Economics, LaTeX

Latin phrases and Greek letters for economists

Latin phrases for economists
Phrase	Translation
A priori	Pre-supposed; your “priors beliefs”.
Ad infinitum	To infinity; and so on.
Ad valorem	Per value; a 10% tax is an ad valorem tax, whereas a duty per gallon of gasoline is not.
Ceteris paribus	All else equal e.g. “We would expect, ceteris paribus, that an increase in price would lower quantity demanded.”
De facto	For all practical purposes, but not officially.
De jure	By law.
Ex ante	Before the event; in anticipation.
Ex post	After the event; in retrospect.
Per se	Literally; by itself.
Prima facie	In the first instance; at first glance.
QED	As has been asked to be shown; done.
Ultra vires	Beyond their power, e.g. the court ruled that Congress were acting ultra vires.

Greek letters for economists
Lower-case	Upper-case	Pronunciation	Economic meaning
$\alpha$	A	Alpha	Capital share of income
$\beta$	B	Beta	Regression coefficient (econometrics), or rate of time discounting (economic theory)
$\gamma$	$\Gamma$	Gamma	N/A
$\delta$	$\Delta$	Delta	Depreciation
$\epsilon$	E	Epsilon	Elasticity
$\zeta$	Z	Zeta	N/A
$\eta$	H	Eta	N/A
$\theta$	$\Theta$	Theta	Type, e.g. $\theta_H$ might represent a “high type”
$\iota$	I	Iota	N/A
$\kappa$	K	Kappa	N/A
$\lambda$	$\Lambda$	Lambda	The Lagrange multiplier
$\mu$	M	Mu	Mean
$\nu$	N	Nu	N/A
$\xi$	$\Xi$	Xi	N/A
o	O	Omicron	N/A
$\pi$	$\Pi$	Pi	Inflation, or profit (lower-case) or the product of a series (upper-case)
$\rho$	R	Rho	The coefficient of autoregression
$\sigma$	$\Sigma$	Sigma	Standard deviation (lower-case) or the sum of series (upper-case)
$\tau$	T	Tau	Tax
$\upsilon$	$\Upsilon$	Upsilon	N/A
$\phi$	$\Phi$	Fy	N/A
$\chi$	X	Chi (rhymes with `guy’)	Used in statistics
$\psi$	$\Psi$	Psi (like `Si’)	N/A
$\omega$	$\Omega$	Omega	N/A

Some Useful Latin and Greek (PDF)
Some Useful Latin and Greek (TeX)

Stata

Cohort grouping script

Suppose you have data on year of birth, but you want to group several years together, e.g. group 1950, 1951 and 1952 births together; 1953, 1954, and 1955 together, etc.

Below is some JavaScript code I wrote to generate the relevant Stata commands without much fuss. You only have to make minor adjustments: Enter the start year (e.g. 1950), the end year (e.g. 1955), and the interval length (e.g. 3 years).

[sourcecode language=”javascript”]
<html><body><script>
//*** Generate Stata Code to replace cohort groups *****
//*** Enda Hargaden, Summer 2010
//*** Just replace the following three variables and refresh the page

var start_year = 1881;
var end_year = 1990;
var interval = 5;

//*** You’re done. Or at least you should be.

var c;
var a;
var backup1 = start_year;
var backup2 = end_year;
a = end_year – start_year;
a = a/interval;
a = Math.ceil(a);
a=a+1;

document.write("gen cohort_group = 0 <br />");
for(i=1;i<a;i++)
{
c=start_year+interval;
document.write("replace cohort_group = " + i + " if cohort > " + (start_year-1) + " & cohort < " + c + "<br />");

start_year = start_year+interval;

}

start_year = backup1;
end_year = backup2

document.write("<br />recode cohort_group ");
document.write("( 0 = 0 \"Other\" ) ///<br />");
for(j=1;j<a;j++)
{

if(j<(a-1))
{
c=start_year+interval-1;
document.write("( " + j + " = " + j + " \"" + (start_year) + " – " + c + "\" ) ///<br />");
start_year=start_year+interval;
}
if(j==a-1)
{
c=start_year+interval-1;
document.write("( " + j + " = " + j + " \"" + (start_year) + " – " + c + "\" ), gen(cohort_clean)<br />la var cohort_clean \"Birth Cohort\"<br />");
start_year=start_year+interval;
}
}
</script></body></html>
[/sourcecode]

I wrote this with a five-year interval in mind so I cannot guarantee you won’t run into an integer problem with the last entry, etc. However, it should get you most of the way there. Enjoy!

