Economists sued for malpractice?

[sickboy]

Interesting blog. stdreb, I'm sure you'll have lots to chime in about this one.
http://www.maxineudall.com/2010/02/s...lpractice.html
We appear to be at a political impasse because the idea that “government is the problem” has become entrenched. A moral philosophy pretending to be a science devoid of normative judgment has aided and abetted that idea by elevating efficiency above any other possible moral or even economic consideration. The result is that many in the US and in the world who lack the math acumen to appreciate the subtleties of economic theory stand enthralled by sound bites derived from a handful of dead economists and one dead president.
Economics provided the theory and language that supported the drive to the ditch we find ourselves in. We did it by allowing economics to become divorced from moral philosophy. Now the economy is on life support and most people in this democracy can’t tell the “difference between cynical posturing and serious economic argument,” but they can and will vote.
If economists were physicians, we would be sued for malpractice.

 

[oscardeuce]

Originally Posted by sickboy
http:///forum/post/3225529
Interesting blog. stdreb, I'm sure you'll have lots to chime in about this one.
http://www.maxineudall.com/2010/02/s...lpractice.html
We appear to be at a political impasse because the idea that “government is the problem” has become entrenched. A moral philosophy pretending to be a science devoid of normative judgment has aided and abetted that idea by elevating efficiency above any other possible moral or even economic consideration. The result is that many in the US and in the world who lack the math acumen to appreciate the subtleties of economic theory stand enthralled by sound bites derived from a handful of dead economists and one dead president.
Economics provided the theory and language that supported the drive to the ditch we find ourselves in. We did it by allowing economics to become divorced from moral philosophy. Now the economy is on life support and most people in this democracy can’t tell the “difference between cynical posturing and serious economic argument,” but they can and will vote.
If economists were physicians, we would be sued for malpractice.
If only gov't were also held to the same standard as physicians.

 

[sickboy]

I think that is one of the points she was getting at, though not directly.

 

[stdreb27]

I think it is drivel.
This is what I walk away from this article. He's complaining because Economics doesn't account for morality in its math? Then complains that because it hasn't, economists has argued that "government is bad" thus repealing all the good that they implemented during the great depression and have been successful, thus should be sued for malpractice.
"How did it come to pass that many people cannot tell the difference between cynical posturing and serious economic argument?"
This article fits into cynical posturing...

 

[uneverno]

Originally Posted by stdreb27
http:///forum/post/3225644
I think it is drivel.
This is what I walk away from this article. He's complaining because Economics doesn't account for morality in its math? Then complains that because it hasn't, economists has argued that "government is bad" thus repealing all the good that they implemented during the great depression and have been successful, thus should be sued for malpractice.
Except that, as the article points out, the mathemetization of Economics took place in the '50's, well after the Depression.
What I take from the blog is this: Reductionist science has reached it's useful end. Yes, math is inherently amoral. As such it fails to account for variables it is not designed to consider. Physics was the first scinece to discover that the whole is greater than the sum of its parts. Other sciences are beginning to discover the same.
Science, and especially social science, cannot be separated from the whole which it attempts to describe if for no other reason than that it operates within that whole, and cannot operate without it.
In other words, the math cannot account for that which it hasn't been asked to take into consideration.

 

[stdreb27]

Originally Posted by uneverno
http:///forum/post/3226053
Except that, as the article points out, the mathemetization of Economics took place in the '50's, well after the Depression.
What I take from the blog is this: Reductionist science has reached it's useful end. Physics was the first to discover that the whole is greater than the sum of its parts. Other sciences are beginning to discover the same.
Math is inherently amoral. Science, and especially social science, cannot be separated from the whole which it attempts to describe if for no other reason than that it operates within that whole, and cannot operate without it.
Policy wise, you can argue that most economic and social policies followed the same train of logic until Kennedy (with his tax cuts), finally really diverging with Reagan. Where there was a trend back to limiting government.

 

[uneverno]

Originally Posted by stdreb27
http:///forum/post/3226056
Policy wise, you can argue that most economic and social policies followed the same train of logic until Kennedy (with his tax cuts), finally really diverging with Reagan. Where there was a trend back to limiting government.
I quite agree insomuch as economics can be both a policy and a science to begin with. I.e. if it's a policy, it cannot be a "pure" science - it is dependent on variables, some of which have no apparent relation to the science itself.
The purpose of government is, contrary to popular belief, to legislate (or, at the very least, regulate) morality. Government has a vested interest in maintaining social order. After all, w/o said order, it can hardly govern. Economics is a factor in maintaining that order. Sure, as a pure science, if there is such a thing, it can be divorced from extraneous issues, if there are such things. In reality however, the maintenance of the public good is part of why the science of economics exists in the first place. This is the factor which the math cannot take into account --- unless it's been told to --- by the self same scientists who don't believe it's a factor.
Hence the argument on the part of economists that it is government which is the problem. What that translates to is: If the government did not interfere, our models would work.
I daresay they would not. As impressive as prevailing theory is, it is still just theory. At some point, economics will reach the point at which its Higgs-Boson must be found.

