or other short piece, email it (with a subject line of “Economics miscellany”) to me at yoram@standupeconomist.com. If you have a multi-page “serious” submission, send it through the usual process, beginning with a careful read of the Submission Information. (Make sure to write on your paper that it is intended for the Miscellany section, and yes you will have to pay the submission fee.) If you are not sure whether your paper is “serious” or not, email it to me and ask me.

Funny economics articles

Please send me additions (I’m just starting this compendium), and please note that some of these articles (and many others) can be found in Clotfelter’s On the Third Hand.

• “An option value problem from Seinfeld“ by Avinash Dixit, June 12, 2010. The abstract: “This is a paper about nothing.”
• “Monopoly® pricing” by John Cawley and Donald S. Kenkel. Economic Inquiry 48: 517-520 (2010).
• “The effect of prayer on God’s attitude toward mankind” by James J. Heckman (Nobel laureate, 2000). Economic Inquiry 48: 234-235 (2010).
• “The theory of interstellar trade” by Paul Krugman (Nobel laureate, 2008). Economic Inquiry, forthcoming. The original version of this paper is from 1978 but was never published.
• “The contractual view of marriage” by Luke Froeb (Jan 29 2010)
• “Market madness” by Allen Sanderson. An NCAA-style tournament to determine the cause of the financial crisis, this appeared first in the U of Chicago alumni magazine in fall 2009, in the Milken Institute Review (1st qtr 2010), David Warsh’s “Economic Principles” in spring 2010, and (linked above) in the AEA program in Atlanta in January 2009.
• “A Rational Choice Model for the Dakota Effect” by Jac C. Heckelman, PS: Political Science and Politics 41: 677-678 (2008).
• “Why I don’t have a girlfriend” by Peter Backus (2008-ish). Not an economics article, but it’s written by an economist. Hat tip to Kate Cell.
• “Contest submissions on a TV show about economists”, organized in early 2009 by Sultan. Here were the rules, here were the entries, and here was the voting. My favorite submission copied here.
• “On the efficiency of AC/DC: Bon Scott versus Brian Johnson” by Robert J. Oxoby. Economic Inquiry 47(3):598-602, 2009. (Congrats to Rob for having a second publication in the same issue! It’s “Game theory for playing games: Sophistication in a negative-externality experiment”, by John M. Spraggon and Robert J. Oxoby. Economic Inquiry 47(3):467-81, 2009.)
• “Clerihews in Merry Hues: An A-to-Z of the Lives and Times of Economists in Jolly Rhymes“ by S. Subramanian. Royal Economic Society Newsletter 146, July 2009, pp17-18.
• “A poem on poverty” by S. Subramanian. Challenge 52:4, July/Aug 2009.
• “A day in the life of a supply-side economist” by Samuel K. McSweeney’s, April 13, 2009. (Hat tip to Andrew Gianni.)
• “Japan’s Phillips Curve looks like Japan” by Gregor W. Smith. Journal of Money, Credit and Banking 40:1325-26 (2008). (Hat tip to Evren Damar.) Smith’s webpage used to link to a version of the paper with a note that “the title is also the abstract and, frankly, most of the text.”
• “Why is language vague?” by Barton L. Lipman. Working paper, Dec 2006. (Hat tip to an anonymous friend, who notes that it’s a serious paper but that it has the funniest abstract ever: “I don’t know.”)
• “JEL review of The Undercover Economist“ by R. Preston McAfee. Journal of Economic Literature 54:722-47 (2006).
• “Counterfactuals in wonderland” by Dov Samet. Games and Economic Behavior 51:537-41 (2005). Note the eight year review lag—maybe we should have a contest for longest review lag :)
• “Mankiw’s ten principles of economics, translated”, by Yoram Bauman. Annals of Improbable Research 9:2 (March/April 2003). Also available on YouTube.
• “Up or down? A male economist’s manifesto on the toilet seat etiquette” by Jay Pil Choi (2002). (Hat tip to Andy Meyer.)
• “Deluge economics” by Eban Goodstein. Ecological Economics 39:1-2 (2001).
• “Cricket versus baseball as an engine of growth” by Howard J. Wall. Royal Economic Society Newsletter 90:2-3 (July 1995). (Hat tip to Gregor Smith.)
• “The cookie caper” by R. Preston McAfee. Unpublished (1994-ish).
• “Chickens, Eggs, and Causality, or Which Came First?” by Walter N. Thurman and Mark E. Fisher. American Journal of Agricultural Economics 70:237-38 (1988). (Hat tip to Chris Bollinger.)
• “American Economic Growth and the Voyage of Columbus” by R. Preston McAfee. American Economic Review 73:735-40 (1983).
• “Macroeconomic Policy and the Optimal Destruction of Vampires” by Dennis J. Snower. Journal of Political Economy 90:647-655 (1982).
• “The conference handbook” by George J. Stigler (Nobel laureate, 1982). Journal of Political Economy 85:441-43 (1977).
• “On romantic love—An analysis of open system economic behavior “ by K. K. Fung. Policy Sciences 11:179-186 (1979). Not I think an intentionally funny article, but here’s the start of the abstract: “Romantic love is characterized by a preoccupation with a deliberately restricted set of perceived characteristics in the love object which are viewed as means to some ideal ends. In the process of selecting the set of perceived characteristics and the process of determining the ideal ends, there is also a systematic failure to assess the accuracy of the perceived characteristics and the feasibility of achieving the ideal ends given the selected set of means and other pre-existing ends.” (Hat tip: Cyril Morong.)
• “On Some Debates in Capital Theory” by Amartya K. Sen (Nobel laureate, 1998). Economica 41:328-35 (1974).
• “The economics of brushing teeth” by Alan S. Blinder. Journal of Political Economy 82:887-91 (1974).
• “The Quality Theory of Money (or Glued Money Does Not Drive Out Bad Money)” by E. R. Weintraub, P. Gusen and T. Havrilesky. Intermountain Economic Review, vol. 5 no. 1 (Summer, 1974), pp. 107-108. (Hat tip to Jeff Rubin, who notes that the article “Basically discusses how we could use epoxy and other types of glues to slow the velocity of money and keep inflation under control including many examples of the use of similar ’strategies’ in other countries.”)
• “Life among the Econ” by Axel Leijonhufvud. Economic Inquiry 11:327-37 (1973). At the time, Economic Inquiry was called Western Economic Journal.
• “The Inverted Tetrahexahedron: A Personal Account of the Discovery of the Structure of the ICBM” by Dudley G. Luckett. Journal of Political Economy 79:933-37 (1971). (Hat tip to S. Subramanian.)
• “A first lesson in econometrics” by John J. Siegfried. Journal of Political Economy 78:1378-79 (1970).
• “The Golden Rule of Accumulation: A Fable for Growthmen” by Edmund Phelps (Nobel laureate, 2006). American Economic Review 51:638-643 (1961). Called “an entertaining classic” by the Royal Swedish Academy of Sciences.

