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Thanks, fixed.
Rachel: I'll have to write that into the new gospel.
E-Merl: New gospel?
Rachel: Gospels should be updated regularly.
Edit: mispelling of "write" corrected.
My bookmark is made of two prices of fridge-magnet material. It can be closed around a few pages and the magnetism holds it in place, preventing it from falling out.
Plus dollars in my country are exclusively coins, the smallest note is $5.
Nonetheless it is important to have a firm grasp on the progress we have already attained. It's easy to go from "we haven't made any real progress" to "real progress is impossible". And so we should acknowledge the achievements we have made to date, while always striving to build on them.
That second point is particularly important. Since present governments cannot reliably bind future governments, credibility is a big issue with any politically-sensitive project with a long time horizon.
Except that an individual vote have a negligible effect on who wins an election, so voters have no incentive to figure out which political party best represents their goals.
The normal margin of error on a political opinion poll would be 1.96 sigma - a 95% confidence interval (that's how you'd get a margin of error of just over 3 percentage points on a poll of 1000 people.
Yes, I don't think "couldn't afford paper" is a good explanation, books of this nature were for wealthy people anyway.
I think much of it is that brevity simply wasn't seen as a virtue back then. There were far fewer written works, so you had more time to go through each one.
The three you mention are all subtypes of the same efficiency - informational efficiency. Informational efficiency is used in finance and refers to how well a financial market incorporates information into prices. Basically a market is informationally efficient if you can't out-predict without using information it doesn't have. The weak / semi-strong / strong distinction merely indicates how much information it is incorporating into prices: weak means it's incorporating it's own past prices, semi-strong includes all public information, and strong includes all information held in private as well.
The other type of efficiency is allocative efficiency, a concept used in microeconomics. An allocatively efficient market is one that assigns goods to the people who place the highest value on them (subject to the constraints of each person's endowments). It is effectively a utility-maximising condition. The whole concept of market failure in economics is built around situations where markets are failing to be allocatively efficient.
Yglesias seems to be committing an error here by confusing technical jargon with common English. Efficient has a very specific meaning in economics (well, two specific meanings, depending on what kind market you're talking about). The word efficient is not meant to refer to universal goodness and it's a mistake to treat it as if it were.
Indeed. In fact there's a website: What's the Harm? that explains what damage these beliefs cause.
Thank you for the recommendation.
For the record, I'm pretty sure this story is apocryphal, though that doesn't take away from it's value as a rationality quote.
It's even better when said by Leonard Nimoy.
You definitely have a point here. The Law of Comparative Advantage is an extremely powerful driver of improved standards of living. So you definitely shouldn't try to do everything yourself.
But at the same time it pays not to over-specialise. If you rely on another person to fix your computer problems for you (for instance), that might work fine, until they aren't available for some reason. Then you have a choice between working it our for yourself or just giving up.
So I'd say at the very least overcoming "learned blankness" is helpful for implementing a back-up plan.
This was really interesting, while I got a decent primer in behavioural economics at university, neuroeconomics was still too cutting edge.
Yes, the trouble with rationality is that it may not work very well if you're a fictional character.
Still, Ford's position was entirely reasonable ex ante.
That is truly incredible, I regret only that I have but one upvote to give.
Happy to help, I like to contribute my economics knowledge to the group when its germane.
The textbook definition of "externality" is where some activity has an effect (whether positive or negative) on people who are neither party to that activity, nor in a contractual relationship with those people.
So, creating a meetup group that other people will enjoy has a positive externality, but note if SilasBarta had been hired by those people to create that group there would be no externality (unless it also benefited some people who hadn't hired him).
As for the reference to counterfeiting, that I believe is (based on previous discussions with SilasBarta) a sly reference to Keynesian economics, and you should probably leave it to one side if you're still trying to get your head around externalities.
Yes, blaming the failure on self-serving behaviour is futile, but its imperative that you account for people's tendency to do this when you design a system.
I think this quote is especially apposite when your looking at ways of reforming a system. Attributing bad policy outcomes to the perfidy of individuals is generally unhelpful in designing a solution.
