Skip to main content

Asad Zaman

Pakistan Institute of Development Economics, Islamabad, Economics, Emeritus

Followers

1,404

Following

73

Co-authors

9

Public Views

I have taught at leading universities like Columbia, U. Penn., Johns Hopkins and Cal. Tech. My textbook Statistical Foundations of Econometric Techniques (Academic Press, NY, 1996) is widely used in advanced graduate courses. My research on Islamic economics is widely cited, and has been highly influential in shaping the field. I am deeply engaged in a project to create a revolutionary alternative to mainstream economics and econometrics. Both disciplines are based on flawed foundations of logical positivist ideas. My publications in top ranked journals like Annals of Statistics, Journal of Econometrics, Econometric Theory, Journal of Labor Economics, etc. have more than a thousand citations as per Google Scholar.
Phone: +92 334 5164905
Address: House 5A, Street 33, F8/1, Islamabad, Pakistan

less

InterestsView All (10)

Uploads

Courses by Asad Zaman

Fundamental Flaws in Modern Game Theory

Modern game theory is based on assumptions about human behavior which are dramatically in conflic... more Modern game theory is based on assumptions about human behavior which are dramatically in conflict with reality. This course will demonstrate how our human experience and intuition allows us deep insights into simple games, whereas game theory leads to wrong conclusions. This is of great importance as insights based on theoretical game theory are used for conduct of economic policy all over the world. This is partly responsible for the flawed economic and political policies which has led to the climate crisis and many other major problems facing humanity today.

5 video lessons132 views

Videos by Asad Zaman

Why the Confusion About Islamic Economics?

{Writeup: http://bit.ly/AZrdi0} Why are there more than 20 different definitions, no consensus, a... more {Writeup: http://bit.ly/AZrdi0} Why are there more than 20 different definitions, no consensus, and no widely accepted textbooks, which explain what the subject matter of Islamic Economics is? To answer this, we explain that Islamic Economics is diametrically opposed to Conventional Capitalist Economics on at least ten different dimensions. Second Generation Islamic Economists have attempted to build the subject as a MIXTURE of Capitalism and Islam. These efforts have failed because fire and ice cannot be combined. The paper provides a new definition of Islamic Economics based on PURELY Islamic foundations.

134 views

Alternative Models of Development: Becoming the Change You Want to See

Lecture at Helsinki Institute of Sustainable Development on 22 Apr 2021 in lecture series on Glob... more Lecture at Helsinki Institute of Sustainable Development on 22 Apr 2021 in lecture series on Global South Encounters. For writeup of talk, and links to related works, see: http://bit.ly/HelSUS Eurocentric conceptions of development are restricted to accumulation of wealth. Every human being is born with infinite potential, and development involves trying to develop this potential to the fullest.

89 views

Uloom-ul-Umran: An Islamic Alternative to Western Social Science

Social "Science" makes a false claim to universality. In fact, it is based on analysis of Europea... more Social "Science" makes a false claim to universality. In fact, it is based on analysis of European historical experience, and takes for granted Eurocentric assumptions about social, economic, and political institutions. This makes it essential to develop an alternative. This talk provides an alternative based on an Islamic perspective. It builds on foundations laid by Ibn-e-Khaldun which identifies social identity as the basis of collective action, and studies the process of social change. In his honor, we call this approach Uloom-ul-Umran; this also signals dropping of Eurocentric perspective. This is a video of a talk delivered at Ghazi University on 31st Aug 2021 -- A writeup of this talk is available from http://bit.ly/AZUUU

95 views

State or Market? Mystery of Money - explained.

{for writeup, see: http://bit.ly/azGian01A} There is an age-old controversy about money. (1) Mone... more {for writeup, see: http://bit.ly/azGian01A} There is an age-old controversy about money. (1) Money is a creation of the state, governed by law. (2) Money arises spontaneously to facilitate exchange in markets. Curzio Giannini's book: The Age of Central Banks - starts by explaining how both aspects are essential to money. The state is required to create confidence in use of money, while the market necessitates its use. This summary of Sections 1 to 3 of Giannini provides a detailed explanation of money as a payment technology, and resolves many other puzzles surrounding money.

