David R. Henderson

Great Lines from Bob Solow

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On February 25, I posted some lines from an Arjo Klamer interview with Bob Lucas and promised to post some of my other favorites. The interview with Bob Solow of MIT has a lot of my favorites. All of these interviews are in Klamer's Conversations with Economists. I first met Solow when I was an undergrad for a year, 1971-72, at the University of Western Ontario in London. In the winter, Solow came to UWO as part of an accreditation team and undergrads were encouraged to visit him. I think I was the only one who took up the offer and we talked for about 30 minutes.

Some highlights:

Asked how it works when Solow tries to talk to Bob Lucas and Tom Sargent, Solow replies:
It doesn't work very well. There are two reasons for that, I guess. One reason is that we really start from very different assumptions about the economy, so it is very hard to communicate seriously. Frank Ramsey, a philosopher, once said that many conversations strike him as analogous to the following conversation: "I went to Grantchester today." "That is funny, I didn't."

A few lines later, Solow says: [I]n any conversation between say Lucas or Sargent and me, there is an element of game playing. There is a tendency to grab a debating point whenever you see it.

Klamer: Why is that?

Solow: I suppose that each of us has self respect to maintain. No good motives, only bad motives. If we were all better people, it would not happen. We have positions and we want to defend those, not merely seek the truth.

And later:
It happened to me once at the National Bureau of Economic Research; it didn't go very well. The reason it doesn't go well is, I think, that I say something within my set of assumptions, and Barro will say in effect (but not in these words) that it is absolute nonsense, meaning by that it is nonsense on his assumptions. So I will say in return, "That is funny, I did not go to Grantchester."

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CATEGORIES: Macroeconomics

COMMENTS (3 to date)
Barkley Rosser writes:

Hmmmm. While I think it is true that both Solow and Lucas are pretty set in their views, Sargent has actually adjusted his somewhat over time. In particular, after spending some time at the Santa Fe Institute in the early 90s, he relaxed his support for rational expectations, while not completely abandoning it. His later view has been more along the lines of that in reality people use some form or other of adaptive expectations, but that over time they tend towards adopting rational expectations.

Carl The EconGuy writes:

I suppose physicists can have a conversation about assumptions - "I don't believe the speed of light is an ultimate limit, gravity is not a constant, and pi has a finite number of decimals." If they did have such discussions, they could agree on testable (or non-) empirical implications, and it's hard to believe that they'd get very emotional about it. They can even discuss reasonably, these days, whether there are lots of different dimensions holding string theory together -- something totally untestable.

So, why was Solow so negative to rational expectations? After all, it's a testable assumption. As a working hypothesis, it has a lot going for it, and finding its limits should be thought of as an exciting scientific quest. To dismiss that by saying Grantchester is pretty haughty and may suggest a closed mind. Perhaps it made him think he's a philosopher, whereas Lucas was just a lousy statistician, lower than a dog. That's not an usual academic approach to dismissing critics, now is it? But should that be acceptable in economics?

Or is it that all economics is at heart a more emotional than rational discipline, that someone's "assumptions" are merely expressions of a desire to see the world as it ought to be rather than as it might really be? I fear that the latter explanation has more than a grain of truth. A lot of economists, especially these days, seem fearful of having their basic assumptions questioned. Just ask people what they think of "multipliers" and you're likely to get things thrown your way.

Donald W. writes:

Maybe they just enjoy disagreeing for argumentative sake.

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