tag:blogger.com,1999:blog-15005476.post5453372789400087946..comments2023-10-10T08:02:18.073-04:00Comments on Rationally Speaking: Economics learns a thing or two from evolutionary biologyUnknownnoreply@blogger.comBlogger16125tag:blogger.com,1999:blog-15005476.post-21470678072561402952009-01-04T15:07:00.000-05:002009-01-04T15:07:00.000-05:00"I'd like to point out that economic advice can al..."I'd like to point out that economic advice can also be used to justify government policies that enrich certain strata of society at the expense (not just financial, but also environmental and social) of others. I believe that because of this there is a strong biasing pressure on the discipline of economics. Models that can be used to justify the enrichment of the dominant strata of society have a strong advantage."<BR/><BR/>This is very important. Any idea or discovery that challenges accepted presumptions will not be taken lying down. Those with economic, military, civil, or other types of power will be vastly more successful at shooting down theories they do not like. (I'm looking at you, Galileo!)<BR/><BR/>Given that prudent economic policy can change by context, it's easy to make a break with the past and say with an air of authority that "today's economy" demands X, not Y. Furthermore, because economies are messy processes that are not fully understood by any one individual, theorists are liable to blame past theories wholesale for failures, while there are almost certainly extraneous reasons for the success/failure of the economy at any point in time.<BR/><BR/>This type of uncertainty prevents economics from having the same kind of rigorous empirical demands placed upon it as other types of sciences, which again, leaves a lot of room for ideology and whimsy.Nick Zieglerhttps://www.blogger.com/profile/03485511197947111934noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-72284669181933547862008-12-26T14:13:00.000-05:002008-12-26T14:13:00.000-05:00I remember criticizing one of your posts on Scienc...I remember criticizing one of your posts on Science Blogs for being economically illiterate.<BR/><BR/>This post definitely doesn't suffer from that weakness. Very nice essay.Will Mayhttps://www.blogger.com/profile/11307726180310118947noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-83361177949937576562008-12-25T21:05:00.000-05:002008-12-25T21:05:00.000-05:00Yeah, but Simon was really a cognitive scientist. ...Yeah, but Simon was <I>really</I> a cognitive scientist. :)RBHhttps://www.blogger.com/profile/13562135000111792590noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-48492740509804506592008-12-25T18:58:00.000-05:002008-12-25T18:58:00.000-05:00Massimo writes: As evolutionary biologists have fo...Massimo writes: <BR/><BR/>As evolutionary biologists have found out, natural selection is not an optimizing process, but a satisficying one ... <BR/><BR/>It may be worth mentioning, in this context, that the optimizing / satisfycing distinction is from Herbert Simon, Nobel Laureate in Economics (so here's a case of biologists learning something from economics).Tony Whitsonhttps://www.blogger.com/profile/18070871302382253692noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-84912809691682695712008-12-25T02:21:00.000-05:002008-12-25T02:21:00.000-05:00Years ago I gave a guest lecture in a quantitative...Years ago I gave a guest lecture in a quantitative finance graduate program to an audience of 60 people, mostly (on show of hands) with undergraduate degrees in engineering or mathematical physics. The title of the lecture was "Finance is not Physics." I barely escaped with my life. :) <BR/><BR/>A published version is <A HREF="http://74.125.95.132/search?q=cache:mdG4rtgO98sJ:www.itrac.com/paper/FinancePhysics.doc+%22Finance+is+not+physics%22&hl=en&ct=clnk&cd=1&gl=us" REL="nofollow">here</A> for the morbidly curious.RBHhttps://www.blogger.com/profile/13562135000111792590noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-88344881521765149562008-12-24T22:20:00.000-05:002008-12-24T22:20:00.000-05:00Economics is supposed to be a solid discipline, fo...<I>Economics is supposed to be a solid discipline, founded on complex mathematical models ...</I><BR/><BR/>Presumably a scientific discipline can be considered "solid" to the extent that it follows the scientific method. In particular, models (complex or otherwise) must be subjected to rigorous empirical verification. To the extent that models become articles of faith, a discipline has wandered from the path of science. <BR/><BR/><I>And yet, economics has always had to fight off the same reputation of being a “soft” science ...