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I totally disagree. Theories have enormous effect on reality. Coase Theorem^ dictated how radio spectrum was managed in the US, with disastrous results. Moneta

by netcan 6y ago

I totally disagree. Theories have enormous effect on reality. Coase Theorem^ dictated how radio spectrum was managed in the US, with disastrous results. Monetarism dictates most decisions made by central banks. Unionisation and later union-busting were very closely tied to social science theories. "Romer theory" had profound influence on world bank and UN policies. Reality impacting theory though... Keynesianism remained totally intact when 1980s stagflation disproved it. Monetarism is taught as-is despite the last 10 years of macroeconomic reality. Marxist theories of ancient history and the origins of high civilisation are virtually indisputed despite the discovery of gobleki tepeh, for an example outside of economics. In the 30s, almost all economists predicted a much reduced workweek. Keynes, the most famous, predicted a 15 hour workweek by the 1970s. Most economists agreed: marxists, liberals, keynsians, corporatists.... The prediction was based on some fundamental theories in economics, combined with GDP & productivity assumptions. The assumptions were right. The theories have not changed. The way economists explain the result is by tweaking theory in a non fundamental way. They mostly argue that people (surprisingly) prefered working 40 hrs, earning more and spending more... The in-theory implication is that people place nearly no value on "leisure." No need to rethink theories just because they predict falsities. No problem if the updated parameter values imply a reality that is obviously false. ^Technically, a bastardised form of the theory that reverses the authors' intended conclusions.