29 views

Online Course: Real Statistics: A Radical Approach

The discipline of modern statistics was built in the early 20th Century on logical positivist fou... more The discipline of modern statistics was built in the early 20th Century on logical positivist foundations. The collapse of logical positivism requires us to rebuild the discipline on new foundations. This presentation explains three major defects created by positivism in the foundations of statistics. The slides introduce a new online course, which rebuilds the entire discipline from the ground up, on the basis of realist philosophy. Interested readers can register for this course on the Google Form: HTTP://bit.ly/RSRA000

6 views

Papers by Asad Zaman

Historical Perspective and Current Practices of Language in Education Planning in Pakistan

PERENNIAL JOURNAL OF HISTORY

The present study seeks to explain the provision of education during the British colonial rule in... more The present study seeks to explain the provision of education during the British colonial rule in the subcontinent and the extent to which Pakistani educational policies adhere to colonial legacies. This investigation concluded that Pakistan remains entangled in colonialism despite achieving independence. Pakistan's education system has been hindered in addressing its language in education needs due to the influence of the ruling class and their interests, which have prevented the country from achieving independence from colonial reasoning. Pakistan has to contend with neocolonialism via education which is stratified by economic class resulting in a concentration of opportunities among a tiny elite who possess proficiency in English. At the global level, there is a contention that utilizing a language of instruction that is not the learner's primary language poses a considerable obstacle to achieving high-quality education across all stages of education. In addition, it is m...

Unregulated Markets and the Transformation of Society

Routledge Handbook of Ecological Economics, 2017

Critiques of Neoclassical Notions of Development

The concept of development and progress ultimately shape the value systems of human beings and dr... more The concept of development and progress ultimately shape the value systems of human beings and drive their efforts. The narrow conception of development solely in terms of economic growth has had a disastrous effect on the stability of our natural ecosystem and planetary resources by pitting human beings against each other in a competitive struggle for more and more. The purpose of the article is to highlight concisely the main critiques that have been raised against the flawed notions of development in neoclassical economics. We present cogently five different critiques-a) the ecological critique; b) the distributional critique; c) the Keynesian critique; d) the &quot;economics as if people mattered&quot; critique; and finally, e) the lack of pluralism critique

Transition to Secular Thought in Europe: Lessons for Muslims

Social Science Research Network, Jun 4, 2012

The reconquest of Spain, and translations of book in the Islamic libraries ended the dark ages of... more The reconquest of Spain, and translations of book in the Islamic libraries ended the dark ages of Europe, around the 13 th Century. The schoolmen used these material to construct a social theory encompassing economics, politics, governance, and community. The rapid influx of knowledge contrary to Catholic doctrines led to a breakup of the Church and a century of devastating factional warfare. This had a huge impact on European thought. In particular, it became necessary to develop social theory without religious or even moral foundations, because of the obvious failure of Christianity in this domain. Some aspects of this historical tradition from Christian society to secular modern society are described in this essay. Our emphasis is on aspects of this story which would be helpful to Islamic societies to resist the pressures towards secular modernity which face the Ummah today.

Wealth as an Indicator of Socio-Economic Development: Islamic Views

SSRN Electronic Journal, 2014

According to western views, wealth is unambiguously good, and so human welfare is positive when w... more According to western views, wealth is unambiguously good, and so human welfare is positive when wealth is in excess of needs, and negative if it is less. Islam has a substantially more sophisticated view of the relation between wealth and welfare. Excess wealth is a trial, which can bring great rewards if utilized correctly, and also bring great harm if utilized incorrectly. Similarly, poverty is a trail which can bring great rewards if borne with patience and prayer, and also cause great harm if it leads to begging from others. Thus there is no clear and simple relationship between wealth and welfare. This means that Islamic approaches to constructing an index for welfare must be substantially more complicated than those currently in use in the West. It is worth considering the reasons for undertaking the project of measurement and assessing what needs to be measured, and whether measurement itself is necessary, for achieving these goals?

