3 ms·

Sure. Utility is a way of representing preferences. A utility function goes from the choice set X to the real number line. A preference relation, in turn, is a

by dash2 4y ago

Sure. Utility is a way of representing preferences. A utility function goes from the choice set X to the real number line. A preference relation, in turn, is a binary relation on X satisfying completeness and transitivity. Utility function u represents preference relation >> if and only if u(x) > u(y) iff x >> y. Yes, utility makes predictions, because preference relations make predictions. See the Weak Axiom of Revealed Preference and its cousins. If I see you choosing oranges over apples, and then the price of apples falls and you still choose oranges, we have learned that you strictly preferred oranges at the old price. More generally, some patterns of choices are rationalizable by a preference ordering. Others aren't. So a claim about someone's preference ordering has empirical content. (It sounds as if you imagine measuring utility as something that might need a brain scanner. We haven't thought that way since about World War II.) This is all Econ 101 (at a bit higher level than a first year undergrad). I don't expect you to know it. I do expect you to know it if you intend to pontificate about it. Similarly, I know nothing about Ohm's Law, and for this reason, I avoid making broad pronouncements about the invalidity of all of physics. I find this basic commitment to intellectual humility helpful.

carapace 4y ago
First, thanks for putting your math where your mouth is, but I'm sorry to admit that I just hear "spherical cow in a vacuum" in what you describe. I mean it, I really do appreciate you trying, but what you're describing sounds ridiculous to me. Sorry for relying on investopedia again but, uh: > Weak Axiom of Revealed Preference (WARP): This axiom states that given incomes and prices, if one product or service is purchased instead of another, then, as consumers, we will always make the same choice. The weak axiom also states that if we buy one particular product, then we will never buy a different product or brand unless it is cheaper, offers increased convenience, or is of better quality (i.e. unless it provides more benefits). As consumers, we will buy what we prefer and our choices will be consistent, so suggests the weak axiom. https://www.investopedia.com/terms/r/revealed-preference.asp https://www.investopedia.com/terms/r/revealed-preference.asp The word "axiom" is inappropriate here. This isn't science, it's a "just so" story. It's cereal box psychology. It's an attempt to dress up in big kids' clothes and I've got no respect for it. > It sounds as if you imagine measuring utility as something that might need a brain scanner. We haven't thought that way since about World War II. That's a shame, disdaining the source of real data. Of course brain scanners weren't that good back then, eh? But you don't need them. Pupil dilation, changes in pulse and respiration, capillary response, there are all sorts of signals that let you see "inside" the brain w/o fancy technology. > I do expect you to know it if you intend to pontificate about it. First, I'm not pontificating, I'm decrying. Second, I don't need to know details about the nature of the BS, I can tell from the smell alone. Economics is in the same epistemological boat as Numerology and Astrology. Just as I don't need to study those in depth to know they're BS, I don't need to know much about economics to see that it's barren and, frankly, ridiculous. > I know nothing about Ohm's Law You might want to learn. Not only would learning electrical engineering give you a great working example of how to use math to reason about real world phenomenon, and unlike economics you can actually use it reliably to build useful devices. > I find this basic commitment to intellectual humility helpful. It would have been most welcome and helpful a couple of comments ago. - - - - See, the thing about Ohm's law is you don't have to take my word for it, or anyone's, not even Ohm's. You can build the circuit, apply the meter, and measure it for yourself. Humility or arrogance doesn't enter into it. The problem isn't that economists want to study the economy and are doing it badly, the problem is that they want to be treated as if they are physicists, and we want to treat them that way because of politics and psychology. And even that's isn't a problem until we make mistakes and our blind following of the not-physicists' "science" prevents us from stopping or fixing the errors. Next thing you know, the Aral Sea is gone! https://en.wikipedia.org/wiki/Aral_Sea https://en.wikipedia.org/wiki/Aral_Sea
- dash2 4y ago
  > The word "axiom" is inappropriate here. This isn't science, it's a "just so" story. It's cereal box psychology. It's an attempt to dress up in big kids' clothes and I've got no respect for it. I don't see any substantive criticism here. Can you explain what's wrong with WARP? I see it as a way of going from theories (people's preferences are such-and-such) to predictions (given WARP and these preferences, we expect these choice patterns, and not those). >That's a shame, disdaining the source of real data. Of course brain scanners weren't that good back then, eh? But you don't need them. Pupil dilation, changes in pulse and respiration, capillary response, there are all sorts of signals that let you see "inside" the brain w/o fancy technology. If you think that, then you can build a theory of utility involving that. There is an approach called neuroeconomics which tries to do so. My point is not to disdain these sources of information, it's that they aren't strictly necessary: preferences exist to predict choices and a given claim about someone's preferences can be falsified by observing their choices. > Second, I don't need to know details about the nature of the BS, I can tell from the smell alone. Economics is in the same epistemological boat as Numerology and Astrology. Of course, if so, then there's nothing further to discuss. Meanwhile: * Autor et al. claim "import competition explains one-quarter of the contemporaneous aggregate decline in US manufacturing employment." What's wrong with their method? Why is it astrology? * Banerjee and Duflo analyse microcredit using a randomized controlled trial. They find "no significant changes in health, education, or women's empowerment" and almost no long run effects. It seems important to understand whether popular anti-poverty policies work. Why is this barren? * James Heckman has spent his life trying to understand how to help disadvantaged children, building mathematical theories of human capital and testing them on data. Why is this numerology? * You blame economists for the loss of the Aral Sea. I would think it's more to do with Soviet planning. I hold no brief for Marxist economics, which was far from the mainstream already by the 1950s, but in any case, which economists were to blame?