naravara 6y ago
> Theories have enormous effect on reality. Coase Theorem^ dictated how radio spectrum was managed in the US, with disastrous results. Monetarism dictates most decisions made by central banks. Unionisation and later union-busting were very closely tied to social science theories. "Romer theory" had profound influence on world bank and UN policies. All of these rose to prominence in the 70s, 80s, and 90s, which is my point. Our institutions are stuck there and haven't been able to break out of them even though most of the theory has refined or invalidated many of these claims based on the empirical evidence and natural experiments we now have. The most recent one you cited, the Endogenous Growth theory, is actually the one that has been most open to adaptation and criticism. And this is largely because the organizations to whom it is most germane--like the World Bank and the IMF--are largely staffed by economists and social scientists rather than the career bureaucrats and political/industry flacks that the rest of the government is. But even then, it has lots of trouble being reflected in US government policy (agencies like State/USAID) because of that same issue I mentioned. > No need to rethink theories just because they predict falsities. No problem if the updated parameter values imply a reality that is obviously false. I don't know where you're getting this from. Basically every 101 level Econ textbook mentions this exact thing and how it led to having to seriously reconsider how much agency workers have in actually deciding their labor/leisure mix. Behavioral and Welfare Economists are particularly interested in this question.
- netcan 6y ago
  Maybe I'm just old, but my 101 econ texbooks made no mention of behavioral economics and very little of welfare economics. Those were in the wishy washy electives bucket. I'd actually like to try this experiment, irl. My guess is that the majority of micro teachers today would deal with "What was Keynes' mistake" in the "tweak and defend" way. At most traditional economics schools, LSE or whatnot, I'd put money on it. Look... I think what you're describing is an effect, not a cause. Social science theories, when faithfully implemented, have had some terrible results. Formal, orthodox economics still holds a lot of power in the most formal bureaucracies like the IMF, central banks, UN agencies, etc. They like legible, citable orthodoxy. They like to have a beyond reproach "scientific basis" or expert consensus for policies. There's a noteworthy principle-agent-ish aspect to this. Social science strongholds tend to exist outside of both market and electoral discipline. A municipality or HR department isn't, so social science doesn't thrive there. All this is a matter of degrees though. Social sciences still do have influence, certainly at the national-political level. Slight tangent: I'm not actually very familiar with Romer, beyond the basics. Was Endogenous Growth Theory the basis for higher education subsidies, or is that a different flavour of human capital theory?
  - naravara 6y ago
    Behavioral Econ is where all the energy is right now. Advances in computing, data collection, and statistical methods have enabled levels of quantitative analysis around natural experiments that nobody thought possible even a few years ago. >Social science theories, when faithfully implemented, have had some terrible results. I think the challenge is that there isn't such a thing as "faithfully" implementing a social science theory. There is too much unaccounted for to just blindly apply. What you're describing sounds more like ideology, which is generally a step or two removed from the underlying theory. Social scientists are themselves aware of the limitations around generalizability of any specific truth claim. It's mostly the pop-version that get a mind of their own and start getting applied uncritically. And the shift of expert opinion in the policy world from actual, practicing social scientists to political flacks and industry types has really ramped up this tendency. Part of the challenge is that there is also lots of ideologically motivated funding in economics and social science that is attempting to put its fingers on the scales of academic inquiry. >Was Endogenous Growth Theory the basis for higher education subsidies, or is that a different flavour of human capital theory? Partly. Depends on whether you're talking about in the US context or a developing country context. In the latter, from the perspective of financial institutions like the World Bank it mostly guided where the loans were disbursed. Previously the focus was very much on infrastructure. Endogenous growth theory started encouraging them to pivot to investments in education and healthcare instead. One of the challenges is that infrastructure is fairly easy and politically popular (powerful people get to bid on the contracts and it creates a rich vein for cronyism and kickbacks). Education and healthcare take more mature organizational capacity and, once you start promising it, people start getting mad at you when you suck at it and vote you out. In developed countries education subsidies are very old. Even high education was mostly viewed as a public responsibility until fairly recently when the risk was offloaded to students instead. American Land Grant universities, particularly the University of California school system, were an early case study to prove the value of education as a growth driver.
watwut 6y ago
> Marxist theories of ancient history and the origins of high civilisation are virtually indisputed This is not true.
- netcan 6y ago
  OK. Undisputed is an overstatement, unfair even. There's actually quite a lot of action in this space, and the publications/excavations are recent. You do see my point though, no? I think many/most history teachers don't really know much about alternative "how it all began" history, and those old narratives are still certainly the history 101 interpretation. If high school teaches neolithic history, they probably teach a historical materialism version. As the evidence stands currently, that's no longer evidence based.
  - watwut 6y ago
    First, there is massive difference between "theory", especially academic theory and what high school teacher teaches. That is completely different claim. Second, no I don't really think so. The kind of worst about high school neolithic all history I can say is that what I seen of it was terminally boring.
    - netcan 6y ago
      I think we may be talking past each other somewhat. By "marxist theory" I meant the timeline and cause-effect chains that are generally in the textbooks, history books what your likely to be taught in college, etc. Marxist interpretation would have been a better choice of words. I agree about high school (and younger) history being boring. I hated it. Don't even remember what periods they taught.
      - watwut 6y ago
        We are not talking past each other. Neither colleges nor high schools are teaching marxist interpretation of history in their history courses. The exception are courses like "marxist interpretation of x" which indeed teaches what marxist interpretation of event x is. Also, I suspect that you dont know what Marxist interpretation of historical events is.

by netcan 6y ago

naravara 6y ago

> Theories have enormous effect on reality. Coase Theorem^ dictated how radio spectrum was managed in the US, with disastrous results. Monetarism dictates most decisions made by central banks. Unionisation and later union-busting were very closely tied to social science theories. "Romer theory" had profound influence on world bank and UN policies. All of these rose to prominence in the 70s, 80s, and 90s, which is my point. Our institutions are stuck there and haven't been able to break out of them even though most of the theory has refined or invalidated many of these claims based on the empirical evidence and natural experiments we now have. The most recent one you cited, the Endogenous Growth theory, is actually the one that has been most open to adaptation and criticism. And this is largely because the organizations to whom it is most germane--like the World Bank and the IMF--are largely staffed by economists and social scientists rather than the career bureaucrats and political/industry flacks that the rest of the government is. But even then, it has lots of trouble being reflected in US government policy (agencies like State/USAID) because of that same issue I mentioned. > No need to rethink theories just because they predict falsities. No problem if the updated parameter values imply a reality that is obviously false. I don't know where you're getting this from. Basically every 101 level Econ textbook mentions this exact thing and how it led to having to seriously reconsider how much agency workers have in actually deciding their labor/leisure mix. Behavioral and Welfare Economists are particularly interested in this question.