 

[stdreb27]

Originally Posted by uneverno
http:///forum/post/3226092
I quite agree insomuch as economics can be both a policy and a science to begin with. I.e. if it's a policy, it cannot be a "pure" science - it is dependent on variables, some of which have no apparent relation to the science itself.
The purpose of government is, contrary to popular belief, to legislate (or, at the very least, regulate) morality. Government has a vested interest in maintaining social order. After all, w/o said order, it can hardly govern. Economics is a factor in maintaining that order. Sure, as a pure science, if there is such a thing, it can be divorced from extraneous issues, if there are such things. In reality however, the maintenance of the public good is part of why the science of economics exists in the first place. This is the factor which the math cannot take into account --- unless it's been told to --- by the self same scientists who don't believe it's a factor.
Hence the argument on the part of economists that it is government which is the problem. What that translates to is: If the government did not interfere, our models would work.
I daresay they would not. As impressive as prevailing theory is, it is still just theory. At some point, economics will reach the point at which its Higgs-Boson must be found.
I guess you could look at it that way. But come on when most people say, "government is the problem" they're quoting reagan... Not complaining that government intervention doesn't allow for a good test of an economic model.
I don't get why people try to discredit economic theory because they don't account for "irrational behavior of humans." If it is done in good faith, it will predict group behavior more times than not. It is like saying you don't buy statistics because they use samples.
One of our game theory professors used to play this game, he'd walk in and tell people to write a number on a piece of paper from 1-10. And that would be the bump on the final grade. We could write any number down, but if the individual turned in a number above the mean for the class that person would get nothing. We could collude all we wanted it, however the final piece of paper had to be turned in privately.
The average was always around 5-6.
I say all this to say, people as a group are predictable, and to attempt to discredit economics as a whole, because of outliers is irrational.

 

[uneverno]

Originally Posted by stdreb27
http:///forum/post/3226138
I guess you could look at it that way. But come on when most people say, "government is the problem" they're quoting reagan... Not complaining that government intervention doesn't allow for a good test of an economic model.
I'm not so sure that government intervention does allow for a good test of the model. If that intervention is both built into and accurately predicted by the model, then perhaps, but there are myriad factors which determine what that intervention will be and if/when it will take place. Have they all been accounted for?
I say all this to say, people as a group are predictable, and to attempt to discredit economics as a whole, because of outliers is irrational.
I agree there. The Laffer Curve is a reasonably accurate algorithm for predicting human behaviour in the face of specific economic circumstances.
The point I'm trying to make is that, just like Physics discovered in the last century: Results are only accurate when the paramaters being studied are limited. Once outside those specific paramaters, results become unpredictable regardless (and perhaps because of) the math employed.
That's not to say it's the fault of the scientist, per se. It's because even the experts don't fully understand what it is they're studying. After all, if it were fully understood, there'd be no reason for further study.

 

[sickboy]

Originally Posted by uneverno
http:///forum/post/3226092
Hence the argument on the part of economists that it is government which is the problem. What that translates to is: If the government did not interfere, our models would work.
You would have to define what Government interference is though. Economic models could not be created without the gov't interference that is known as social order, especially personal property right, both tangible & intangible.

 

[stdreb27]

Originally Posted by uneverno
http:///forum/post/3226145
The point I'm trying to make is that, just like Physics discovered in the last century: Results are only accurate when the paramaters being studied are limited. Once outside those specific paramaters, results become unpredictable regardless (and perhaps because of) the math employed.
That's not to say it's the fault of the scientist, per se. It's because even the experts don't fully understand what it is they're studying. After all, if it were fully understood, there'd be no reason for further study.
The results of the group as a whole are predictable. you're trying to argue that you can't assume rationality. But you can. To some degree or another people are going to do what is best for themselves...
Take the example of a gift used in the article. One could argue, that the person who "selflessly" gave a few bucks, was doing it to assuage guilt for having more money... Which to some extent or another does happen.
It is like saying it is possible for everyone to hit the lotto on the same day. Sure it is possible, but highly highly improbable.

