08
Jan
2015
Potpourri
==> Curious what you guys think of this blog post urging Austrians to study math. (I disagree with the author’s opinion of the actual attitude toward math among self-described Austrians, which is mostly why I’m asking.)
==> Contra Krugman, Daniel Kuehn wants to make sure Keynesianism wins fair and square.
==> A neat blog post from Mark Sisson explaining why “take in fewer calories than you burn” is not really a good guide to weight loss.
A couple of thoughts in relation to the first link.
1) I agree that he’s basically wrong about Austrians’ attitudes toward math. I think there are a lot of not-formally-trained people on the internet who refer to themselves as Austrians and take to the comments sections of blogs and websites slamming mathematical models. However, the formally-trained Austrian economists I’ve met who publish in a variety of academic journals use all sorts of mathematical models. A relatively famous, formally-trained Austrian told me something to the effect that his work is always *consistent* with Austrian ideas, even if it includes other insights and uses mathematical models. As a junior faculty member at a research university, that sounds like a pretty damn smart way to work.
2) McCloskey has criticized what she calls “math department math” in economics and says she’s in favor of the usage of “engineering department math.” While I’m not 100% sure I understand her point, it strikes me as a contravention of Albrecht’s perspective. He suggests that Austrian economists should study math for its own sake and explicitly says you could/should avoid mathematical economics.. To me that’s the worst thing you can do. Study mathematical economics so you can engage the mainstream of the profession, or at least so you have the option to do so. I went to a mainstream school and was lucky enough to have a major professor who was interested in the Austrian school. In grad school, everything I did in class was neoclassical, mathematical economics. I read Austrian stuff in my “spare time” and was able to write an Austrian paper for a class.
Anyway, thanks for sharing the post, Bob.
I’m formulating some questions in my mind that would require Math as a physicist would use it. Do we really gain anything by segmenting math into engineering math, econometrics math, high school math, &c? That is for the academicians to worry about. I think what Albrecht really should have said is: don’t get stuck in one discipline to the extent that you ignore other avenues. Math was an easy target because it is so useful but so difficult. I don’t see professor Krugman, in his columns, challenging his sycophants to learn math; they accept him as the high priest who has studied and knows these things.
The common split is pure math and applied math. Studying elegant proofs is pretty solidly in the pure math camp; studying measurement theory and sources of error usually falls into applied math. For example, economists typically ignore all units other that dollar signs and percentages (in particular they regularly write a stock with the same units as a flow, then lambast students for getting them confused). When Krugman was on about “austerity” he jumped to second derivatives without a blink, certainly no warning to the reader. I don’t think I’ve ever seen a economist present an equation along with units analysis of that equation, but in high school physics we would have been cleaning blackboards for a week if we did that.
There’s no way any commercial engineering project will be investing labour into development of elegant proofs. The focus is very much on deploying tried and tested tools, most of which are at least a century old.
The exception might be in the computer engineering space where some of the market leaders are genuinely pushing the pure math boundary (e.g. Google with their algorithm development) but this would probably be straddling the pure/applied boundary.
In my view Austrians Economics should be done in the language of Galois theory. Then when a Keynesian tries to make a mathematical argument you can always respond, “But that argument doesn’t hold on elliptic curves over finite fields!”
I have no idea what you just said, but it reminds me of this:
Finite Simple Group (of Order Two)
https://www.youtube.com/watch?v=BipvGD-LCjU
I’m with you on the first link. Math is fascinating and incredibly useful. I disagree with the author’s characterization of Austrians as being “anti” math. No, we are against inferring economic truths from quantitivative values and mathematical formulae.
It would have helped if the author cited passages from Austrians that support his claim. Sadly, nothing.
Science is More than Mathematics – Mises Daily
http://mises.org/library/science-more-mathematics
“Proof-based mathematics attempts to create a solid connection between assumptions and conclusions, laying out every step between. That is not to say each connection is always clear.”
We already have a Proof-like tool for understanding economics: It’s called Methodological Individualism.
