We stay by funny economy today
Bill and Boris
are taking a break from a long summit, Boris says to Bill, -Bill, you know, I
have a big problem I don't know what to do about. I have a hundred bodyguards
and one of them is a traitor. I don't know which one. -Not a big deal Boris,
I'm stuck with a hundred economists I have to listen to all the time before any
policy decision, and only one tells the truth but it's never the same one.
Two government
economists were returning home from a field meeting. As with all government
travelers, they were assigned the cheapest seats on the plane so they each were
occupying the center seat on opposite sides of the aisle. They continued their
discussion of the knotty problem that had been the subject of their meeting through
takeoff and meal service until finally one of the passengers in an aisle seat
offered to trade places so they could talk and he could sleep. After switching
seats, one economist remarked to the other that it was the first time an
economic discussion ever kept anyone awake.
Robert J. BARRO
in his 1989 paper in the Journal of Economic Perspectives:
"A colleague of mine argues that a 'normative' model should be defined as
a model that fits the data badly."
Found in a paper of Anatol
RAPOPORT (Scientific American, July 1967) who tells the following joke which he
found in 'The Complete Strategist' by J. D. Williams:
"Two policemen are considering the problem of catching the bandit. One of
them starts to calculate the optimal mixed strategy for the chase. The other
policeman protests.
'While we're doodling,' he points out, 'he is making his getaway.'
'Relax,' says the game-theorist policeman. 'He's got to figure it out too,
don't he?'"
During the
waning days of communism in the Soviet Union, an
inspector was encharged with visiting local poultry farmers and inquiring about
the amount of feed they were giving their chickens. Central planning was still
in effect and each farmer was allocated 15 Roubles to spend on chicken feed.
One farmer very honestly answered
that he spent five of the allocated 15 Roubles on chicken feed. The inspector
took this to mean that the thieving farmer pocketed the other ten and promptly
had him imprisoned.
Hearing of this through the
rumour mill, the next farmer down the road insisted that he spent all 15
Roubles on food for the chickens. The inspector saw this as a case of
budget-padding and the farmer as a wasteful opportunist. He too was imprisoned.
The third farmer heard of both
episodes and was more prepared for the inspector's arrival.
"How many of the 15 Roubles
do you actually spend on chicken feed," asked the inspector.
Like a true nascent capitalist,
the farmer threw his hands in the air and answered, "hey! I give 15
Roubles to the chickens. They can eat whatever they want!"
Experienced
economist and not so experienced economist are walking down the road. They get
across shit lying on the asphalt.
Experienced economist: "If
you eat it I'll give you $20,000!"
Not so experienced economist runs his optimization problem and figures out he's
better off eating it so he does and collects money.
Continuing along the same road they almost step into yet another shit.
Not so experienced economist: "Now, if YOU eat this shit I'll give YOU
$20,000."
After evaluating the proposal experienced economist eats shit getting the
money.
They go on. Not so experienced economist starts thinking: "Listen, we both
have the same amount of money we had before, but we both ate shit. I don't see
us being better off."
Experienced economist: "Well, that's true, but you overlooked the fact
that we've been just involved in $40,000 of trade."
What's the
difference between economists and businessmen: the first don't keep their feet
on the ground; the latest use to keep their four feet in the ground
An economist is
someone who knows the price of everything and the value of nothing.
Following story
is to demonstrate some possible implications of the above statement. Two
stangers, a man and a woman, meet in a cafe, the man asks.
"My Dear, would you go to bed with me for a million dollars?"
"Well, yes, I guess I would."
"How about $100?"
"What kind of person do you think I am?"
"My Dear, we have already established that. We are merely haggling over
the price!"
According to Ross Emmet, the
story was told by George Bernard Shaw. The man and woman are Winston Churchill
and Lady Astor and the incident allegedly did occur.
Economists are
people who are too smart for their own good and not smart enough for anyone
else's.
From Ambrose
Bierce, The Devil's Dictionary:
Tariff -- A scale of taxes on
imports, designed to protect the domestic producer against the greed of his
consumer.
Economy -- Purchasing the barrel of whiskey that you do not need for the price
of the cow that you cannot afford.
