Would you critique astronomy the same ways as economics? What is the critical difference?
[1] Yes, there was a lot of simultaneous work in other areas as well.
* Observers are also actors. They can and will significantly influence the observed.
* Once observations are revealed at large it'll have short/long term consequences. There's a good reason fed gives multiple indications before changing any parameters such as interest rates, tapering etc.,
* Humans don't necessarily act like rational selfish agents (as economists expect) all the time.
* Economics is often entangled with other aspects such as trade agreements, geopolitics some of which take years and decades to manifest.Whether the stuff you’re observing can read and understand your observations, and then choose to do the exact opposite.
One of the observation of the author is that models work better if the human beings accept to restrict their behavior and follow simple rules. Another observation is that in social science, it is hard to design models that do a prediction significantly better than "tomorrow will behave the same as yesterday".
[0]: http://www.ens-lyon.fr/en/article/research/your-life-numbers...
- Astronomers cannot influence the system they are describing; there's no feedback. In economics there is.
- Astronomy describes systems with a few, simple particles whose inner state is not relevant to the behavior at large. Economics describes (tries to..) systems with many complex 'particles' whose inner state is essential to the behavior at large.
Not saying that this is what's fundamentally separates astronomy from economics, just pointing out some potential differences.
Economics is a dismal science and models rarely predict real word outcomes correctly. It’s more akin to astrology than astronomy.
So when we criticize "economists" are we criticizing the scientists like Galileo and Copernicus that were right and got their books banned, or are we criticizing the ones that supported the political power of the day?
Note that some of those scientist would have genuinely believed their 'church-approved' theories. Just their opponents couldn't challenge them openly without incurring wrath.
And would generic criticism of "scientists" have benefitted science or the established political power at that time?
Astronomy doesn't fight back, economics does.
The even worse part is that some assumptions don't even work in once you look at the math of e.g. accounting.
Keynes and Silvio Gesell and Wolfgang Stützel are much closer to how our accounting system known as money works even though both of them lived during a gold standard where it was normal to bend some accounting rules like digging out new gold to create more money or just bend them outright by printing money without any asset backing it.
Assumptions don't need to be absolutely true, they have to be good enough to have predictive power.
>Keynes and Silvio Gesell and Wolfgang Stützel are much closer to how our accounting system known as money works
I doubt.
As for Econometrics, I agree that studies employing observational causal inference in statistics are much harder (and harder to swallow) than experiments. Usually.
But perhaps, if you dig a bit deeper and ask yourself things like: "what makes a hypothesis falsifyable" or, "could there be a hypothesis falsifyable by observational data?". Have your ever written down the exact exclusion condition (or exogeneity condition or whatever) you use in your experiment? You might find out something interesting.
Controlled experiments, much like any econometric (or statistic) technique, require identification assumptions. And of course, these can not be proven. Even though many people believe it is so, experiments are not really different in kind, the assumptions are just usually easier to believe. Not always, though, which can also be fun. Even in an experiment, you - in fact - observe reality only once. In other cases, however, we find out that our assumptions about the identification in the experiment were wrong, due to factors we didn't know about. This happens even in physics (shocker, I know).
Keep an open mind, would be my advise. Your critiques are well known, and in the broad sense tackling them is the business of statistics. By the way, there are indeed smart people here and there.
A good heuristic: If your find yourself rejecting entire disciplines, like econometrics, all while implictily using auction theory, regulation, pricing etc. in your amazon, ebay, cellphone, or energy grid, you are probably on the wrong peak of a Dunning Kruger curve.
The number of places for bias to creep in are way to many. I think the econometrics people have gone down a hopeless path, guided by wishful thinking and demand from people who want us to be able to make statements about things which we just cannot do.
The parts of economics that are valuable are not based on econometrics, but upon reasoning from first principles: Incentives, supply and demand, game theory etc. under which I would argue all of your examples fall.
Could you be more specific what is a lab setting for you? Natural experiments are not what I meant when I spoke of experiments, as natural experiments are observational inferential methods!
btw did they ever tell you about that physics experiment in a lab that was built just over a subway line? So much confounding!
Jokes aside, your assumptions amount to assumptions about what "controlled" and "in a lab" means. I hope you see it makes more sense to define the requirement for experimental identification mathematically, in which case you'd see that the conditions are not different in kind, only in degree. etc.
Edit:
If that counts as revealed preference data, I can assure you that econometrics are used to great effect in pricing, auctions etc - one of the reasons certain orange and blue companies hiring experts on this have become mucho rich in the past couple of years. Some oldschool econ models may not be the best to describe the altruistic, boundedly rational present-preferrer. But oh boy, can you make some serious dough if you can mechanism design the auction platforms and the best the firms can do is to try to train some machine learning models against it.
There is a substantial difference in degree when dealing with atoms, molecules, homogenous materials vs. people who think, face incentives and understand game theory.