It may have more to do with compartmentalisation than anything else. Economists focus their attention on their own sub-disciplines, so the micro guys don't pay much attention to what the macro guys are doing. I'm not sure that's especially unusual in any intellectual discipline though.
Secondly, macro is what most people think of when they think of economics. So laypeople talk about the failings of economics when they're really talking about fairly small parts of the discipline in the grand scheme of things.
As to why economists don't pick up on this more often, I'm not really sure. Part of it is that debates on the epistemological merits of different methodologies don't really get a lot of play among the general public for some reason.
As an economist myself (though a microeconomist) I share some of your concerns about macroeconomics. The way support and opposition for the US's recent stimulus broke down along ideological lines was wholly depressing.
I think the problem for macro is that they have almost no data to work with. You can't run a controlled experiment on a whole country and countries tend to be very different from each other which means there are a lot of confounding factors to deal with. And without much evidence, how could they hope to generate accurate beliefs?
Add to that the raw complexity of what economists study. The human brain the most complex object known to exist and the the global economy is about 7 billion of them interacting with each other.
None of this is meant to absolve macroeconomics, it may just be that meaningful study in this area just isn't possible. Macro has made some gains, there's a list of things that don't work in development economics and stabilisation policy is better than it was in the 1970s. But apart from that? Not much.
I deal with this by wearing a watch. I always wear a watch on my left hand. Whenever I have to work out whether I'm talking about my left or my right I stop and sense the extra weight. The wrist with a slight weight on it is my left.
That's only true for a stationary series, which temperature isn't. For a random walk series you can have a 50% chance of each new observation being the highest ever in the series. For a trended series it can be higher than 50%.
Furthermore even if one is a pure consequentialist, there may be a case for acting like a deontologist in some cases. While a perfectly rational entity can properly weight costs and benefits, people can't. Chances are if a person's moral code says "it's a good idea to subject some people to mind rape for decades" that person has made a mistake, and one should account for that.
And you had the good taste to steal something that doesn't get stolen all that often.
In circumstances like that I find I have to laugh, if only to keep from weeping.
I definitely face this issue, I find it difficult to do anything I'm not in the habit of doing, especially if I'm doing it for the first time.
I've given the problem a quick pass and I can conclude this much:
1) Using the red weapon is weakly dominated, so definitely don't do that.
2) There's no Nash equilibrium in pure strategies, so if there's an equilibrium, it's in mixed strategies. If I have time over the weekend, I might re-learn how to do Lagrange Multiplier calculus and then I'll have a go at calculating a mixed strategy equilibrium.
That all sounds right to me.
I'd go along with both of those examples (though the US has a history of corporate bailouts that extends far beyond current events). Also rent control (it has significant perverse effects on rental markets and often hurts the poor).
That's not to say other countries don't have their problems, I don't think the US is a uniquely bad policy maker, but there is something about the way the US government makes policy that seems to want to have its cake and eat it too. When they try that it usually doesn't end well.
Not at all. Emergency care is precisely the sort of thing that should be covered by insurance. Equally, there's no reason why the providers of health savings accounts couldn't negotiate rates for their members, if that's a valuable service (in fact many insurance companies offer HSAs at the moment. Though I wouldn't object to the US government forcing hospitals to be more transparent about their pricing.
The essential problem is the way health insurance works in the US. The basic function of insurance is to protect people from strongly adverse events that would put them into financial distress. Insurance companies have to charge more than an actuarially fair rate for insurance in order to make a profit. This means that it is inefficient to run small or high probability expenses through an insurance scheme. The only reason this happens in the US is the tax deductibility of insurance and the mandates on coverage in some states. This turns health insurance into an inefficient health savings scheme.
Furthermore community rating produces very adverse outcomes. By preventing insurance companies from pricing insurance policies at a different rate for each customer (thus creating an expected profit from each customer), the insurance company has an incentive to refuse cover to high risk people (i.e. those that need insurance the most) or drive them away by making their life a misery every time they try to lodge a claim. To the extent they can't do this it drives low risk people out of the market, which leave them exposed if they suddenly need emergency health care (this is especially problematic since low risk people are generally young and therefore have little savings) and insurance companies have to raise premiums further to make up for the loss of the highly profitable young people.