A woman hears
from her doctor that she has only half a year to live. The doctor advises her
to marry an economist and to live in South Dakota. The woman asks: will this cure my
illness? Answer of the doctor: No, but the half year will seem pretty
long.
A boy was
crossing a road one day when a frog called out to him and said, "If you
kiss me, I'll turn into a beautiful princess." He bent over, picked up the
frog and put it in his pocket. The frog spoke up again and said, "If you
kiss me and turn me back into a beautiful princess, I will stay with you for
one week." The boy took the frog out of his pocket, smiled at it, and
returned it to his pocket. The frog then cried out, "If you kiss me and
turn me back into a princess, I'll stay with you and do ANYTHING you
want." Again the boy took the frog out, smiled at it and put it back into
his pocket. Finally, the frog asked, "What is the matter? I've told you
I'm a beautiful princess, that I'll stay with you for a week and do anything
you want. Why won't you kiss me?" The boy said, "Look, I'm an
economist. I don't have time for a girlfriend, but a talking frog is
cool."
Q:Why did God
create economists ?
A:In order to make weather
forecasters look good.
Q: Why did the
economist cross the road?
A: It was the chicken's day
off.
Q. What does an
economist do?
A. A lot in the short run, which
amounts to nothing in the long run.
Two economists
meet on the street. One inquires, "How's your wife?" The
other responds, "Relative to what?"
To an economist,
real life is a special case.
Allow me to tell
one joke in Finnish... its difficult to translate without loosing the funny
point...
K: Miten ekonomi ja ekonomisti eroavat toisistaan?
V: Samalla
tavoin kuin alkoholi ja alkoholisti!
...and one joke in German
as requested...
Zwei
Geraden treffen sich in der Unendlichkeit. Sagt die eine: "Aus dem Weg,
sonst leit' ich dich ab!" Antwortet die andere: "Aetsch! Ich bin eine
e-Funktion."
I asked an
economist for her phone number....and she gave me an estimate.
One more
lightbulb joke:
Q: How many economists does it
take to change a lightbulb?
A: Eight. One to screw it in and seven to hold everything else constant.
Conversation
between two Dinosaurs:
Dinosaur #1: "How many
economists does it take to screw in a light bulb?"
Dinosaur #2: "What is an economist?"
Dinosaur #1: "A flunkie mathematician who tries to predict the population
of kangaroos in Australia. But that's not important and don't ask
what a Kangaroo is."
Dinosaur #2: "I don't know, how many?"
Dinosaur #1: "10 economists and one grad student. One economist to make a
model, one to run the regression, one to test the hypothesis, one to interpret
the results, one to conclude how to screw it on, one grad student to screw it
on, and five economists trying to fight off the dinosaurs trying to eat
them.
Economists have
forecasted 9 out of the last 5 recessions.
An
econometrician and an astrologer are arguing about their subjects. The
astrologer says, "Astrology is more scientific. My predictions come out
right half the time. Yours can't even reach that proportion". The
econometrician replies, "That's because of external shocks. Stars
don't have those".
SOCIALISM: You
have two cows. State takes one and give it to someone else.
COMMUNISM: You have two cows. State takes both of them and gives you milk.
FASCISM: You have two cows. State takes both of them and sell you milk.
NAZISM: You have two cows. State takes both of them and shoot you.
BUREAUCRACY: You have two cows. State takes both of them, kill one and spill
the milk in system of sewage.
CAPITALISM: You have two cows. You sell one and buy a bull.
Alternative: A
COWSMIC VIEW OF WORLD ORGANIZATION
FEUDALISM: You have two cows.
Your lord takes some of the milk.
PURE SOCIALISM: You have two
cows. The government takes them and puts them in a barn with everyone else's
cows. You have to take care of all the cows. The government gives you as much
milk as you need.
BUREAUCRATIC SOCIALISM: You have
two cows. The government takes them and puts them in a barn with everyone
else's cows. They are cared for by ex-chicken farmers. You have to take care of
the chickens the government took from the chicken farmers. The government gives
you as much milk and as many eggs as the regulations say you should need.
