J. M. Keynes, Like Benoit Mandelbrot, Was Right. They (Econometricians, Statisticians) Do Not Know What They Are Doing
35 Pages Posted: 26 Apr 2016
Date Written: April 20, 2016
S. Stigler’s University of Chicago view of J M Keynes’s A Treatise on Probability, that only its literary style recommends it to a potential reader, is based entirely on a completely worthless book review written by Ronald Fisher in 1923. However, Stigler is an excellent example of a profession that has lost its way by conflating, like Jerry Bentham and Frank Ramsey did before him, rationality with adherence to the strictly mathematical laws of the calculus of probability.
Stigler, like Fisher before him, overlooked that Keynes’s A Treatise on Probability (1921) was constantly being monitored, while Keynes was writing it, by the most illustrious names in the fields of philosophy and mathematical logic at the beginning of the 20th century, namely J Nevile Keynes, Bertrand Russell, Alfred North Whitehead, William Ernest Johnson, and CD Broad. Of course, everyone, except Broad and Edgeworth, overlooked the seminal role of George Boole, upon whose work in Chapters 16-21 of The Laws of Thought (1854) Keynes built the foundation for his logical theory of probability using interval valued probabilities. None of Stigler’s conclusions, as regards his evaluation of Keynes’s A Treatise on Probability, make any sense.
JEL Classification: B10, B12, B20, B22
Suggested Citation: Suggested Citation