My advice to the US government would be to end community rating, guaranteed issue and mandated coverage. I would suggest eliminating the tax deductibility of insurance (or failing that, make putting money into a Health Savings Account tax deductible). Medicare and Medicaid should be discontinued and replaced with a system of income support where poor or unusually sick people would receive extra money in a health savings account that could be spent on healthcare or health insurance. If you have to include old people in the scheme explicitly to make it politically possible, that would be OK as a second-best solution.
The basic principle in this is to let market mechanisms work in the absence of a clear market failure and then deal with people who can't afford vital services by helping them directly. To what extent you provide that help is a terminal values question so I won't venture an opinion here, but however much or little you want to help, this system should result in cheaper insurance for most people and essential coverage for the poor or those in need of extraordinary levels of health care. It should also arrest the escalating health costs of the US government.
I'm an economist and it makes no sense to me at all. It seems almost like someone carefully identified the efforts insurance markets make to mitigate the failures in health markets and then crippled them. I actually have trouble convincing some of my colleagues that I'm serious when I describe the regulatory structure.
Just an indication that one should avoid absolutes: even an absolute directive to avoid absolutes ;)
I agree with your qualifications, I was oversimplifying. And the reason I didn't say certainly fail because I try to avoid using the word "certain" unless I'm dealing with purely logical systems.
For some strange reason a lot of US policy in particular seems to fall into the "worst of both worlds" camp ( I would consider their health insurance system as an example). As I'm not an American I don't know why this is the case.
It's a government-run fire station, so it's not all that capitalistic.
By "understand", I mean have a sufficiently good model to make high quality predictions about what key economic variables are going to do. And I wouldn't call papers like the one on the Monday effect routine, though they do happen.
The problem is that understanding the economy is probably harder than understanding human intelligence. After all, the global economy is the product of over 6 billion human brains interacting with each other and their environment.
I think it genuinely wise, it contains three related important concepts: 1) You should try to make the world a better place, 2) You shouldn't waste your effort in attempting 1 in situations when you will almost certainly fail, 3) in order to succeed at 1 & 2 you need to be able to understand the world around you, a desire, to affect change isn't enough.
The only thing that's missing form it is something about having the insight to distinguish good changes form bad ones.
In Oblivion, the settlements you are in are village-sized. They would be close-knit communities in which you are a stranger. Also, we're not talking about picking up something off a street (picking flowers or herbs for instance) was OK, because outdoor plants generally weren't flagged as owned. Things you might want to pick up were generally indoors and often within sight of the person who owned them.
It's interesting that the designers hook up the formula for FF 13. You basically don't do any sidequests until you finish the game. After defeating the final bosses it puts you at the last save point, and lets you go back and do all those sidequests you walked past earlier in the game. The incentive to play this way comes form the fact you can't finish levelling up until you finish the game.
It's interesting to see what happens when videogames behave more like real life. For instance, in Oblivion (and Fallout 3), you can't just take things unless you're in the middle of nowhere. If someone sees you, they cry out "stop, thief!". Equally, attacking people who didn't attack you first in civilised areas will draw the guard or vigilantes down on your head, and most of the stuff you find lying around is worthless trash that isn't worth the effort to haul away and sell.
I remember how jarring it was when I first tried to take something in Oblivion, only for a bystander to call for the guard. And then I realised that this is how NPCs should react to casual theft.
Eliezer advocates the "rationality is about winning" position, as timtyler note sin his reply to you.
And this is actually a Humean point. The idea is that passion is about what you want i.e. want qualifies as winning and rationality is about getting what you want i.e. how to go about winning.
As for Mr Bagehot's preference set, it's true that transitivity is a necessary condition for rationality because an agent with intransitive preferences has no coherent utility function.
However, I don't think that's an issue here. Bagehot's preferences are dependant on others, but that doesn't make them intransitive. I fact there's no way to test for intransitivity with fewer than three alternatives to choose from.
And all of that is true. Even if you have a real problem that people are ignoring, highlighting its badness might still be counter-productive.