Oh, my pleasure. Economics is super neat and really changes the way you look at things, so I’m always super happy when someone gets into it and starts learning about this stuff. And then I write something super long telling them how super wrong they are....
Actually, the distinction between unemployed and nonemployed is very important. First of all, the blurring of terminology leads to more of the same, as some of the comments about frictions show. And more to the point, whether someone is unemployed, in the economics jargon, is a question about how they relate to an equilibrating market price. All the questions of information, friction, and macroeconomic disturbances boil down to the dynamics of this system. As the comments show, by blurring the lines between nonemployment and unemployment, a very confused sort of analysis results where markets never clear, frictions are rampant and virtually insurmountable, and macroeconomics seems divorced from common experience.
As for irrational and rational, fine, words are...wordy, but in a post about economics, readers might understandably think that you are using the sense of irrationality peculiar to economics rather than the sense of irrationality peculiar to this site. And, as a matter of personal and observed experience, I think you will go a lot farther in economics by calling nothing irrational under all possible explanations have been exhausted—because in economics, whatever you intend to intend by the word, “irrational” means “I’m done here.” Trying to come up with reasons why an individual resisting a nominal wage decrease is actually rational can be very elucidating. Relative status is only one possible explanation, and it could be a proxy for more, um, financially motivations.
is a question about how they relate to an equilibrating market price.
And this is, to my mind, a misleading though possibly useful simplification. People exhibit path dependence, moods, have issues of pride, resentment, have possibly fluctuating principles and energy levels, etc. Pretending that there is a single market price at which someone would work at, and using this to distinguish between unemployed and nonemployed might be useful in a model, but is a mistake if taken as a view of reality (and can lead to excessive respect for concepts such as “revealed preferences”, which are are only partially true).
There’s a reason that people stereotype economics as over-simplified, and its because many people do use the models in an over-simplified manner.
I feel the same about “irrational”. Someone can be economically rational while behaving in a stupid, counter-productive, and biased fashion. However, because of the connotations of “rational” in everyday speech, some people seem to feel that that’s not possible.
People will work at many prices. I’ll work practically anything at a million dollars an hour, and even more so at a billion dollars an hour. There are rather fewer prices, however, that will equate quantity supplied to quantity demanded, where both quantity supplied and quantity demanded should be understood as points on a supply/demand schedule describing the amount people want to sell/buy at that particular price.
I’m working on a series of articles about economics I hope to start posting fairly soon. I’m sure you’ll find them interesting....
Oh, my pleasure. Economics is super neat and really changes the way you look at things, so I’m always super happy when someone gets into it and starts learning about this stuff. And then I write something super long telling them how super wrong they are....
Actually, the distinction between unemployed and nonemployed is very important. First of all, the blurring of terminology leads to more of the same, as some of the comments about frictions show. And more to the point, whether someone is unemployed, in the economics jargon, is a question about how they relate to an equilibrating market price. All the questions of information, friction, and macroeconomic disturbances boil down to the dynamics of this system. As the comments show, by blurring the lines between nonemployment and unemployment, a very confused sort of analysis results where markets never clear, frictions are rampant and virtually insurmountable, and macroeconomics seems divorced from common experience.
As for irrational and rational, fine, words are...wordy, but in a post about economics, readers might understandably think that you are using the sense of irrationality peculiar to economics rather than the sense of irrationality peculiar to this site. And, as a matter of personal and observed experience, I think you will go a lot farther in economics by calling nothing irrational under all possible explanations have been exhausted—because in economics, whatever you intend to intend by the word, “irrational” means “I’m done here.” Trying to come up with reasons why an individual resisting a nominal wage decrease is actually rational can be very elucidating. Relative status is only one possible explanation, and it could be a proxy for more, um, financially motivations.
Cheers!
And this is, to my mind, a misleading though possibly useful simplification. People exhibit path dependence, moods, have issues of pride, resentment, have possibly fluctuating principles and energy levels, etc. Pretending that there is a single market price at which someone would work at, and using this to distinguish between unemployed and nonemployed might be useful in a model, but is a mistake if taken as a view of reality (and can lead to excessive respect for concepts such as “revealed preferences”, which are are only partially true).
There’s a reason that people stereotype economics as over-simplified, and its because many people do use the models in an over-simplified manner.
I feel the same about “irrational”. Someone can be economically rational while behaving in a stupid, counter-productive, and biased fashion. However, because of the connotations of “rational” in everyday speech, some people seem to feel that that’s not possible.
People will work at many prices. I’ll work practically anything at a million dollars an hour, and even more so at a billion dollars an hour. There are rather fewer prices, however, that will equate quantity supplied to quantity demanded, where both quantity supplied and quantity demanded should be understood as points on a supply/demand schedule describing the amount people want to sell/buy at that particular price.
I’m working on a series of articles about economics I hope to start posting fairly soon. I’m sure you’ll find them interesting....