İslam Ekonomisini Yeniden Tanımlamak

(Turkish Translation of English Article -- abstract in English) There is a huge number of definit... more (Turkish Translation of English Article -- abstract in English) There is a huge number of definitions of Islamic Economics available in the literature. The vast majority take existing definitions from the western literature and modify them to incorporate an Islamic angle. This leads to the widespread belief that Islamic Economics is a variant or a branch of conventional economics. We argue that something can be called “Islamic” only if it is based on the Quran and Sunnah. In this paper we propose a new definition based purely and directly on Islamic ideas and sources. We show that this definition differs radically from any available in the West, as well as the vast majority of definitions proposed by Islamic Economists. It creates entirely new ways of looking at and organizing the subject matter of Economics. This paper discusses ten dimensions of contrast, where our new definition suggests that the methodology of Islamic Economics is directly opposed to western methodology. Zaman (2012, Crisis In Islamic Economics) describes the current crisis in Islamic Economics, widely acknowledged by leaders in the field. Conventional views are that Islamic Economics must be a compromise between Islamic ideals embodied in homo islamicus, and realistic views embodied in homo economicus. However, there is substantial disagreement on the nature and extent of the compromise required. Consensus on defining “Islamic Economics” appears to be a pre-requisite for progress. I believe that a definition which can be justified purely and directly from Islamic sources will be able to command consensus that compromises cannot. Furthermore, this definition opens the way to radically new approaches, which can fulfill the promise initially held out by Islamic Economics. This (now largely forgotten) promise was that Islamic Economics will provide justice, and eliminate oppression and inequities associated with capitalist, communist and socialist economic systems.

The Ethical and Political Foundations of Scarcity

Since Robbins (1932) influential essay on the methodology of economics, scarcity has been taken a... more Since Robbins (1932) influential essay on the methodology of economics, scarcity has been taken as the fundamental economic problem. We will argue that this is based on a tacit assumption of primacy of property rights. We illustrate how differing ethical commitments on part of a society lead to differing formulations of the fundamental economic problem.

Interest and the Modern Economy Arshad Zaman & Asad Zaman

Lahore Journal of Economics

Can the modern economy function without a market for interestbased credit? This question has acqu... more Can the modern economy function without a market for interestbased credit? This question has acquired some urgency in the wake of the recent Shariat Court ruling banning interest in Pakistan. Some pundits have pronounced that great harm will result from the banning of interest 1. Actually, such pronouncements are based on a lack of understanding of both the modern economic system, as well as the nature of the Islamic prohibition of interest. As we hope to demonstrate clearly below, the modern economy can function very well, indeed ...

Variance Estimates and Model Selection

by Asad Zaman and Sidika Basci

International Econometric Review, Oct 1, 2010

The large majority of the criteria for model selection are functions of the usual variance estim... more The large majority of the criteria for model selection are functions of the usual variance
estimate for a regression model. The validity of the usual variance estimate depends on
some assumptions, most critically the validity of the model being estimated. This is often
violated in model selection contexts, where model search takes place over invalid models.
A cross validated variance estimate is more robust to specification errors (see, for
example, Efron, 1983). We consider the effects of replacing the usual variance estimate
by a cross validated variance estimate, namely, the Prediction Sum of Squares (PRESS) in
the functions of several model selection criteria. Such replacements improve the
probability of finding the true model, at least in large samples.

Transition to Secular Thought in Europe: Lessons for Muslims

Insights, 2012

The reconquest of Spain, and translations of book in the Islamic libraries ended the dark ages of... more The reconquest of Spain, and translations of book in the Islamic libraries ended the dark ages of Europe, around the 13 th Century. The schoolmen used these material to construct a social theory encompassing economics, politics, governance, and community. The rapid influx of knowledge contrary to Catholic doctrines led to a breakup of the Church and a century of devastating factional warfare. This had a huge impact on European thought. In particular, it became necessary to develop social theory without religious or even moral foundations, because of the obvious failure of Christianity in this domain. Some aspects of this historical tradition from Christian society to secular modern society are described in this essay. Our emphasis is on aspects of this story which would be helpful to Islamic societies to resist the pressures towards secular modernity which face the Ummah today.