We have discussed “macro vs micro” or emergent behaviours here before, but I recently came across research demonstrating that models of behaviour based on individual behaviour is flawed. How do you respond to the work of Sagalnik et al on social influence? Basically, he allowed large groups of people to listen to and download music from new, unknown bands. The control group could not see what others were doing, then in several other “worlds” the participants could see what others were doing in different detail. In the control group songs were listened to roughly the same. In the other worlds this was not the case, resulting in unpredictable success of the songs. They concluded “when individual decisions are subject to social influence, markets do not simply aggregate pre-existing individual preferences.” and “it seems to be difficult to predict the behavior of systems with many interacting components, even with a reasonable understanding of these lower level components. That is, just as it is hard to reduce biology to the behavior of molecules it is hard to reduce group behavior to individual psychology (Barton, 1968); in the words of Anderson (1972), ‘‘more is different.’’… However, it does suggest that models of collective behavior that are based solely on the behavior of a ‘‘representative agent’’ are seriously deficient (Kirman, 1992).”
This seems to me to demonstrate that trying to explain group behaviour in terms of individuals is doomed to failure with current levels of understanding.
I sent a comment without filling in the name box – I will try to repeat it.
Re individual vs group, micro vs macro etc. we have discussed it here before, but I recently came across some research on social inluence that is pertinent. Sagalnak et al allowed thousands of volunteers to listen to and download music from new, unknown bands. The success of each song was the number of downloads. The control group were isolated – they could not see what others were doing. In several different “worlds” the participants could see what others were doing in different detail. In the control group the songs were listened to the same number of times. In the other groups that was not the case, leading to unpredictable success and failure of the songs. They concluded:
“when individual decisions are subject to social influence, markets do not simply aggregate pre-existing individual preferences”
and
” it seems to be difficult to predict the behavior of systems with many interacting components, even with a reasonable understanding of these lower level components. That is, just as it is hard to reduce biology to the behavior of molecules, it is hard to reduce group behavior to individual psychology (Barton, 1968); in the words of Anderson (1972), ‘‘more is different.’’… However, it does suggest that models of collective behavior that are based solely on the behavior of a ‘‘representative agent’’ are seriously deficient (Kirman, 1992).”
This says to me that we cannot explain behaviour of groups such as an economy by the behaviour of individuals with current understanding. Just as few would say that biology is not actually caused by molecules interacting, we cannot explain biology in terms of individual molecules.
Links for anyone interested
http://www.princeton.edu/~mjs3/salganik_dodds_watts06_full.pdf
http://www.princeton.edu/~mjs3/salganik_watts09.pdf
“They concluded “when individual decisions are subject to social influence, markets do not simply aggregate pre-existing individual preferences.””
Individual preferences are expressed based on the attempt to alieviate some felt uneasiness; That’s all the Action Axiom is saying.
Austrians aren’t arguing from pre-existing individual preferences, and we would say that the fact that individual preferences change all the time in response to “society’s” (really other specific individuals) ability to lower a given individual’s costs in terms of his foregone opportunities, that this is precisely why central planning necessarily destroys the economy.
“This says to me that we cannot explain behaviour of groups such as an economy by the behaviour of individuals with current understanding.”
Austrian Economics doesn’t attempt to explain the behavior of groups, and we would say that such a thing would be logically impossible since “groups” don’t behave – only individuals behave.
“For example, I was discussing continuous preferences with a classmate. … Goods are never infinitesimally small, so a consumption set is discontinuous. …
“Not quite. My classmate was able to explain to me that I also required an extra assumption: I need to assume the goods are finite. If there were infinite goods, continuous preferences is still workable.”
“infinite goods” are not economic goods. Preferences cannot be made for them.
To the extent that an individual can avoid a given benefit of an infinite good, for that person the good is not infinite, and the unit being preferred is “exposure time” to the good.
But if all goods are infinite then economics is pointless.
“Plus it helps you communicate with other economists (which is worthy of a whole post).”
Only to show the limitations of math, as Bob Murphy does in this video (noting that he was taught the Keynesian math tools):
Austrian Economics and the Business Cycle | Robert P. Murphy
https://www.youtube.com/watch?v=hkDYsRDah3I
Toward a Reconstruction of Utility and Welfare Economics
http://mises.org/library/toward-reconstruction-utility-and-welfare-economics-0#2c
“The Fallacy of Indifference …
“If a person is really indifferent between two alternatives, then he cannot and will not choose between them.[29] Indifference is therefore never relevant for action and cannot be demonstrated in action.”
