Offering a unifying theoretical perspective not readily available in any other text, this innovative guide to econometrics uses simple geometrical arguments to develop students' intuitive understanding of basic and advanced topics, emphasizing throughout the practical applications of modern theory and nonlinear techniques of estimation. One theme of the text is the use of artificial regressions for estimation, reference, and specification testing of nonlinear models, including diagnostic tests for parameter constancy, serial correlation, heteroscedasticity, and other types of mis-specification. Explaining how estimates can be obtained and tests can be carried out, the authors go beyond a mere algebraic description to one that can be easily translated into the commands of a standard econometric software package. Covering an unprecedented range of problems with a consistent emphasis on those that arise in applied work, this accessible and coherent guide to the most vital topics in econometrics today is indispensable for advanced students of econometrics and students of statistics interested in regression and related topics. It will also suit practising econometricians who want to update their skills. Flexibly designed to accommodate a variety of course levels, it offers both complete coverage of the basic material and separate chapters on areas of specialized interest.

Estimation and Inference in Econometrics

Criticism and the Growth of Knowledge. Edited by I. Lakatos and A. Musgrave. Pp. viii, 282. £3·50, paperback £1. 1970. (Cambridge University Press.)

Beginning with Emlen (1966) and MacArthur and Pianka (1966) and extending through the last ten years, several authors have sought to predict the foraging behavior of animals by means of mathematical models. These models are very similar,in that they all assume that the fitness of a foraging animal is a function of the efficiency of foraging measured in terms of some "currency" (Schoener, 1971) -usually energy- and that natural selection has resulted in animals that forage so as to maximize this fitness. As a result of these similarities, the models have become known as "optimal foraging models"; and the theory that embodies them, "optimal foraging theory." The situations to which optimal foraging theory has been applied, with the exception of a few recent studies, can be divided into the following four categories: (1) choice by an animal of which food types to eat (i.e., optimal diet); (2) choice of which patch type to feed in (i.e., optimal patch choice); (3) optimal allocation of time to different patches; and (4) optimal patterns and speed of movements. In this review we discuss each of these categories separately, dealing with both the theoretical developments and the data that permit tests of the predictions. The review is selective in the sense that we emphasize studies that either develop testable predictions or that attempt to test predictions in a precise quantitative manner. We also discuss what we see to be some of the future developments in the area of optimal foraging theory and how this theory can be related to other areas of biology. Our general conclusion is that the simple models so far formulated are supported are supported reasonably well by available data and that we are optimistic about the value both now and in the future of optimal foraging theory. We argue, however, that these simple models will requre much modification, espicially to deal with situations that either cannot easily be put into one or another of the above four categories or entail currencies more complicated that just energy.

Citation classic - optimal foraging - a selective review of theory and tests

Knowledge Management

Econometric policy evaluation: A critique

Forensic science error rates are needlessly high. Applying the perspective of veritistic social epistemology to forensic science could produce new institutional designs that would lower forensic error rates. We make such an application through experiments in the laboratory with human subjects. Redundancy is the key to error prevention, discovery, and elimination. In the "monopoly epistemics" characterizing forensics today, one privileged actor is asked to identify the truth. In "democratic epistemics," several independent parties are asked. In an experiment contrasting them, democratic epistemics reduced the rate at which biased observers obscured the truth by two-thirds. These results highlight, first, the potential of "epistemic systems design," which employs the techniques of economic systems design to address issues of veracity rather than efficiency, and second, the value of "experimental epistemology," which employs experimental techniques in the study of science.

Epistemics for Forensics

The origin of economic niches, conceived as potential markets, has been mostly neglected in economic theory. Ecological niches emerge as new species evolve and fit into a web of interactions, and the more species come into existence, the more (exponentially or power-law distributed) ecological niches emerge. In parallel fashion, economic niches emerge with new goods, and niche formation in economics is also exponentially or power-law distributed. In economics and ecology alike, autocatalytic processes drive the system to greater and greater diversity. Novelty begets novelty in a positive feedback loop. An autocatalytic set of self-enabling transactions feed back upon one another in combinatoric fashion to generate progressive diversity. While these combinatorial dynamics cannot be prestated, the model explains the “hockeystick of economic growth”—a pattern of prolonged stasis followed by a sudden takeoff, such as occurred during the Industrial Revolution or the Cambrian explosion in ecology. Several implications derive from our niche emergence model, including the idea that the evolutionary process of technological change is not something we do; rather, it happens to us.

https://link.springer.com/content/pdf/10.1007/s10818-020-09295-4.pdf

On the emergence of ecological and economic niches

When Do Ideas Matter? A Study in the Natural Selection of Social Games

The American criminal justice system creates incentives for false conviction. For example, many public crime labs are funded in part per conviction. We show that the number of false convictions per year in the American criminal justice system should be considered “high.” We examine the incentives of police, forensic scientists, prosecutors, and public defenders in the U.S. Police, prosecutors, and forensic scientists often have an incentive to garner convictions with little incentive to convict the right person. These incentives create what economists call a “multitask problem” that seems to be resulting in a needlessly high rate of false convictions. Public defenders lack the resources and incentives needed to provide a vigorous defense for their clients. Corrective measures are discussed, along with a call for more research.

/pdf/the-criminal-justice-system-creates-incentives-for-false-42kanw6qox.pdf

The Criminal Justice System Creates Incentives for False Convictions

Unplanned order is the leading problem of economics. Its periodic failure is the leading problem of macroeconomics. Both problems are very much problems of expectations. How is possible that we can plan our affairs more or less harmoniously? And why is it that our plans periodically fail to cohere to the usual degree? How is it possible, in other words, that our expectations are generally more or less fulfilled yet sometimes go spectacularly wrong? Different solutions have been proposed to the problem of expectations. Today's most popular solution is based on the plausible assumption that people do the best they can. If so, the theory goes, we should imagine the errors in their parameter estimates to be distributed about the true mean. Otherwise, a profit can be got from knowing the sign of the bias; and no profit opportunity goes unnoticed for long. The rational-expectations modeling technique makes expectations endogenous and a function of observed data. This technique is not very useful when one wishes to explain systematic error. Another solution is based on the equally plausible assumption that people's expectations are thoughts about the future. If so, the theory goes, we must not imagine that economic actors can do what we cannot, namely, see the future. We do not make rational calculations of prospective profit because we can not. Instead, \"animal spirits\" drive us to take on entrepreneurial risks. The radical subjectivism of J.M. Keynes makes expectations exogenous and largely a function of psychological waves of optimism and pessimism. The radical Keynesian understanding of expectations is weak on why things ever go right.

Roger Koppl

Papers

Epistemics for Forensics

On the emergence of ecological and economic niches

When Do Ideas Matter? A Study in the Natural Selection of Social Games

The Criminal Justice System Creates Incentives for False Convictions

Hayek and kirzner at the keynesian beauty contest