Nobel Prize for Economics

[ALB]

Have people noticed what it's been awarded for? From today's Times:

Quote:

Their studies helped to improve efficiency in markets where price was not an issue, matching doctors to hospitals, students to dorm rooms and organs to transplant patients.(…)

Such matching arrangements are essential in most Western countries where organ-selling is illegal, and the free market cannot do the normal work of resource allocation. (…)

Professor Shapley, who is 89, began the theoretical spade-work in the 1950s and 1960s, using game theory to analyse different matching methods. In the 1990s, Professor Roth, now 60, working independently, applied similar theories to more practical matters, helping to allocate student doctors to particular hospitals and later providing the theoretical underpinning to streamline organ donation. Professor Roth is regarded as an authority on a field known colloquially as ‘repugnance economics’ — in essence, the study of transactions where the application of the price mechanism is regarded as morally repugnant, such as the sale of body parts, sperm and eggs, prostitution and even dwarf-throwing.

So it looks as if their work could be of some use in socialism where there will be no markets. That's a turn up for the books as normally the prize goes to someone who just provides an ideological justification for some government policy within capitalism.

But note the economic ignorance of the awarding body in describing these non-market arrangements as "markets where price was not an issue". One of the winners, Professor Shapley, got it right when he said he was a mathemetician not an economist: "I never, never in my life took a course in economics."

[Young Master Smeet]

http://en.wikipedia.org/wiki/Stable_marriage_problem

Quote:

The Gale-Shapley algorithm involves a number of "rounds" (or "iterations"). In the first round, first a) each unengaged man proposes to the woman he prefers most, and then b) each woman replies "maybe" to her suitor she most prefers and "no" to all other suitors. She is then provisionally "engaged" to the suitor she most prefers so far, and that suitor is likewise provisionally engaged to her. In each subsequent round, first a) each unengaged man proposes to the most-preferred woman to whom he has not yet proposed (regardless of whether the woman is already engaged), and then b) each woman replies "maybe" to her suitor she most prefers (whether her existing provisional partner or someone else) and rejects the rest (again, perhaps including her current provisional partner). The provisional nature of engagements preserves the right of an already-engaged woman to "trade up" (and, in the process, to "jilt" her until-then partner).

However, I fear our own Assistant Secretary has refuted this:http://en.nothingisreal.com/wiki/Why_I_Will_Never_Have_a_GirlfriendAlso of interest is linnear programming:http://en.wikipedia.org/wiki/Linear_programming

[Anonymous]

Young Master Smeet wrote:

However, I fear our own Assistant Secretary has refuted this:http://en.nothingisreal.com/wiki/Why_I_Will_Never_Have_a_Girlfriend

Which has, in turn, been refuted.  Not only did he have a girlfriend but he's been married to her for over a year.  Which only goes to show that statistics can be used to prove almost anything      

[alanjjohnstone]

I never heard…  belated congratulations to Tristan…or condolences… depending on your attitude to matrimony.

[Anonymous]

Nadya – the girlfriend (now wife) that Tristan, statistically at least, should never have had…   

[DJP]

The 'Nobel Prize in Economics' is not a proper Nobel prize, but is awarded by the central bank of Sweden.http://www.alternet.org/economy/there-no-nobel-prize-economics

[Young Master Smeet]

Stuart, late of this parish, as found a good article:http://economistsview.typepad.com/economistsview/2012/10/a-nobel-for-planning.htmlSome of the articles linked to are very detailed, so not for the layman, but overall, the post makes the same point we do.  We need to find some way to publicise this stuff more…

[ALB]

Young Master Smeet wrote:

http://economistsview.typepad.com/economistsview/2012/10/a-nobel-for-planning.html