FASCISM: You have two cows. The
government takes both, hires you to take care of them, and sells you the milk.
PURE COMMUNISM: You have two
cows. Your neighbors help you take care of them, and you all share the milk.
RUSSIAN COMMUNISM: You have two
cows. You have to take care of them, but the government takes all the milk.
DICTATORSHIP: You have two cows.
The government takes both and shoots you.
SINGAPORE DEMOCRACY: You have two cows. The
government fines you for keeping two unlicensed animals in an apartment.
MILITARIANISM: You have two cows.
The government takes both and drafts you.
PURE DEMOCRACY: You have two
cows. Your neighbors decide who gets the milk.
REPRESENTATIVE DEMOCRACY: You
have two cows. Your neighbors pick someone to tell you who gets the milk.
AMERICAN DEMOCRACY: The
government promises to give you two cows if you vote for it. After the
election, the president is impeached for speculating in cow futures. The press
dubs the affair "Cowgate".
BRITISH DEMOCRACY: You have two
cows. You feed them sheep's brains and they go mad. The government doesn't do
anything.
BUREAUCRACY: You have two cows.
At first the government regulates what you can feed them and when you can milk
them. Then it pays you not to milk them. After that it takes both, shoots one,
milks the other and pours the milk down the drain. Then it requires you to fill
out forms accounting for the missing cows.
ANARCHY: You have two cows.
Either you sell the milk at a fair price or your neighbors kill you and take
the cows.
CAPITALISM: You have two cows.
You sell one and buy a bull.
HONG KONG CAPITALISM: You have two cows. You sell
three of them to your publicly listed company, using letters of credit opened
by your brother-in-law at the bank, then execute a debt/equity swap with
associated general offer so that you get all four cows back, with a tax
deduction for keeping five cows. The milk rights of six cows are transferred
via a Panamanian intermediary to a Cayman Islands company secretly owned by the majority shareholder, who sells the
rights to all seven cows' milk back to the listed company. The annual report
says that the company owns eight cows, with an option on one more. Meanwhile,
you kill the two cows because the Feng Shui is bad.
ENVIRONMENTALISM: You have two
cows. The government bans you from milking or killing them.
FEMINISM: You have two cows. They
get married and adopt a veal calf.
TOTALITARIANISM: You have two
cows. The government takes them and denies they ever existed. Milk is banned.
POLITICAL CORRECTNESS: You are
associated with (the concept of "ownership"is a symbol of the
phallo-centric, war-mongering, intolerant past) two differently-aged (but no
less valuable to society) bovines of non-specified gender.
COUNTER CULTURE: Wow, dude,
there's like... these two cows, man. You got to have some of this milk. Far
out! Awesome!
SURREALISM: You have two
giraffes. The government requires you to take harmonica lessons.
JAPANESE DEMOCRACY: You have two
cows. You give the milk to gangsters so they don't ask any awkward questions
about who you're giving the milk to.
EUROPEAN FEDERALISM: You have two
cows which cost too much money to care for because everybody is buying milk
imported from some cheap east-European country and would never pay the fortune
you'd have to ask for your cows' milk. So you apply for financial aid from the
European Union to subsidise your cows and are granted enough subsidies. You
then sell your milk at the former elevated price to some government-owned
distributor which then dumps your milk onto the market at east-European prices
to make Europe competitive. You spend the money you
got as a subsidy on two new cows and then go on a demonstration to Brussels complaining that the European
farm-policy is going drive you out of your job.
EASTERN EUROPEAN DEMOCRACY: You
have two cows. You sell the milk (diluted with some water) at a high price to
the neighbors or to anyone at the open-air market. If somebody asks for
receipt, you charge for a two times higher price, so nobody will request an
invoice. For concerned families with small babies you claim that the milk is
"bio", though you collect the grass for feeding at the side of the
highway and you keep the milk in plastic barrels used previously as containers
of dangerous chemicals. Later, your neighbor or anybody from town will steal
the cows and will buy their meat for a high price, and if you ask for a
receipt, you will be charged for a two times higher price.
