Monday, July 05, 2010

Doomed to Repeat...

The New York Times has They Did Their Homework (800 Years of It), a nice article on Rogoff and Reinhardt, the authors of This Time Is Different: Eight Centuries of Financial Folly , a detailed economic look at bubbles and crashes through the last 800 years of history.

Harvard professor Rogoff is an interesting character in his own right, a one-time chess prodigy, a master at age fourteen who quit high school at sixteen to become an itinerant pro in Europe, winning the GM title before returning to the US and college.

In Catherine Rampell's NYT article the authors data focussed approach is contrasted with the theory minded approach that has recently dominated academic econ. He mentions economists frequently noted "physics envy" as a culprit. Of course I think he undermines his case there by telling his "favourite economics joke."

ONE of Ken Rogoff’s favorite economics jokes — yes, there are economics jokes — is “the one about the lamppost”: A drunk on his way home from a bar one night realizes that he has dropped his keys. He gets down on his hands and knees and starts groping around beneath a lamppost. A policeman asks what he’s doing.

“I lost my keys in the park,” says the drunk.

“Then why are you looking for them under the lamppost?” asks the puzzled cop.

“Because,” says the drunk, “that’s where the light is.”

Damn! I would have sworn that was a physics (statistical mechanics) joke, but maybe statisticians would say otherwise - though I always thought they were a pretty humorless lot.