Back in December, when Brad DeLong said I needed to study at the feet of Krugman because I lost an inflation bet to David R. Henderson, and then Bryan Caplan objected to the tone of the statements, Daniel Kuehn wrote:
I thought the whole point of betting on predictions was to weed out BS and test theories.
Now when people actually propose that some of that actually goes on Bryan Caplan – a big advocate of economic blog betting – finds it “frankly deplorable” and calls it “cackling with glee” instead of… you know… just hoping that betting will do what you all think it will do.
Now, when Bryan is asking Keynesians to explicitly bet with him because they keep saying how much better their model predicts things, Daniel writes:
Bryan Caplan is promoting bets on Keynesian theory – encouraging Keynesians to put their money where their mouth is.
He is concerned that the only bets around are about inflation, and that you don’t have to be a Keynesian to think inflation will stay low.
True enough but this kind of gets at the heart of the problem, right? If it’s hard to get detailed empirical analyses to tease out a distinction between theories, how can you expect a bet on any kind of headline indicator to? There is a lot of other stuff going on out there and in particular a lot of endogeneity.
If you’re someone that would bet that when government spending goes up output will go up (this is what Bryan suggests) – without cleaning up the endogeneity bias – then you really don’t understand how economics works and shouldn’t be betting on it in the first place.
You certainly shouldn’t be representing Keynesianism with your bet.
Bets are great for getting people to be more serious about the claims they make, but I think the proponents of betting vastly overestimate how useful it is.
Not an outright contradiction, but a Kuehn Kontradiction? A Daniel Double-Take?
Anyway let’s leave him alone. Soon enough he will be punished by a sleep deprivation experiment.