The “assume a can opener” joke (from JokEc)

A physicist, a chemist and an economist are stranded on an island, with nothing to eat. A can of soup washes ashore. The physicist says, “Lets smash the can open with a rock.” The chemist says, “Lets build a fire and heat the can first.” The economist says, “Lets assume that we have a can-opener…”

Here’s what The Economist published (about their articles on the 2009 crisis in macroeconomic theory):

SIR – Having used my PhD in economics as a stepping stone to the more reputable field of stand-up comedy, it would be easy for me to spend all my time mocking macroeconomists. Consider, for example, that the current head of the Congressional Budget Office co-wrote a paper a few years back titled “Can Financial Innovation Help to Explain the Reduced Volatility of Economic Activity?”.

Here’s what I actually wrote them:

Sir: Having used my PhD in economics as a stepping stone to the more reputable field of stand-up comedy, it would be easy for me to spend all my time mocking macroeconomists—consider, for example, that the head of the Congressional Budget Office co-authored a paper a few years back titled “Can Financial Innovation Help to Explain the Reduced Volatility of Economic Activity?”—but the truth is that my fellow microeconomists must do some soul-searching too. The single-minded devotion to perfect competition in most micro classes means that they skip over topics like principal-agent problems and adverse selection that are at the heart of the current crisis. As in macro, the problem is too much price theory and not enough game theory.