</I><BR/><BR/>It seems to me that economics is fundamentally more difficult (dare I say "harder") than the "hard" sciences. After all, unlike say the behaviour of electrons, economic structures and behaviours change over time. Economic models that work in one context may be completely inappropriate in another. <BR/><BR/>I'd like to point out that economic advice can also be used to justify government policies that enrich certain strata of society at the expense (not just financial, but also environmental and social) of others. I believe that because of this there is a strong biasing pressure on the discipline of economics. Models that can be used to justify the enrichment of the dominant strata of society have a strong advantage.Nick Barrowmanhttps://www.blogger.com/profile/11224940659269649220noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-65002902733062909192008-12-24T16:52:00.000-05:002008-12-24T16:52:00.000-05:00Let's see... economists stir everyone up into an e...Let's see... economists stir everyone up into an enormous investment bubble frenzy, pocket their huge bonuses, and then are given upwards of a trillion dollars more when the whole thing collapses. Sounds pretty rational to me! Just not very moral.Chris Everetthttps://www.blogger.com/profile/05671387340492801338noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-11956530061602082012008-12-24T09:44:00.000-05:002008-12-24T09:44:00.000-05:00"I just wanted to point out that not all, or even ..."<I>I just wanted to point out that not all, or even a majority, of economists believed in the Greenspan view of the world.</I>"<BR/><BR/>But that's the thing. In economics the extent to which one's view of the world changes the way data are interpreted is much greater, ISTM, than in other sciences.<BR/><BR/>Of course I realize that ideology colors the kinds of questions asked and how things are interpreted in all fields, but in economics, it seems like that's all there is sometimes.John Krehbielhttps://www.blogger.com/profile/10078079001156415151noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-26345432116697970852008-12-23T23:24:00.000-05:002008-12-23T23:24:00.000-05:00Massimo,I generally agree with your distinction be...Massimo,<BR/><BR/>I generally agree with your distinction between 'hard' and 'soft' sciences, though I think there is (as you would probably accept) a lot of gray area between the two. Nevertheless, I think your premise, or more mildly, example in this case is off. Even many relatively simple economic models (I'm not informed enough about the models to say exactly what the assumptions are) could have predicted (in a very general sense) the financial bubble and its ramifications. That is why many prominent economists like Stiglitz and Krugman (both Nobel-like laureates, so clearly not radicals in their profession) have long called for regulation of financial markets. I'm not sure that we disagree here, I just wanted to point out that not all, or even a majority, of economists believed in the Greenspan view of the world.Chris Muirhttps://www.blogger.com/profile/00008164143878605805noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-44846649318717202682008-12-23T17:51:00.000-05:002008-12-23T17:51:00.000-05:00I think the problem with economics is not the logi...I think the problem with economics is not the logic or models, but the lack of a commensurable property. Value in economics is highly derived - currencies do not represent any physical properties like work and resources. Instead they represent some abstraction of abstractions of properties. So the models cannot be expected to work even if they were tractable.John S. Wilkinshttps://www.blogger.com/profile/04417266986565803683noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-74661959529490114642008-12-23T17:39:00.000-05:002008-12-23T17:39:00.000-05:00I worked in a grocery store for many years, and wa...I worked in a grocery store for many years, and was talking to a regular customer in my line once. I told him that, given that the simplifying assumptions of economics are all BS, it becomes so ideologically loaded that you get out of it whatever you want to.