FINNISH SOCIALISM: You have two
cows. Soon you have to kill one of them because in the Netherlands there is an overproduction of milk and
the European Union rules say so. When you do so, you realize that it was not
necessary, only the system was too slow in getting you the up-to-date news.
From the stress, you get an ulcer in your stomach so you go to a doctor. The
doctor realizes that this ulcer is a serious one, so you need an urgent
treatment. Therefore, you soon get a call to the local hospital. The call's
date is for 3 months later, because there is a queue with more urgent cases.
Then your ulcer becomes even more serious because you remember that 40 percent
of your income is taken for social tax.
Q: What do you
call a little girl in a brown dress who is running across a playground?
A: A brownian motion.
David Gunn (Scotland): "Eighty percent of rules of
thumb only apply 20 percent of the time"
This one I
attribute to Richard Thaler, now at the Univ of Chicago.
When an economist says the
evidence is "mixed," he or she means that theory says one thing and
data says the opposite.
From Peter
Kennedy's "A Guide to Econometrics" (MIT Press, 1992):
(P. 7) [Econometrics is...] the
art of drawing a crooked line from an unproved assumption to a foregone
conclusion."
True story: One
day in microeconomics, the professor was writing up the typical
"underlying assumptions" in preparation to explain a new model. I
turned to my friend and asked, "What would Economics be without
assumptions?" He thought for a moment, then replied,
"Accounting."
Q: Why has
astrology been invented? A: So that economy could be an accurate science.
This is a true
story:
Back in the mid-1970s, I attended
an ASSA/AEA convention in Dallas. During the third day of the convention, one of the bellhops at the
convention hotel asked me who the people attending the convention were and what
we did for a living.
"We're economists," I replied. "Why do you ask?"
"I don't know..... no women, no drugs, just booze, booze, booze."
John Palmer
An old joke applied to economists.
One night a policeman saw a macroeconomist looking for something buy a
lightpole. He asked him is had had lost something there. The
economist said, "I lost my keyes over in the alley." The
policeman asked him why he was looking by the lightpole. The economist
responded, "it's a lot easier to look over here."
This tale is said to be told by John Kenneth Galbraith on himself. As a boy he
lived on a farm in Canada. On the adjoining farm, lived a girl he
was fond of. One day as they sat together on the top rail of the cattle
pen they watced a bull servicing a cow. Galbraith turned to the girl, with what
he hoped was a suggestive look, saying, "That looks like it would be
fun." She replied, "Well....she's your
cow."
An economist is someone who gets rich explaining others why they are poor.
Not a joke as such, but (a true story, apparently, as told by a Finance
lecturer at LSE):
An economist was about to give a
presentation in Washington, DC on the problems with Black-Scholes model of
option pricing and was expecting no more than a dozen of government officials
attending (who would bother?). To his amazement, when he arrived, the room was
packed with edgy, tough-looking guys in shades. Still, after five or so minutes
into the presentation all of them stood up and left without a word. The
economist found out only later
that his secretary ran the presentation through a spell-checker and what was
"The Problem with Black-Scholes" became "The Problem with
Black Schools", a rather more fascinating subject.
The last severe depression and banking crisis could not have been achieved by
normal civil servants and politicians, it required economists involvement.
"I'd rather be vaguely right than precisely wrong."
- J.M.Keynes; Found in Forbes
magazine 01/25/1999 issue. In the Numbers Game column by Bernard
Cohen
A joke from the
October 1992 Reader's Digest, the Best Medicine section:
"I'm thinking of leaving my
husband," complained the economist's wife.
"All he ever does is stand at the end of the bed and tell me how good
things are going to be."
Q: Why do social
workers refuse to sleep with economists?
A: They have learned its a sunk cost.
Q: Why do
Economists provide estimates of inflation to the nearest tenth of a percent?
A: To prove they have a sense of humour.
"Economic
statistics are like a bikini, what they reveal is important, what they conceal
is vital"
- Attributed to Professor Sir Frank Holmes, Victoria University, Wellington,
New Zealand, 1967.
"An
economist is a person who confronted with a eight foot high wall, immediately
assumes he is ten feet tall."
