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Could someone summarize what everyone in the comments is arguing about in less technical terms? I don’t have a background in economics but do have a background

Could someone summarize what everyone in the comments is arguing about in less technical terms? I don’t have a background in economics but do have a background with physics.

H8crilA 6y ago
It's some hilarious turf/flame war. The paper itself is pretty interesting if you know some maths and haven't thought about non-linear utility functions. You can also read that "original" paper by Bernoulli, he has some simple examples there (for example why does it make sense to buy insurance despite it having negative expected payoff, he brings the example of ship cargo insurance but it applies to any kind of insurance really). EDIT: Daniel Bernoulli's paper: https://www.semanticscholar.org/paper/Exposition-of-a-New-Theory-on-the-Measurement-of-Bernoulli/ef512f15aa1c294c7575aa329a7fecd80be6633b https://www.semanticscholar.org/paper/Exposition-of-a-New-Th...
- rmbeard 6y ago
  Exactly.
fallingfrog 6y ago
I think what’s going on is that “hard sciences” people in physics etc have a strong feeling that most of economics (and behavioral science and psychology) is bunk, given that economists in particular seem to have all sorts of mutually contradictory theories, are always making predictions that turn out to be wildly wrong, and seem to disagree with one another on basic facts. This paper gives them ammunition to support these feelings that the emperor has no clothes. I am not qualified to judge whether those feelings are correct however.
ReflectedImage 6y ago
Economists have been using ensemble average where they should of being using time average. Using the wrong type of average mildly screws up everything in very subtle ways as you can imagine. A lot of the important results in the field including one that got a nobel prize turn out to be wrong. The economists are responding to this in a very mature way and have told Ole Peters "he can go kick a rock".

Could someone summarize what everyone in the comments is arguing about in less technical terms? I don’t have a background in economics but do have a background with physics.

H8crilA 6y ago

It's some hilarious turf/flame war. The paper itself is pretty interesting if you know some maths and haven't thought about non-linear utility functions. You can also read that "original" paper by Bernoulli, he has some simple examples there (for example why does it make sense to buy insurance despite it having negative expected payoff, he brings the example of ship cargo insurance but it applies to any kind of insurance really). EDIT: Daniel Bernoulli's paper: https://www.semanticscholar.org/paper/Exposition-of-a-New-Theory-on-the-Measurement-of-Bernoulli/ef512f15aa1c294c7575aa329a7fecd80be6633b https://www.semanticscholar.org/paper/Exposition-of-a-New-Th...

rmbeard 6y ago
Exactly.

fallingfrog 6y ago

I think what’s going on is that “hard sciences” people in physics etc have a strong feeling that most of economics (and behavioral science and psychology) is bunk, given that economists in particular seem to have all sorts of mutually contradictory theories, are always making predictions that turn out to be wildly wrong, and seem to disagree with one another on basic facts. This paper gives them ammunition to support these feelings that the emperor has no clothes. I am not qualified to judge whether those feelings are correct however.

ReflectedImage 6y ago

Economists have been using ensemble average where they should of being using time average. Using the wrong type of average mildly screws up everything in very subtle ways as you can imagine. A lot of the important results in the field including one that got a nobel prize turn out to be wrong. The economists are responding to this in a very mature way and have told Ole Peters "he can go kick a rock".