  - carapace 4y ago
    Thank you for replying in such a constructive way, and I apologize for being uncouth in my previous comments. You've made your original point: I've admitted that, as a critic of economic science, I'm speaking from gross ignorance. I want to be clear, I don't object to the study of economics, it's obviously an important and valuable field of study. What I object to is the (IMO) unearned social/political status of the field. I don't believe that economics is science (yet!) and so it seems to me that it functions (en mass) as a kind of psychological blind or bluff to let us feel like we have more agency than we in fact do. If I were to try to put it in a pithy "clickbait" phrase, "Alan Greenspan is a priest not an engineer." Hmm? I don't think I'm going to convince you that economics is pre-scientific, and you're not going to convince me that it's a proper science. But let me try to be a little bit constructive. To me a legit scientific economics would have to be essentially: Ecology + Psychology Ecology is scientific (because it studies physical systems and our physics is solid. It deals in vastly complex networks but traction is gained through statistical methods, and our understanding of statistics is pretty strong too.) Psychology, on the other hand, is a huge mess, far worse than economics. I'm not going to get into it here but the only rigorous engineer-able psychology I know of is dismissed as pseudoscience by academics, so there we are. We're halfway there, viewed optimistically. - - - - > Can you explain what's wrong with WARP? I can pick apart the definition and maybe that will illustrate where I'm coming from. > This axiom states that given incomes and prices, if one product or service is purchased instead of another, then, as consumers, we will always make the same choice. The weak axiom also states that if we buy one particular product, then we will never buy a different product or brand unless it is cheaper, offers increased convenience, or is of better quality (i.e. unless it provides more benefits). As consumers, we will buy what we prefer and our choices will be consistent, so suggests the weak axiom. To me, this is obviously a statement about psychology, but it's trying to treat the human being as a kind of "black box" by applying an abstraction ("as consumers") that's almost cartoonish, and then reasoning over this abstraction in ways that don't particularly match up to what you see in the real world, where people buy things for all kinds of reasons, most of them largely unconscious. There's the phenomenon where the price of something goes up and people want it more. Or the package changes and the sales go up (or down) even though the other qualities (price, convenience, quality) are the same. Then there's the methodological difficulties. How do you actually measure these things to test the theories? How are these predictions stated? To me, WARP says "people have habits" without adding anything of substance. It's taking a commonsense, prosaic truism and dressing it up in a lab coat. > My point is not to disdain these sources of information, it's that they aren't strictly necessary: preferences exist to predict choices and a given claim about someone's preferences can be falsified by observing their choices. If you have access to lots of purchasing data then, yes, I'm sure you can find regularities. If you're talking about predicting individual behaviour than again, how are you measuring this stuff? Are people following subjects around and recording them? I want to be clear, I am pro-science. I'm not trying to undermine the authority of science, I'm trying to protect it. If we restrict the word to mean those fields of study that can make reliable predictions, or in other words that lead to reliable engineering disciplines, then it becomes pretty much unassailable. Only a fool doubts a physicist (in re: physics) eh? Chemistry is already a little squiffy though: e.g. nicotine "research". If we continue to insist that psychology, sociology, economics, and the other "soft" sciences should carry the same authority when it's obvious to a lot of people that they are nothing like physics, then it seems to me we risk throwing the baby out with the bathwater. I'm not going to go through those examples you gave, and I apologize for that. The first one sounds like it might be a statistical correlation backed by a lot of data, so perhaps it's okay? The second two sound like numerical naval gazing. Why study poverty? Just give people food and money. The reason poverty exists is that we lack love. > You blame economists for the loss of the Aral Sea. In re: the Aral sea. I do not blame the economists, or even the Soviets per se, I blame human nature. We are dumb, ignorant, and prone to hallucinations. That's why science is so important. These folks thought they had a correct economic theory but they were wrong and they didn't have the ability to notice and react. We (modern, Western) folks tend to talk and act like we have a correct economic theory but then things like the 2008 meltdown come along and Alan Greenspan is like, "Whoops." To the extent that economics helps us see and understand reality, it's terrific! To the extent that it helps us fool ourselves, it's as dangerous as relying on astrologers.