Rebuilding Islamic Economics on New Foundations

Turkish Journal of Islamic Economics, 2022

Massive amounts of confusion exists regarding the definition of Islamic Economics. This has block... more Massive amounts of confusion exists regarding the definition of Islamic Economics. This has blocked progress in terms of the development of the discipline, since there is no agreement on what its proper subject matter and methodology is. This paper shows that the confusion arises because of our attempts to borrow foundational concepts and methodology from conventional capitalist economics. Modern economists advertise their discipline as a positive, objective, and factual science. However, it is actually a branch of moral philosophy, built on concealed moral foundations of competition, selfishness, individualism, and hedonism. Islamic economics cannot be built on such foundations. We can build the discipline of Islamic Economics on the diametrically opposite foundations of cooperation, generosity, brotherhood of mankind, and social responsibility. Instead of the methodology of Newtonian physics currently in use, we need to use the methodology of Ibne-Khaldun, created for studying the...

Policy Forum Effects of Conquest: A Fantasy and a Reality

Ibn-e-Khaldun wrote of the impact of conquest on the psychology of the conquered. This can be mad... more Ibn-e-Khaldun wrote of the impact of conquest on the psychology of the conquered. This can be made much more vivid by thinking about a possible complete conquest of Iraq by the USA. This fantasy serves to illuminate the current reality of how our perceptions of the world have been shaped by our history of having been colonized. These distorted perceptions form a major obstacle towards progress in desired directions.

Reviving the Promise of Islamic Economics

First generation Islamic economics promised to create a system with just and equitable economic o... more First generation Islamic economics promised to create a system with just and equitable economic outcomes, which would be far superior to capitalism and communism. Historical circumstances led the second generation to forget this promise, and to consider Islamic Economics as a minor variant of capitalism. The second generation has been trying to create a sharī'ah compliant system, where the form is Islamic but the spirit is capitalistic. We need to go back to the roots, and build a genuine Islamic system in form and spirit which is sharī'ah based, rather than sharī'ah compliant. By doing this, the third generation can revive the promise of Islamic Economics and create a model economic system which fulfills the promise of the first generation. JEL Classification: P4

Sunspot Equilibria of Baby-Sitting Cooperatives

SSRN Electronic Journal, 2014

Krugman has popularized the experiences of the Capitol Hill Baby-sitting Cooperative (BSC) as a f... more Krugman has popularized the experiences of the Capitol Hill Baby-sitting Cooperative (BSC) as a fundamental paradigm for macroeconomic policy. Many authors who have formally analyzed the story have concluded that money must be supplied in an optimal quantity for smooth functioning of the BSC economy. We create a natural model of the BSC which has sunspot equilibria. Agents must co-ordinate their expectations to arrive at an equilibrium. Our analysis shows that many of the lessons derived from the experience of the BSC depend on a particular choice of the equilibrium. Other choices can be more efficient and lead to different lessons. In particular, money holdings act like sunspots; they matter only if all agents agree that they matter. Surprisingly, flexible prices cannot solve the problem of mismatch between supply and demand. Also equilibria with excess supply may be more efficient than outcomes where supply and demand are matched. Our model shows that there are deep lessons to be learned from the BSC economy, but they are of a rather different nature from those derived by most authors. How expectations are formed, and how agents learn about other agents strategies form a crucial part of the equilibrium. These must be part of good models, and suitable interventions must take these into account. How agents can consciously choose among multiple equilibria and learn to coordinate on a particular choice requires more attention from economists.

Wealth as an Indicator of Socio-Economic Welfare: Islamic Views

Palgrave Studies in Islamic Banking, Finance, and Economics, 2019

There is now substantial dissatisfaction with wealth (or GNP per capita) as the sole measure of p... more There is now substantial dissatisfaction with wealth (or GNP per capita) as the sole measure of progress. Two Nobel Laureates have listed numerous shortcoming of this measure in the Stiglitz-Sen-Fitoussi (2009) report. Substantial effort is being made to find suitable replacements. In this paper, we consider the Islamic point of view regarding the relationship between wealth and human welfare.