- Attributed to John Zanetti, Senior Lecturer, Victoria University, Wellington, New Zealand 1971.
Contagion: A
strory demostrating the possible outcomes from interlinkages in the financial
markets.
Back during the Solidarity days,
I heard that the following joke was being told in Poland:
A man goes into the Bank of Gdansk to make a deposit. Since he has never
kept money in a bank before, he is a little nervous.
"What happens if the Bank of Gdansk should fail?" he asks.
"Well, in that case your money would be insured by the Bank of
Warsaw."
"But, what if the Bank of Warsaw fails?"
"Well, there'd be no problem, because the Bank of Warsaw is insured by the
National Bank of Poland."
"And if the National Bank of Poland fails?"
"Then your money would be insured by the Bank of Moscow."
"And what if the Bank of Moscow fails?"
"Then your money would be insured by the Great Bank of the Soviet Union."
"And if that bank fails?"
"Well, in that case, you'd lose all your money. But,
wouldn't it be worth it?"
Seven habits
that help produce the anything-but-efficient markets that rule the world by
Paul Krugman in Fortune.
1. Think short term.
2. Be greedy.
3. Believe in the greater fool
4. Run with the herd.
5. Overgeneralize
6. Be trendy
7. Play with other people's money
Phelson's Law
(or so I was told)
Copying an idea from an author is plagiarism. Copying many ideas from
many authors is... research !!
These deep
thoughts of colleague economists were originally collected by Hiroyuki
Kawakatsu
How to do research
Keep the ass to the chair.
-James Buchanan
Everything has been thought
before, but the problem is to think of it again.
-Goethe
Concepts without perceptions are
empty; perceptions without concepts are blind.
-Kant
Mathematics has no symbols for
confused ideas.
-George Stigler
All models are wrong but some are
useful.
-George Box
Far better an approximate answer
to the right question, which is often vague, than an exact answer to the wrong
question, which can always be made precise.
-J. Tukey
The paradox is now fully
established that the utmost abstractions are the true weapons with which to
control our thought of concrete fact.
-A. Whitehead
In the long-run, there's just
another short-run.
-Abba Lerner
Life can only be understood
backwards, but it must be lived forwards.
-Kierkegaard
Someone once said about partisan
analysts that they use economic data the way a drunkard uses a lamppost: for
support rather than illumination. Or as Disraeli put it, there are three kinds
of lies: lies, damn lies, and statistics.
-Paul Krugman
Theories are testable where they
are least needed, and are not testable where they are most needed.
-Charles Manski
If you torture the data long
enough, Nature will confess.
-Ronald Coase
There are two things you are
better off not watching in the making: sausages and econometric estimates.
-Edward Leamer
Doing econometrics is like trying
to learn the laws of electricity by playing the radio.
-Guy Orcutt
Any observed statistical
regularity will tend to collapse once pressure is placed upon it for control
purposes.
-Charles Goodhart
Time series regression studies
give no sign of converging toward the truth.
-Phillip Cagan
Any time series regression
containing more than four independent variables results in garbage
-Zvi Griliches
Forecasting is like trying to
drive a car blindfolded and following directions given by a person who is
looking out of the back window
-Anonymous
Given the choice between Bob
Solow and an econometric model to make forecasts, I'd choose Bob Solow; but I'd
rather have Bob Solow with an econometric model, than Bob Solow without one
-Paul Samuelson
Keep in mind the three most
important aspects of real data analysis: compromise, compromise, and
compromise.
-Edward Leamer
The four golden rules of
econometrics:
1.Think brilliantly,
2.Be infinitely creative,
3.Be outstandingly lucky,
4.Otherwise, stick to being a theorist
-David Hendry
A good empirical study requires
three components:
1.A concise and sensible theoretical framework that is related to the questions
to be asked,
2.Reasonably good data, and
3.An experiment or an event or a set of circumstances that give the data a
chance to answer the questions asked. In short, the model needs to be
identifiable from the data at hand.
-Zvi Griliches
Two students of
economics at lunch:
Student 1" 'Do you know what are the two most important degrees in economics?"
