Article Summary Review The purpose of this paper is to provide an article review from an approved academic journal. The article that will be reviewed is titled Communication: Do Old Fallacies Ever Die? It was authored by Milton Friedman and appeared in the Journal of Economic Literature in 1992. The format that this paper will utilize is to first provide an introduction in which the key issues of the paper will be discussed followed by a firm analysis of the findings, with a special focus on the economic concepts, ideas, theories and techniques exhibited.
By highlighting previous examples of Jeffery G. Williamson reviewing a book by William J. Baumol et al. titled Productivity and American Leadership which postulated that the rates of growth of various countries was likely to eventually intersect, it was postulated by Friedman that economists that have even the most basic understanding of modern statistical methods often fail to recognize that they are guilty of regression fallacy. An example was highlighted by Friedman that job creation comes mainly from small firms (Which may ultimately be a true assumption) however the position may not be true insofar as measurements are often made by a firms initial size and not their terminal size over a given period of time.
From this perspective, the key issue at stake is the idea that many economists tend to over simplify issues and not take into consideration fundamental principles of economic theory. A specific economic theory that Friedman highlighted (Which many economists simply do not take into consideration) regression fallacy which was covered extensively in our text. In regards to a theoretical aspect of this problem, it could be argued that in the cases highlighted by Friedman, many economists ascribe a cause where in fact none exists.
This is problematic insofar as it fundamentally flaws the economic analysis of a given situation without taking into consideration one of the more fundamental principles of economic theory. With reference to what we are studying in our text, one could make the case that by over complicating an economic issue one could (theoretically) overlook one of the more simplistic principles. In the case of the article written by Friedman, one could argue that the author had not conducted a quantitative analysis of several articles rather he took already arrived upon conclusions and applied fundamental economic principles of to determine outcomes.
One could argue that the approach could be considered an experimental approach. In terms of conclusions that could be validated by this research, one could look at a case as highlighted by Friedman in the article by which he identified that regression fallacy can be useful in resolving apparent budget and time series data. It was believed that marginal propensity to consume was greater than the average propensity, yet most research had not yielded such a correlation.
The explanation that could be generated when keeping this in mind is simply that budget studies typically classified consumer units by income and ultimately few (if any) consumer units were in the lowest income. This article does support the key concept of closely analyzing what factor inputs should be examined in order to generate accurate results. I believe this article was important to review insofar as it is always wise to get an external interpretation of a body of literature.
In this regard economic analysis only benefits from being peer reviewed. References Friedman, M. (1992) Communication Do Old Fallacies Ever Die? Journal of Economic Literature. Vol. XXX (December 1992), pp. 2129-2132. [online] Available at http: //mcadams. posc. mu. edu/econ/Friedman, %2520The%2520Regression%2520Fallacy. pdf Accessed on August 31st 2011.