Effects of Conquest: A Fantasy and a Reality

Market Forces, 2008

Ibn-e-Khaldun wrote of the impact of conquest on the psychology of the conquered. This can be mad... more Ibn-e-Khaldun wrote of the impact of conquest on the psychology of the conquered. This can be made much more vivid by thinking about a possible complete conquest of Iraq by the USA. This fantasy serves to illuminate the current reality of how our perceptions of the world have been shaped by our history of having been colonized. These distorted perceptions form a major obstacle towards progress in desired directions.

Monetary Paradoxes of Baby-Sitting Cooperatives

The Pakistan Development Review, 2021

Many authors have described and modelled Keynesian effects in a Baby-sitting Cooperative (BSC), w... more Many authors have described and modelled Keynesian effects in a Baby-sitting Cooperative (BSC), which has the underlying structure of a single good barter economy. We construct a simple model of the BSC economy to explore this issue, and find very surprising results. Outcomes depend on agents beliefs about the decision making process of others, as in the Keynesian beauty contest. For some structures of beliefs, money is neutral, while for others, money can have short and long run effects. The value of money can be high, low, or zero, depending purely upon expectational effects. Also, despite the fact that this is a single good economy, partial equilibrium supply and demand analysis do not work as expected. Some equilibria have excess supply, others have excess demand, and none have a match between supply and demand. Furthermore, flexible prices cannot fix this problem. An additional paradoxical property is that excessive trading can take place. Even though all trades are done with m...

Redefining Islamic Economics

Economic Anthropology eJournal, 2014

For Turkish translation, see: https://ssrn.com/abstract=3139291 There is a huge number of definit... more For Turkish translation, see: https://ssrn.com/abstract=3139291 There is a huge number of definitions of Islamic Economics available in the literature. The vast majority take existing definitions from the western literature and modify them to incorporate an Islamic angle. This leads to the widespread belief that Islamic Economics is a variant or a branch of conventional economics. We argue that something can be called “Islamic” only if it is based on the Quran and Sunnah. In this paper we propose a new definition based purely and directly on Islamic ideas and sources. We show that this definition differs radically from any available in the West, as well as the vast majority of definitions proposed by Islamic Economists. It creates entirely new ways of looking at and organizing the subject matter of Economics. This paper discusses ten dimensions of contrast, where our new definition suggests that the methodology of Islamic Economics is directly opposed to western methodology. Zaman (...

Islamic Alternatives to the Secular Morality Embedded in Modern Economics

Comparative Political Economy: Comparative Capitalism eJournal, 2021

Economics started out as a branch of Moral Philosophy. Early in the 20th Century, logical positiv... more Economics started out as a branch of Moral Philosophy. Early in the 20th Century, logical positivists argued that science is the only source of knowledge, and values are not part of science. The desire to make humanities “scientific” led to the creation of the “social sciences”, which claimed to be objective and value-free. In fact, values are inevitably involved in the study of human societies. Instead of being removed, they were buried into the foundations. In economics, “rational” behavior was defined to be the pursuit of pleasure, without any explicit recognition or acknowledgement of the value judgment involved. Similarly, the scarcity foundations of modern economics also conceal many value judgements. In particular, secular morality at the heart of economics makes pursuit of pleasure and profits the goal of life for all rational human beings. Once we recognize the secular moral principles on which modern economics is built, the path to creating an Islamic alternative becomes c...

Reviving the Promise of Islamic Economics

PSN: Culture & Capitalism (Topic), 2016

First generation Islamic Economics promised to create a system with just and equitable economic o... more First generation Islamic Economics promised to create a system with just and equitable economic outcomes, which would be far superior to capitalism and communism. Historical circumstances led the second generation to forget this promise, and to consider Islamic Economics as a minor variant of capitalism. The second generation has been trying to create a Sharia compliant system, where the form is Islamic but the spirit is capitalistic. We need to go back to the roots, and building a genuine Islamic system in form and spirit which is Sharia based, rather than Sharia compliant. By doing this, the third generation can revive the promise of Islamic Economics and create a model economic system which fulfills the promise of the first generation.