[UPDATE: It was not until I pushed this post out on Twitter that I realized I should have called it, “WHY DID THE ECONOMIST CROSS THE ROAD?” Ah, life is full of regrets.
But seriously, that is a clever title for this content, beyond the obvious.]
I am in the middle of a lot of “day job” projects and can’t devote the full time to this post that it deserves. The context is that Milton Friedman famously said in economics, models need to make testable predictions, otherwise we are not being scientific but instead are engaged in spinning out mere tautologies.
Mises and many of his followers reject this strongly, thinking that economic laws should be deduced logically from the axiom of human action.
OK now to my anecdote: To walk from my apartment to my office at Texas Tech, I have to cross a busy street that has 4 total lanes, with a divider in the middle. So in the morning when it’s busy, what usually happens is that I wait for a break on my side of the street, I walk to the middle and hang out on the divider, and wait for a break in the traffic going the other way to get totally across the street.
The rub is that there’s a gap in the divider, so that cars going one way on the street are allowed to do a U-turn through the gap, so that they can effectively get onto the other side of the big street, going the other way.
Anyway, yesterday it was really busy. I made my way across the first two lanes of traffic, and I was hanging out on the divider. I saw a car turned right onto the busy street (behind me), drove up past me on my right, and then was waiting “in” the gap in the divider (about 20 feet in front of me), trying to turn left.
The driver of that car and I were *both* waiting for the oncoming traffic to give us an opening, so that I could cross and the driver could make the turn. Now normally in this situation I have to be careful, because if a car is pulling a U-turn, then obviously it will be heading straight for me if I’ve also entered the road (jaywalking across the remaining two lanes).
But I was very confident that the car would NOT pull a U-turn, but instead would make a 90-degree left turn and go straight through to the side street that intersected the busy 4-lane road.
How did I “know” this? Because I realized that if the driver pulled a U-turn, it would simply bring him back to where he had been a few minutes ago. In other words, had the driver wanted to get to where the U-turn would place him, it would have been dumb for him to turn right onto my busy street in the first place. He should’ve kept going straight.
Now granted, this wasn’t a prediction on the order of astronomers telling us where to find Halley’s comet. But I *was* right. The driver *didn’t* pull a U-turn, and I was able to cross the street. (By the way, I made sure the driver wasn’t turning. I didn’t stake my life on my prediction.)
One last thing: Notice that my prediction, based on “getting inside the head” of the other acting being, was way more tractable than if I had asked a bunch of neurobiologists to analyze the state of the driver’s brain stem and predict the physical movements of his feet and hands. My knowledge of praxeology allowed me to navigate in the real world a lot better than the natural sciences alone would have allowed.