Good. Confirmation that I was not alone in thinking that there was more behind this award than having worked out a formula for speed (and non-speed) dating.I hadn't realised that Kantorovich had been awarded a Nobel Prize (in 1975, the year after that joke Hayek). So, along with Amartya Sen (whose work had shown that famines are not caused by an absolute shortage of food but by a collapse in the ability of some people to buy or exchange something for food) and Elinor Ostrom (whose research exposed the myth of “the tragedy of the commons” by showing that in practice where commons existed they had been managed by the community and did not break down through the self-defeating selfish behaviour of those have access to them), that makes three other winners who were worth it.  Actually 4, as I see Wassily Leontief got one in 1973 (for the development of input-output tables, something else that could be used in socialism).Here's a book review which deals with Kantorovich and the problems he had to deal with:http://www.worldsocialism.org/spgb/socialist-standard/2010s/2010/no-1275-november-2010/book-reviews

[Young Master Smeet]

Just been reading up a bit more about the Gale-Shapley algorithm, and thinking a little about whether it would be useful to socialism.Now, their stable-matching algorithm is used in an example of pairing off men and women, so that in the end, even if people don't get their first preference, no better preference is available.  That is, they are two-way allocations in which both parties have to agree, based on a expressed ordinal preference of the available options. So, it wouldn't be any good for, say, choosing tellies over oranges.  It thus isn't much cop for consumer products.  Yes, it would be very good for, say, housing (indeed, our speakers can now answer: "How will you handle housing in socialism with the confident answer "With the Gale Shapley Stable Matching Algorithm" – exciting).But, as the Miseans say, the problem for socialism isn't the consumer goods, but putting the means at the service of the ends, deferred consumption through intermediate inputs.  I think this algorithm could help at that stae.  Robin has often mentioned that we might have to, say, prioritise hospitals over hotels. So, the bed linen warehouse could well have a model of, say, proximity and priority (a hospital on the otherside of the planet would get a lower score than one next door, say).  So, the hospital (or hotel) would "shop around, giving out a list of where it wants to get linen from, and then the information clearing houses could run the algorithm, and see which warehouse could provide them, and come up with the best match.Consumer "Co-ops" (for want of a better term) could bid on packages, so not just choosing between warehouses, but also packets of goods, say 10 tellies from warehouse A versus  4 tellies from Warehouse B (warehouse A could also offer a 2 telly package).  The warehouse could rate its "customers" (How often, proximity, priority, etc.) and so both sides could negotiate to try and meet their obligations under a fairly general worldwide agreed plan.This could also, even, answer the infamous Platinum bicycle question.  The platinum mines could well have their own allocation rankings, that would simply preclude any frivolous use of a rare resource (although such rankings could be open to renegotiation, outside the algorithmic calculation).The shorter version, though, is that those powerful minds currently beign turned toward calculating the latest odds for William Hill would be turned to working out the best way to organise production.  What we have are glimerings of what could become possible.

[Young Master Smeet]

It seems there are other useful mathematicians out there:http://en.wikipedia.org/wiki/Brams%E2%80%93Taylor_procedureFrom their patent (yeah, I know):

Patent wrote:

In both methods, the parties are each given 100 points and then bid on each item using their points. Under the AW method, which is applicable to indivisible items, each party is initially allocated those goods, or wins on those issues, for which it bids the higher number of points. Then the goods or issues are reassigned, or resolved differently, to achieve equality of points based on the quotients of the parties' bids. Under PA, each good or issue is divided according to a ratio based on both parties' bids for that good or issue.

Obviously, that sounds like market like behaviour, although it is a game in which the entrants do not bring a pile of money, but play according to the same rules each time.  It seems there are a plethora of such methods out there that could be used.

[ALB]

This year's "Nobel" Prize for economics has reverted to form and has been awarded to three professors who have studied something quite useless, and which falls only marginally within economics — stock market and other assets bubbles;http://www.nytimes.com/2013/10/15/business/3-american-professors-awarded-nobel-in-economic-sciences.html?_r=0Junk economics which will have absolutely no relevance in socialism.

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