Economics

A note for the free marketeers

Oftentimes I hear conservatives argue for freer markets on efficiency grounds. Typically this will take the form of a pseudo-counterfactual, along the lines of “Well if there were profits to be made in this market, why didn’t some firm come in and earn them?” People sometimes assume that the freer the market, the greater the efficiency.

On the other hand, liberals will often assert that economists have an uncritical, ideological lust for the free market.

Neither of these things are true. Here’s a simple example.

Let Sam (the seller) own an item that he values somewhere between $0 and $100. My example of this is an autographed portrait of Tom Hanks — nobody really knows how much it’s worth, but it’s definitely worth less than $100. Let’s call his valuation of the portrait $v_s$. If the seller receives a bid greater than or equal to $v_s$, he will sell it.

Barry (the buyer) comes along. He too values the portrait somewhere between $0 and $100. He values it at $v_b$. Sam and Barry agree to simultaneously write down their offers (the lowest price Sam will accept, and how much Barry bids) and then to reveal their prices. If the bid is greater than the price, Barry buys the portrait.

To make the maths a little easier to grasp, let’s assume the valuations are uniform, continuous, and iid. This means that 1% of people value the portrait at $1 or less; 30% value is at $30 or less; 99.99% value it at $99.99 or less, etc.

Note that this is a free market situation. There is no government intervention or taxation. There is no large corporation acting anti-competitively. There are no externalities. It’s two guys negotiating on a price.

How much does Barry bid? To get the intuitive idea, let’s say his valuation is $60. If he bids $60, even if that bid is accepted he gets no “profit” since $60 was really the most he would pay anyway. However if he bids e.g. $55 although he decreases his chances (by 5%) of winning, he stands to make a $5 profit if he does win. Thus he may have an incentive to bid below his true valuation. You can skip this if you like, but denoting $b$ as how much Barry should bid, here’s the mathsy bit:

\(\pi_B = \text{prob(}b>v_s) (v_s – b) + \text{prob}(b<v_s)(0) \\

\pi_B = F(b)(v_s – b) \\

\pi_B = b(v_s – b) \\

\displaystyle \frac{\partial \pi_B}{\partial b} = v_s – 2b = 0 \\

b = \frac{1}{2} v_s\\\)

Thus the optimal bid for Barry is exactly half his valuation. What does this tell us?

In the original setting, trade should happen if Barry’s valuation is greater than Sam’s. By our assumption, that happens half the time. However Barry, behaving rationally, will lower his bid in the hope of maximising his expected profits. This means that trade will happen only one quarter of the time.

This implies that even in this very simple no-frills no-government setting, the free market will only work efficiently 50% of the time.

So no, the free market will not definitely realise all potential gains from trade and no, economists do not think that free markets will cure all of the world’s problems.

(This is based on a microeconomic theory question that I think was written by Lones Smith. It is an application of the Myerson-Satterthwaite theorem.)

LaTeX

A clarification on LaTeX

Just in case you’ve googled me and wondered why I happily link to something called LaTeX, I should clarify that LaTeX (most commonly pronounced “Lay-tek”) is a computer language for typesetting documents. (Well, it’s officially called $\LaTeX$ and is a markup language rather than a standard computer language, but that’s splitting hairs.)

Most people use Microsoft Word to write documents. That’s fine. I prefer to use LaTeX, particularly if there is any mathematics in the document. The primary reason for this is ease. LaTeX can “read” math and I find it easier to type \sum x_i to obtain $\sum x_i$ than to mess around with the equation editor.

LaTeX also produces remarkably beautiful documents. I appreciate that this sounds particularly nerdy, but it’s true: ask Dario for proof. Moreover, its settings are defaulted to look just right, so there’s no messing around with fonts, margins, line-spacing, etc.

Andrew Roberts has a thorough outline of the benefits of LaTeX. Here’s my summary:

Math(s) is much easier to write.
Presentations (via beamer) are cooler.
The documents look better.
You don’t have to worry about how it looks, so you can focus on content.

I admit the name is unfortunate, though.

About

Introduction

I am an assistant professor of economics at The University of Tennessee, Knoxville.

This blog is primarily a repository for links, documents or code that I think will be useful to others. I will also post up some comments about economics.

Latin phrases and Greek letters for economists

Cohort grouping script

A note for the free marketeers

A clarification on LaTeX

Introduction

Enda Patrick Hargaden