 

[sickboy]

Originally Posted by uneverno
http:///forum/post/3226145
I agree there. The Laffer Curve is a reasonably accurate algorithm for predicting human behaviour in the face of specific economic circumstances.
Speaking of the Laffer Curve, I've been thinking a lot about this lately as it relates to the tax rate. I seems to me that the "correct" tax rate for our current level of spending is as they were before Bush took office (37% top rate, correct?). I find it ironic that the same principle that supply side economics was founded on shows that to fix the budget deficit we need to raise the tax rate based on current spending.

 

[sickboy]

stdreb, what is your opinion on whether economics is a social science or a wing of Math? I personally think that the optimum is in the middle somewhere, just curious your opinion. uneverno?

 

[uneverno]

Originally Posted by stdreb27
http:///forum/post/3226151
The results of the group as a whole are predictable.
Yes.
you're trying to argue that you can't assume rationality.
Again, yes.
Rationality absolutely can be built into the model. What I'm saying however, is that what is rational is a matter of perception. Quantum Physics flies in the face of what Classical Physics defines as "rational."
I have yet to be given a reason to conclude that Economics is a more "rational" science than Physics is.

 

[sickboy]

Originally Posted by stdreb27
http:///forum/post/3226138
I don't get why people try to discredit economic theory because they don't account for "irrational behavior of humans." If it is done in good faith, it will predict group behavior more times than not. It is like saying you don't buy statistics because they use samples.
But how do you define rational vs. irrational I believe is the problem with the theories. What may be rational on a personal level may be irrational for that same person when put into a social context, therefore making the decision both rational and irrational. But I agree that more times than not it works.

 

[uneverno]

Originally Posted by sickboy
http:///forum/post/3226154
stdreb, what is your opinion on whether economics is a social science or a wing of Math? I personally think that the optimum is in the middle somewhere, just curious your opinion. uneverno?
There is no Unified Field Theory of either physics or economics. What is, is also what is not, on some level.
The optimum is probably in the middle. Inasmuch as probability is the determining factor in any equation.

 

[uneverno]

Originally Posted by sickboy
http:///forum/post/3226160
But I agree that more times than not it works.
That's the point I'm trying to make.
More times than not does not = all. It therefore does not indicate understanding, specifically because it cannot account for abberations. It does not equate to rationality (a nebulous term, at best) for the same reason.
All it equals is a fairly reasonable explanation for what we think we know.

 

[sickboy]

Originally Posted by uneverno
http:///forum/post/3226163
That's the point I'm trying to make.
More times than not does not = all. It therefore does not indicate understanding, specifically because it cannot account for abberations. It does not equate to rationality (a nebulous term, at best) for the same reason.
All it equals is a fairly reasonable explanation for what we think we know.
Right, which is why the subject should remain considered in part a Social Science as it is more closely related to psychology & sociology than math in these regards. You have eluded to this above, but if economics is taught and practiced as math with social assumptions which may or may not be accurate, then the discipline as a whole has reached its end and no further study is needed. However, the irony is that in the name of maximized profit & efficiency on a personal level, an economist is better off working with as a "statistician" for a corporation. But, it is not the only discipline to have this problem, I mentioned psychology which is now mostly about diseases and not why a person thinks/does a certain thing, also because of the profit motive.

 

[stdreb27]

Originally Posted by uneverno
http:///forum/post/3226155
Rationality absolutely can be built into the model. What I'm saying however, is that what is rational is a matter of perception. Quantum Physics flies in the face of what Classical Physics defines as "rational."
I have yet to be given a reason to conclude that Economics is a more "rational" science than Physics is.
While you're at it, tell the clerk you got the wrong change, because 20 minus 10 does not always equal 10...
Originally Posted by sickboy
http:///forum/post/3226160
But how do you define rational vs. irrational I believe is the problem with the theories. What may be rational on a personal level may be irrational for that same person when put into a social context, therefore making the decision both rational and irrational. But I agree that more times than not it works.
you're not using the term "rational" in a daily sense of the word in the economic world.

 

[beaslbob]

Economics is not science and never can be.
They use the "Elegancy the argument" as if it were an actual test to see if the argument is realistic. When actually it just tests the argument for consistancy.
Unlike physics and other sciences, there is no experiments that can be conducted to precisly verify, quantify, and independently verify hypothses.
Therefore, economics starts with some assumptions (with or without some real world examples) then uses those assumptions to see if projected results are realistic.
For instance, Adam Smith (Wealth of nations) and Karl Marx (communist manefesto) looked at data, saw different assumptions which resulted in the two competing theories.
Reagen was right IMHO to state 'economists have been wrong' and other political figures (Obama) are wrong to blindly rely on a group of economists whose predictions and recommendations always point in the same direction.
my .02