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You may be interested in Mark Blyth[1]'s take[2] on this, in which he also blames the seductive quality of mathematical models. Math can give an illusion of acc

by pdkl95 11y ago

You may be interested in Mark Blyth[1]'s take[2] on this, in which he also blames the seductive quality of mathematical models. Math can give an illusion of accuracy, when the real world is chaotic and often has far more confounding variables than you know about in something as complex as "the economy". Treating "efficient markets" as if it was a law of nature is probably inevitable when you combine a trust of bad models with the greedy side of human nature (Moloch) that is biased to overlook the differences between reality and a model that tells you what you want to hear [1] Prof. Econ. at Brown University, who is probably most well known these days for his warnings about the dangers of "austerity" (e.g. https://www.youtube.com/watch?v=B6vV8_uQmxs#t=673 https://www.youtube.com/watch?v=B6vV8_uQmxs#t=673 ) [2] https://www.youtube.com/watch?v=hmWbkPezgtU https://www.youtube.com/watch?v=hmWbkPezgtU

realquick81 11y ago
> Math can give an illusion of accuracy, when the real world is chaotic and often has far more confounding variables than you know about in something as complex as "the economy". I don't know what you folks are talking about on this thread branch (what with "efficient markets") but Keynesian Economics is the "theory" that suffers from this "illusion of accuracy". I don't believe in efficient anything, but I know Free Markets Theory involves no Math (only deductive methods like Praxeology).
- TeMPOraL 11y ago
  > I don't believe in efficient anything, but I know Free Markets Theory involves no Math That's actually not a good sign. Math is refined thinking. If your theory doesn't involve math, it's probably little more than handwaving and could be significantly improved by being formalized a little more. There is always the risk that people confuse the map with the territory, but it's present regardless of whether you have a differential equation handy for everything or you're just sharing campfire stories.
  - realquick81 11y ago
    The deductive process on which Austrian School theory is based, is itself based on Logic. That's as formal as you can get. > Math is refined thinking. No, Mr. Poet. Math is an abstract science that can be applied to concrete fields. So far no one has been able to meaningfully apply mathematics to economics, or we would have computers that can simulate markets like we can simulate tornadoes.
    - TeMPOraL 11y ago
      > So far no one has been able to meaningfully apply mathematics to economics, or we would have computers that can simulate markets like we can simulate tornadoes. That only proves those problems are incredibly hard - and require incredible resources and work to think about in a formal, precise way. It's also worth noting that you are therefore no more likely to be a good economist by guessing and waving hands than you're likely to be a good meteorologist by spinning make-believe stories about which way the weather should be. Failure to understand the meaning of this point is a source of tremendous amount of stupid decisions and pointless politics. Also, don't confuse logic with math. The former is just a subset.

by pdkl95 11y ago

realquick81 11y ago

> Math can give an illusion of accuracy, when the real world is chaotic and often has far more confounding variables than you know about in something as complex as "the economy". I don't know what you folks are talking about on this thread branch (what with "efficient markets") but Keynesian Economics is the "theory" that suffers from this "illusion of accuracy". I don't believe in efficient anything, but I know Free Markets Theory involves no Math (only deductive methods like Praxeology).

TeMPOraL 11y ago
> I don't believe in efficient anything, but I know Free Markets Theory involves no Math That's actually not a good sign. Math is refined thinking. If your theory doesn't involve math, it's probably little more than handwaving and could be significantly improved by being formalized a little more. There is always the risk that people confuse the map with the territory, but it's present regardless of whether you have a differential equation handy for everything or you're just sharing campfire stories.
- realquick81 11y ago
  The deductive process on which Austrian School theory is based, is itself based on Logic. That's as formal as you can get. > Math is refined thinking. No, Mr. Poet. Math is an abstract science that can be applied to concrete fields. So far no one has been able to meaningfully apply mathematics to economics, or we would have computers that can simulate markets like we can simulate tornadoes.
  - TeMPOraL 11y ago
    > So far no one has been able to meaningfully apply mathematics to economics, or we would have computers that can simulate markets like we can simulate tornadoes. That only proves those problems are incredibly hard - and require incredible resources and work to think about in a formal, precise way. It's also worth noting that you are therefore no more likely to be a good economist by guessing and waving hands than you're likely to be a good meteorologist by spinning make-believe stories about which way the weather should be. Failure to understand the meaning of this point is a source of tremendous amount of stupid decisions and pointless politics. Also, don't confuse logic with math. The former is just a subset.