netcan 6y ago
Maybe I'm just old, but my 101 econ texbooks made no mention of behavioral economics and very little of welfare economics. Those were in the wishy washy electives bucket. I'd actually like to try this experiment, irl. My guess is that the majority of micro teachers today would deal with "What was Keynes' mistake" in the "tweak and defend" way. At most traditional economics schools, LSE or whatnot, I'd put money on it. Look... I think what you're describing is an effect, not a cause. Social science theories, when faithfully implemented, have had some terrible results. Formal, orthodox economics still holds a lot of power in the most formal bureaucracies like the IMF, central banks, UN agencies, etc. They like legible, citable orthodoxy. They like to have a beyond reproach "scientific basis" or expert consensus for policies. There's a noteworthy principle-agent-ish aspect to this. Social science strongholds tend to exist outside of both market and electoral discipline. A municipality or HR department isn't, so social science doesn't thrive there. All this is a matter of degrees though. Social sciences still do have influence, certainly at the national-political level. Slight tangent: I'm not actually very familiar with Romer, beyond the basics. Was Endogenous Growth Theory the basis for higher education subsidies, or is that a different flavour of human capital theory?
- naravara 6y ago
  Behavioral Econ is where all the energy is right now. Advances in computing, data collection, and statistical methods have enabled levels of quantitative analysis around natural experiments that nobody thought possible even a few years ago. >Social science theories, when faithfully implemented, have had some terrible results. I think the challenge is that there isn't such a thing as "faithfully" implementing a social science theory. There is too much unaccounted for to just blindly apply. What you're describing sounds more like ideology, which is generally a step or two removed from the underlying theory. Social scientists are themselves aware of the limitations around generalizability of any specific truth claim. It's mostly the pop-version that get a mind of their own and start getting applied uncritically. And the shift of expert opinion in the policy world from actual, practicing social scientists to political flacks and industry types has really ramped up this tendency. Part of the challenge is that there is also lots of ideologically motivated funding in economics and social science that is attempting to put its fingers on the scales of academic inquiry. >Was Endogenous Growth Theory the basis for higher education subsidies, or is that a different flavour of human capital theory? Partly. Depends on whether you're talking about in the US context or a developing country context. In the latter, from the perspective of financial institutions like the World Bank it mostly guided where the loans were disbursed. Previously the focus was very much on infrastructure. Endogenous growth theory started encouraging them to pivot to investments in education and healthcare instead. One of the challenges is that infrastructure is fairly easy and politically popular (powerful people get to bid on the contracts and it creates a rich vein for cronyism and kickbacks). Education and healthcare take more mature organizational capacity and, once you start promising it, people start getting mad at you when you suck at it and vote you out. In developed countries education subsidies are very old. Even high education was mostly viewed as a public responsibility until fairly recently when the risk was offloaded to students instead. American Land Grant universities, particularly the University of California school system, were an early case study to prove the value of education as a growth driver.

watwut 6y ago

> Marxist theories of ancient history and the origins of high civilisation are virtually indisputed This is not true.

netcan 6y ago
OK. Undisputed is an overstatement, unfair even. There's actually quite a lot of action in this space, and the publications/excavations are recent. You do see my point though, no? I think many/most history teachers don't really know much about alternative "how it all began" history, and those old narratives are still certainly the history 101 interpretation. If high school teaches neolithic history, they probably teach a historical materialism version. As the evidence stands currently, that's no longer evidence based.
- watwut 6y ago
  First, there is massive difference between "theory", especially academic theory and what high school teacher teaches. That is completely different claim. Second, no I don't really think so. The kind of worst about high school neolithic all history I can say is that what I seen of it was terminally boring.
  - netcan 6y ago
    I think we may be talking past each other somewhat. By "marxist theory" I meant the timeline and cause-effect chains that are generally in the textbooks, history books what your likely to be taught in college, etc. Marxist interpretation would have been a better choice of words. I agree about high school (and younger) history being boring. I hated it. Don't even remember what periods they taught.
    - watwut 6y ago
      We are not talking past each other. Neither colleges nor high schools are teaching marxist interpretation of history in their history courses. The exception are courses like "marxist interpretation of x" which indeed teaches what marxist interpretation of event x is. Also, I suspect that you dont know what Marxist interpretation of historical events is.