The concept of “infinite goods” being just another way of trying to argue from indifference.
Nice post from Daniel and Mark S.
Albrecht’s post was good but suffers from two major weaknesses:
(1) A problem that is common to the art of blogging: it is easy to make assertions but he offered very little evidence in support of his major premise. Do Austrians know/study math? I offer a counter example: I know Landsburg’s blog resonates more with Austrians than with Keynesians which would, at least, suggest an affinity between Austrians and math.
(2) Yes, they should study math. They also should study: Finance, Energy Policy, Literature, Greek Philosophy, German Language, China, Physics …
Bob, this Anonymous was me…did the posting controls completely disappear somewhere along the line?
I don’t know what you mean. I think we upgraded to a new version of the blog software when the website moved.
I’ve noticed a lot more posts by Anonymous. Prior to the changes the software would not accept a reply without a name and email. I failed to put either in and it accepted it.
Yeah, for some reason it’s not saving my name and email, so I have to remember to put it in before each comment. Otherwise, it shows up as anon.
Me too – ya you’ve gotta remember to put it in each time.
The good thing is I couldn’t comment at all from my IP address at home for months but for whatever reason I can now.
Let’s see…censors Daniel Kuehn – feature or bug?
(Good post, by the way!)
People interested in the math/Austrian issue may want to look at Austrian Economics as Extraordinary Science, by Edwin G. Dolan . It is a chapter in The Foundations of Modern Austrian Economics edited by Edwin G. Dolan. The book and thus the chapter is available on-line. Have you seen this article Dr. Murphy and if so do you have an opinion of it?
Also, it is now more difficult to get to the Free Advice site. Before, all one had to do is Google “Bob Murphy” and a link for Free Advice would appear. Now, even if you google “Bob Murphy Free Advice”, you can get some articles from the site, but no direct link to it. To get to the site you have to go to the old articles and then get to the site from there…
I google free advice. A lot depends on usage because of google’ls memory cookies, though.
Krugmanism is derived from (or inspired by) Hari Seldon’s psychohistory. By his own admission.
My response to “Austrians should learn to love math” is this:
Show me an equation(s) describing human action on one (any) issue this single human being meets in life and give me another set that will accurately describe his future actions on this and the final outcome.
Too hard?
Well, cry me a river….
Until this can be done, math is at best a tool to describe PAST, with only limited utility in describing PRESENT.
My POV is that any discipline which deals with human actions and/or interactions can be only arts, never sciences. Except psychology/psychiatry, which are bullshit.
While I love math – it is literally everywhere around us – and I’m not shy in using them, I believe applying math to humans is… Welllllll…. I don’t know how to describe that act… Arrogance? Stupidity? Ignorance? Incomplete education? Take your pick.
“since “groups” don’t behave – only individuals behave.” This is exactly the problem you have. An economy is the combined behaviour of groups of individuals. The behaviour of each individual cannot be understood without reference to the group. Therefore the economy cannot be understood without reference to the group. The authors say that an attempt to work up from an individual level to the economy will not work any more than an attempt to work up from individual molecules to,say, ecology will work.
I would not deny that biology *is* the interactions of molecules, but any theory based on individual molecules is useless in describing what happens. So with the economy. The economy *is* the combined behaviour of individual people, but any theory based on individuals will fail to describe what happens.
On the posting theme, the comment box used to move to underneath the comment you were replying to, but now it stays at the bottom. Hope this ends up in the right place.
It didn’t end up in the right place – it was supposed to be a reply to Guest
I take his appeal on math to simply be for Austrians to better equip themselves to refute the mainstream on their own terms. Sure, you can argue against them without dismantling their claims on their own terms but it is superior to be able to. In fact, knowing how to lie with statistics is integral to immunizing ourselves against the mainstream claims. As to the attitudes of Austrians on math, I think the simple logic of the Austrian school can encourage less rigorous study but not from those that might comment on this post.
-Actuary