Friday, June 17, 2011

McAfee on economists as engineers:the view from Yahoo!

From The Register ("biting the hand that feeds IT"), an old interview that I don't think I saw before: Yahoo! economist rebuilds ad empire with 'Magic Formula'

"McAfee is an economist, but he's the sort of economist who's actually useful. In the early-90s, he helped build the simultaneous ascending auction, a mathematical contraption that governments across the globe have since used to license over $100 million in wireless spectrum. And nowadays, as the man who oversees the microeconomics and social sciences research group at Yahoo!, he builds things that are so useful, they wind up on the boss's chest.

"I'm a member of a group of people — you might even call it a movement — who do economics as an engineering discipline," McAfee tells The Reg. "If you look at the humor of economics, it's all about how useless economists are. What economists have traditionally done for the world is block stupid ideas. Economists go to Washington just so they can stop Washington from doing the silly things it would otherwise do. That may serve a greater purpose, but it's still a negative thing to do.

"Economics as engineering discipline is all about building things with economics that are positive — as opposed to stopping things, things that won't work."

I like it.
Roth, Alvin E., "The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics," Fisher-Schultz Lecture, Econometrica, 70,4, July 2002, 1341-1378. 

(And I'm in Montreal at a relevant conference: Society for Economic Design Conference in Montreal)

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