Student 2:"The MSc and the PhD?" Student 1:"No, the zeroth and
the first!"
In explaining
why she felt our relationship had problems, a former girlfriend (an English
teacher) told me that the problem was that I was so ... so ... reasonable. (David
Colander)
+With
simultaneous low inflation and low unemployment in the US persisting for some time, certain
policy-makers at the Fed are beginning to think NAIRU stands for Nothing About
Inflation (is) Related (to) Unemployment.
- Chris Varvares (September 2000)
+A true story:
A game theorist was talking to a group of psychologists at a conference. The
conversation turned to children. He said that he does not intend his children
to get any money from him now that they are grown. "In fact, if I have so
much as a penny to my name on the day I die, it will only be because I
miscalculated my utility."
+In the Soviet Union, Stalin asked the Minister of Finance
to give him an advice as to the establishment of the ruble convertibility. The
minister produced a thick document, arguing in favor of establishment the rate
1 dollar = 14 rubles. Stalin looked at it and did not like that ruble is so
undervalued. He took his red pencil and eliminated "1". The exchange
rate was established at 1 dollar = 4 rubles.
An economics journal article
should be like a woman's skirt: short enough to be provocative; long enough to
have something substantial underneath.
- Gerard Debreu (?)
+ A student was sitting in an
econometric class taught by Prof White. The lecture was too difficult that few
students understood it.
"What is the lecture
all about?" A student asked his friend who was sitting right next to him.
"I don't quite understand it either. All I get is, it's just some
noise...specifically, white noise. He said we can expect it to be nothing on
average."
+ When doctors make mistakes, at
least they kill their patients. When economists make mistakes, they
merely ruin them.
An economist is someone who has
had a human being described to him, but has never actually seen one.
There are three sorts of
economist. Those who can count, and those who can't.
Grow your own dope -- plant an
economist.
Economic forecasters assume
everything, except responsibility.
Economics is to be found in the
library -- beyond fiction.
You know the difference between a
dead economist and a dead cat. There are usually skid marks in front of the
dead cat.
I begin with the assumption that
economists have their uses. I know many of you will disagree with this, but as
economists themselves say, 'we can relax the assumption later'.
Several academics are asked
whether all odd numbers are prime:p> Mathematician: let's see...3 is prime,
5 is prime, and the result follows by induction.
Physicist: let's see...3 is prime, 5 is prime, 7 is prime, 9 is -- experimental
error, 11 is prime, 13 is prime, ...
Engineer: let's see...3 is prime, 5 is prime, 7 is prime, 9 is prime, 11 is
prime...
Computer Scientist: let's see...3 is prime, 3 is prime, 3 is prime...
Economist: let's see...2 is prime, 4 is prime, 6 is prime...
(the joke has apparently very
little to do with economics, but if it makes you laugh...)
An econometrician E.M. left his
office after a long day of doing estimations. When arriving at the parking
lots, he could not find his car because he could not remember the exact place
where he left it. After pondering a while, he stopped at an empty lot and
started cursing, "they stole my car, those bloody bandits". He called
in the police who started taking notes after arrival. A friend from the history
department passed along. After listening to what had happened he said,
"hey, your car is 25 meters over there, didn't you realize?"
The econometrician said, "Can't be, this is the mean value of the
distribution of my past choices of lots".
"I once read about a meeting
of economists who agreed that if their forecasts were 33 1/3 % correct, that
was considered a high mark in their profession. Well, of course, I know you
cannot invest in securities successfully with odds like that against you if you
place dependence solely upon judgement as to the right securities to own and
the right time or price to buy them. Then, too, I read somewhere about the man
who described an economist as resembling 'a professor of anatomy who was still
a virgin.'"
-Gerald M Loeb (1935, 1965 ed.) "The Battle for Investment
Survival"
Economics-everything we know in a
language we don't understand.
A voice from
history.
"Not all Germans
believe in God but they believe in the Bundesbank"
Jacques Delors former
president of European Commission
in FT December 15,1998
A real story
One day, the professor who
taught Money and Banking in Buenos Aires told us: "I do not know if you
will find a job as economists, but am sure you will know why you are going to
be poor"
