Did Mr Ricardo consult Mrs Ricardo before coming out with the Ricardian equivalence idea?

Manasiecon blog is the go to blog on economics humor.

In her recent post on the International Women’s day, she takes a dig at the male dominated world of economic theories:

Look at the centre-piece of economic theory. The entire science hinges on the assumption that economic agents are rational. Households, firms, governments and bureaucrats all act in a rational fashion so as to maximise utilities, profits, revenues, rents or social outcomes. Really now. Can anyone smell sexism here?

This is not to imply that rationality is a male domain and that women are irrational. But the very definition of rationality in that other things being equal, rational people think at the margin and always respond to monetary incentives, is so construed as to be necessarily a male domain.

Think of Ricardian equivalence. This theorem says a tax break given to a household today does not really prompt it to consume more immediately; that is, households look at their consumption inter-temporally i.e. across time. So households believe that any reduction in taxes today will be compensated by governments increasing taxes later and, hence, a tax cut may not really promote consumption, in a manner that was assumed by Keynes.

Did Ricardo never indulge in that fun thing called as impulsive shopping? Had he just thought of consulting Mrs Ricardo about her inter-temporal choices, he would undoubtedly, have been given a totally different angle to look at things, saving him a lot of criticism in the future.

🙂

Further a point to Mr Gary Becker who never really consulted Mrs Becker as well:

Another centre piece of neo-classical economics that has been blasted by feminists is Gary Becker’s paper on “A treatise of a family.” Becker, using rational neo-classical norms goes on to prove that the utility of the family would stand maximised when each partner performed the task in which he or she “specialised”. Through socialisation, he claims, women have developed a comparative advantage in home production, and hence, a happy couple is one in which the woman stays at home. This inherently means that an egalitarian couple could not really maximise their well-being, a conclusion that derives from a premise based on male rationality.

🙂🙂

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