November 16th, 2010

euro

"The Theory of Interstellar Trade," by Paul Krugman



In 2008, Paul Krugman won the Nobel Prize in Economics for his contributions to New Trade Theory and New Economic Geography, but back in 1978, as a mere assistant professor at Yale, he wrote a parody of an academic paper about interstellar trade theory.

The paper claims to prove with "two useless but true theorems" and boasts that it "is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics."

As a youth, Krugman was inspired to become an economist after reading Isaac Asimov's Foundation novels, which explains the mention of Trantor.

The paper also claims the research was supported by a grant from the Committee to Re-Elect William Proxmire. Here's the joke: Senator Proxmire (D-Wis.) did not accept any campaign donations in 1976 (or 1982, for that matter) and spent less than $200 out of his own pocket for filing expenses. He won with 73% of the vote. Those were different times.

A link to "The Theory of Interstellar Trade" is at:
http://krugman.blogs.nytimes.com/2008/03/11/economics-the-final-frontier/

The Wikipedia page includes responses to his theorems:
http://en.wikipedia.org/wiki/The_Theory_of_Interstellar_Trade

— Sue Burke