Keynesian Model

[Aaron]

I had a debate today with my lecturer regarding the analysis of economic models and he set me this statement to investigate:

"Keynesian Model applies less to educated societies than to those that are less-educated."

Do you agree?

[Smokey D]

I don't really see that as a meaningful question. Can you explain what he means?

But I doubt many people here have read the General Theory, so I don't know if we can give you a good answer anyway.

[Aaron]

We were discussing the fundamental of KM in that expectations are based on herd instinct.

[Smokey D]

Okay you're gonna have to explain this more. I wasn't aware that Keynes wrote about expectations theory.

[Aaron]

He specifically didn't [from what I can understand], but modern Keynesians have interpretted his concepts to mean that and it's commonly held to be a fundamental rule of KM, least within my university and the texts they use it is.

[Smokey D]

Can you explain how they are herd instinct based? I can't see it but I'm no economist and I haven't read any Keynes aside from the Economic Consequences of the Peace.

[Aaron]

In simplistic terms it's the concept that shared discontent/confidence affects peoples' marginal propensity to consume. Obviously this implies that it's social "vibes" [for lack of a better term] have a huge weight in the economy.

[free_thinkers_are_dangerous]

In simplistic terms it's the concept that shared discontent/confidence affects peoples' marginal propensity to consume.
if you call this simplistic terms hillary clinton could call you an elitist and for once i'd agree with her.

but yeah im not in economics but that statement seems to make sense. if you're the only poor person on your block you might be less inclined to save for all sorts of reasons, whereas if everybody you know is losing jobs and going through hard times you're probably more likely to save up for a rainy day. and i guess more intelligent people would be less affected by perceived trends in others' consumer habits/mindset, but that's just a hunch.

[griftadan]

In simplistic terms it's the concept that shared discontent/confidence affects peoples' marginal propensity to consume. Obviously this implies that it's social "vibes" [for lack of a better term] have a huge weight in the economy.

ok, but can this guy explain how being educated stops this?

[Iskandar]

I don't get this at all when you consider that Keynesianism took hold in developed (i.e. educated) nations.

[Reaganista]

most education connects you further into society rather than alienating you
but i suppose when you get into high levels of subjects that most people hate like a phd in econ for example you could start to become increasingly alienated but overall no educated societies are far more cohesive

[Aaron]

We're discussing collective decision making, ie. will one town if told of something more likely or less likely spend/save compared to another? Im macroeconomic terms, will one nation more likely save compared to another in a recession? Why do they do that?

ok, but can this guy explain how being educated stops this?
That's the question. Does it? Where does rationality stop and emotion begin? This is the point that interests me the most as it can be applied to a lot of events in society.

[Reaganista]

We're discussing collective decision making, ie. will one town if told of something more likely or less likely spend/save compared to another? Im macroeconomic terms, will one nation more likely save compared to another in a recession? Why do they do that?

that's what i was talking about wtf

[Aaron]

Free Thinkers.. not you.

[Smokey D]

So the question is does Keynesianism promote looking after group interests as opposed to individual interests?

[Aaron]

I guess you could ask that question in response, but my reading of his question is that "ceteris paribus morality, social stance and educational level will naturally affect the way we make group decisions and so Keynesian Modelling cannot be applied in modern terms in a macro context." Eitherway it's an interesting point to mull over.

[Smokey D]

I agree with his variables and their effects but I can't see why that they automatically disqualify Keynesianism.

[Aaron]

Well it doesn't entirely, it's more [to me] a comment on the complexity of modern society and a warning not to discount morality in decision making as an important variable.