An Applied Economist

1
An Applied Economist

• Emery N. Castle
• October 6, 2005

2
The Iron Triangle

• Economic Theory
• Intellectual Stimulation
• Philosophy of Science

THE IRON TRIANGLE

• Professional Responsibilities
• Public
• Colleagues
• Students
• Undergraduate
• Graduate
• Administration

• Applied Economics
• Research
• Administration
• Public Service

3
Adam Smith, The Wealth of Nations (1776)

• every individual necessarily labours to render
  the annual revenue of society as great as he can.
  He generally, indeed, neither intends to promote
  the public interest, nor knows how much he is
  promoting it. ...he intends his own gain, and is
  in this, as in many other cases, led by an
  invisible hand to promote an end that was not a
  part of his intention. ... By pursuing his own
  interest he frequently promotes that of society
  more effectually than when he really intends to
  promote it. I have never known much good done by
  those who affected to trade for the public good.
  It is an affection, indeed, not very common among
  merchants, and very few word need be employed in
  dissuading them from it.

Bold and underlining made by Emery Castle.
4
Normal and Revolutionary Science (Kuhn)

• Normal Science
• Methodology and technique
• Puzzle solving
• Empirical observations
• Revolutionary Science
• A new view of old problems
• Anomalies

5
Science and Applied Science
Normal Science
Revolutionary Science
Applied Science
6
The Inexact and Separate Science of Economics
(Hausman)

• Separate
• Inexact
• All items, not exact
• Incomplete (Castle)
• Exact, but not all

7
Economic Assumptions

• The acquisition of wealth is the primary
  motivation of producers
• The acquisition of goods and services is the
  primary motivation of consumers
• Producers and consumers have access to the same
  information and are equally well informed
• Goods and services are homogeneous within a given
  market

8
In Summary

• Applied economics has ties to both normal and
  revolutionary economics
• Applied economics encourages revolutionary
  economics by
• The preservation and interpretation of anomalies
  and,
• The education of graduate students
• A separate discipline of economics does not
  preclude consideration of other viewpoints
• An inexact or incomplete theory becomes serious,
  only if not recognized or if denied