As far as economic reasoning goes, there are some studies you can do (like optimal auction clearing) where you can hold the inputs equal and then adjust some aspects of the optimization (the objective, constraints, or decision variables) and get a very accurate picture of how market changes would impact the results. I think that is probably an exception rather than the normal case though.
In general, my thoughts during my studies has been that the economic theories of supply & demand, incentives, elasticity, theory of the firm, game theory, government intervention...etc all has more use as a generic framework of thinking (ex: if we put in a price cap, here are the expected impacts), rather than an equation I can use to get an exact answer (basically exactly what you're saying above). Doing some kind of analysis on things as complex as the US economy must have massive inaccuracies involved as there are too many factors and even behavioral economics doesn't have all the answers for why people don't always act rationally.
So how do you confirm these first principles? I'd argue that those are an even wider door to let your biases flow into the analysis. I mean this type of argument has given us trickle down economics which has significant real world evidence it doesn't work.
For example people use says law to argue saving does not create unemployment but says law can also be interpreted as saving is impossible over the long run and therefore unemployment shouldn't happen either.
It's not that economics can't be a science like physics. It's that (most) economists don't treat it like a science.
Contrast that to physics, where we have been very successful with predicting the behavior of masses both on small and on large scale, with relatively few exceptions.
From Popper’s The Open Society and its Enemies
The seen/measurable: employment in the production of windows. The unseen/unmeasurable: missing employment in the production of suits.
Why not?
As for your other point, I guess the issue the lack of a hypothesis regarding basic income. You can't test "basic income" as such, and with such unspecific setup you are sure to conflate rather than illuminate mechanisms of relevance. In any case, it depends on your question whether you need to take income away from anyone. Are you going to start by examining distributive effects? Really? No physisict would test their airflow experiment on a flying rocket, while also trying to measure how he exhaust affects the wind in Costa Rica next week and saying 'something' about the future climate. They would start by putting their airflow gizmo into an isolated chamber - which is, afaik, more or less where UBI experiments are.
Fair point. I guess you could run an experiment where money is simply taken away from people, destroyed and then look at the effect of that in isolation.
That it is harder to draw conclusions from experiments in biology than in physics doesn’t imply biology isn’t a science. Economics adds the problem that we (rightfully) don’t want to do realistic controlled experiments (would at times be hard, too. Put a few million people in a country with a given law regime, watch for a couple of decades, draw conclusions. Repeat) but again, to me, that doesn’t imply it isn’t a science.
I think it’s more part of the humanities than a science, though.
Money would majorly come from those who have the greater means to pay larger amounts into the system, and on the hypothesis that bettering the material conditions of those in the lower and middle class will necessarily lead to increasing productivity and thus (and 'thus' is a large leap) greater general income that can partly be paid back into the system in a cycle.
How much you plan to pay in taxes to support my UBI?
I expect to pay and continue paying a lot, yet the benefit is more than what I pay in taxes. What's better is that our current UBI is quite a bit above zero already, but the distribution is fraught with large costs in time. Re-organizing and streamlining UBI distribution would result in significant cost improvements to the current US welfare approach, and improve its impact.
Can you back your claim with facts? UBI is universal, not magic.
> I expect to pay and continue paying a lot,
Just say a number, so we will put it into formula to see is your expected taxation will match minimum requirement for UBI.
Typical wealth distribution without UBI:
^
|
|
| *
| * *
| * *
| * *
| * *
|* * * *
+------------------------------------------------>
^ - number of people, > - income
^ *
|
|
|
|
|
|
|
| *
| *
| *
| *
| * * *
+--U------------------------------------------->
^ - number of people, > - income, U - UBI level
As you see, UBI erases middle class. Everyone becomes poor, except some rich.
The US already has a non-zero UBI[1], it's simply inefficiently distributed via the negative income tax rate and various welfare efforts. That's a clear first area to fix things up. Then, if we need to increase the historically low tax rates on high income households or implement capital tax rates on the wealth, increases in taxes can be considered.
Further, from a theoretical perspective, the economy is not zero-sum. A rising tide lifts all boats; if less money has to be doled out to industries supporting enforced poverty, such as private jail systems among others, then there is more money in the economy for utilization for many things (including but not limited to UBI). General equilibrium effects often have counterintuitive effects, such as they are.
[1] https://en.wikipedia.org/wiki/Universal_basic_income_in_the_...
I answered your earlier questions already. I encourage you to read full threads.
So you're saying that you're a poor economist, then.
A reasonable overview: https://econreview.berkeley.edu/unboxing-universal-basic-inc...
Econometrics gives people everything they want to hear, and with a scientific veneer as a bonus. The HN crowd should however appreciate how susceptible this is to the tyranny of metrics. Claude-Frédéric Bastiat warned of this over a century ago with his parable of the broken window: Think not only of what you can see (the glazier who is employed to repair the window), but also of what you cannot see (the alternative purchase of a suit) had the window not been broken.