<BR/><BR/>He said that he was a retired professional economist, and it took him all of his career to realize that. He asked me how I had "come by such wisdom." <BR/><BR/>I simply said that, as a science teacher, I think a lot about how we know what we know.John Krehbielhttps://www.blogger.com/profile/10078079001156415151noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-81647346474806802212008-12-23T17:27:00.000-05:002008-12-23T17:27:00.000-05:00Surely it is important to note that Alan Greenspan...Surely it is important to note that Alan Greenspan was a Randian Libertarian (I say "was" since maybe he no longer is - having recognised the fatal flaw in that ideology?) and so an extreme supporter of <I>laissez faire</I> capitalism, maybe not the best person to have as the leading financial regulator in the world's largest economy...<BR/><BR/>The Nobel Prize in Economics is not one of the five Nobel Prizes established by Alfred Nobel but is "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel". Just wanted to blow up that misconception, whilst we watch the world economy blow up ;-)Martin Freedmanhttps://www.blogger.com/profile/16952072422175870627noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-7561239782391835082008-12-23T17:26:00.000-05:002008-12-23T17:26:00.000-05:00I would agree that economics (and other "soft" soc...I would agree that economics (and other "soft" social sciences) deserves as much respect as physics and should be judged according to the difficulties and complexities inherent in its subject matter. <BR/><BR/>But I would say that many <STRONG>economists</STRONG> deserve to be treated with a little more caution (relative to physicists, e.g.) for the influential roles they play in our society. After all, it's not like they merely <STRONG>de</STRONG>scribe how economies work — in their common advisory roles, they also <STRONG>pre</STRONG>scribe how they should work. (To some extent, I suppose this is analogous to climate scientists advising government on pollution control, although, thanks to the strong influence of polluting industries on environmental policy, their <STRONG>degree</STRONG> of influence seems comparably weak.)<BR/><BR/>While there are certainly exceptions (e.g. neo-Keynesians, not to mention orthodox Marxists), the dominant prescription (at least up until the very recent economic crisis) is something along the lines of: Keep the politicians out of the way and just allow the "Invisible Hand of the Market" to "work" (read: deregulation/laissez-faire economic policy). [See <A HREF="http://hnn.us/articles/58616.html" REL="nofollow">here</A> for an historian's treatment of the subject.]<BR/><BR/>In that sense, the popular urge to tar & feather the likes of Greenspan & his acolytes in banking, government, & academia is at least understandable (if crude and unconscionable), given the pain that many of us are now experiencing as a result of our political leaders' having trusted their counsel.Unknownhttps://www.blogger.com/profile/05381138707884092921noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-54252248334734331022008-12-23T13:59:00.000-05:002008-12-23T13:59:00.000-05:00The new eSkeptic isn't up on the web yet, but Sher...The new eSkeptic isn't up on the web yet, but Shermer talked about the author, <A HREF="http://skepticblog.org/2008/12/23/ponzi-dilemma/" REL="nofollow">here</A>.Hume's Ghosthttps://www.blogger.com/profile/13551684109760430351noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-72134324768885010512008-12-23T13:55:00.000-05:002008-12-23T13:55:00.000-05:00"A recent article by Chelsea Wald in Science (12 D..."A recent article by Chelsea Wald in Science (12 December 2008) puts things in perspective by asking how it is possible that so many smart people in the financial sector made irrational decisions over a period of years..."<BR/><BR/>I just checked my e-mail and saw that the latest eSkeptic features an article from a guy who wrote a book on Ponzi schemes who fell victim to Madoff's Ponzi scheme!Hume's Ghosthttps://www.blogger.com/profile/13551684109760430351noreply@blogger.comtag:blogger.com,1999:blog-15005476.post-31314127511560721542008-12-23T13:21:00.000-05:002008-12-23T13:21:00.000-05:00Quite. I've met a few physicists who have tried t...Quite. I've met a few physicists who have tried to do biology. My conclusion from observing them is that the successful ones are the ones who learn their biology first or link up with a biologist. Physics seems to be a different beast to the messier sciences, but this is something I don't think a lot of people appreciate.<BR/><BR/>Anyway, <A HREF="http://xkcd.com/520/" REL="nofollow">we have our answer to the physicists</A>. <BR/><BR/>And have a good Christmas!Bob O'Harahttps://www.blogger.com/profile/09924796617668384141noreply@blogger.com