by dash2 4y ago

carapace 4y ago

First, thanks for putting your math where your mouth is, but I'm sorry to admit that I just hear "spherical cow in a vacuum" in what you describe. I mean it, I really do appreciate you trying, but what you're describing sounds ridiculous to me. Sorry for relying on investopedia again but, uh: > Weak Axiom of Revealed Preference (WARP): This axiom states that given incomes and prices, if one product or service is purchased instead of another, then, as consumers, we will always make the same choice. The weak axiom also states that if we buy one particular product, then we will never buy a different product or brand unless it is cheaper, offers increased convenience, or is of better quality (i.e. unless it provides more benefits). As consumers, we will buy what we prefer and our choices will be consistent, so suggests the weak axiom. https://www.investopedia.com/terms/r/revealed-preference.asp https://www.investopedia.com/terms/r/revealed-preference.asp The word "axiom" is inappropriate here. This isn't science, it's a "just so" story. It's cereal box psychology. It's an attempt to dress up in big kids' clothes and I've got no respect for it. > It sounds as if you imagine measuring utility as something that might need a brain scanner. We haven't thought that way since about World War II. That's a shame, disdaining the source of real data. Of course brain scanners weren't that good back then, eh? But you don't need them. Pupil dilation, changes in pulse and respiration, capillary response, there are all sorts of signals that let you see "inside" the brain w/o fancy technology. > I do expect you to know it if you intend to pontificate about it. First, I'm not pontificating, I'm decrying. Second, I don't need to know details about the nature of the BS, I can tell from the smell alone. Economics is in the same epistemological boat as Numerology and Astrology. Just as I don't need to study those in depth to know they're BS, I don't need to know much about economics to see that it's barren and, frankly, ridiculous. > I know nothing about Ohm's Law You might want to learn. Not only would learning electrical engineering give you a great working example of how to use math to reason about real world phenomenon, and unlike economics you can actually use it reliably to build useful devices. > I find this basic commitment to intellectual humility helpful. It would have been most welcome and helpful a couple of comments ago. - - - - See, the thing about Ohm's law is you don't have to take my word for it, or anyone's, not even Ohm's. You can build the circuit, apply the meter, and measure it for yourself. Humility or arrogance doesn't enter into it. The problem isn't that economists want to study the economy and are doing it badly, the problem is that they want to be treated as if they are physicists, and we want to treat them that way because of politics and psychology. And even that's isn't a problem until we make mistakes and our blind following of the not-physicists' "science" prevents us from stopping or fixing the errors. Next thing you know, the Aral Sea is gone! https://en.wikipedia.org/wiki/Aral_Sea https://en.wikipedia.org/wiki/Aral_Sea

dash2 4y ago
> The word "axiom" is inappropriate here. This isn't science, it's a "just so" story. It's cereal box psychology. It's an attempt to dress up in big kids' clothes and I've got no respect for it. I don't see any substantive criticism here. Can you explain what's wrong with WARP? I see it as a way of going from theories (people's preferences are such-and-such) to predictions (given WARP and these preferences, we expect these choice patterns, and not those). >That's a shame, disdaining the source of real data. Of course brain scanners weren't that good back then, eh? But you don't need them. Pupil dilation, changes in pulse and respiration, capillary response, there are all sorts of signals that let you see "inside" the brain w/o fancy technology. If you think that, then you can build a theory of utility involving that. There is an approach called neuroeconomics which tries to do so. My point is not to disdain these sources of information, it's that they aren't strictly necessary: preferences exist to predict choices and a given claim about someone's preferences can be falsified by observing their choices. > Second, I don't need to know details about the nature of the BS, I can tell from the smell alone. Economics is in the same epistemological boat as Numerology and Astrology. Of course, if so, then there's nothing further to discuss. Meanwhile: * Autor et al. claim "import competition explains one-quarter of the contemporaneous aggregate decline in US manufacturing employment." What's wrong with their method? Why is it astrology? * Banerjee and Duflo analyse microcredit using a randomized controlled trial. They find "no significant changes in health, education, or women's empowerment" and almost no long run effects. It seems important to understand whether popular anti-poverty policies work. Why is this barren? * James Heckman has spent his life trying to understand how to help disadvantaged children, building mathematical theories of human capital and testing them on data. Why is this numerology? * You blame economists for the loss of the Aral Sea. I would think it's more to do with Soviet planning. I hold no brief for Marxist economics, which was far from the mainstream already by the 1950s, but in any case, which economists were to blame?
- carapace 4y ago
  Thank you for replying in such a constructive way, and I apologize for being uncouth in my previous comments. You've made your original point: I've admitted that, as a critic of economic science, I'm speaking from gross ignorance. I want to be clear, I don't object to the study of economics, it's obviously an important and valuable field of study. What I object to is the (IMO) unearned social/political status of the field. I don't believe that economics is science (yet!) and so it seems to me that it functions (en mass) as a kind of psychological blind or bluff to let us feel like we have more agency than we in fact do. If I were to try to put it in a pithy "clickbait" phrase, "Alan Greenspan is a priest not an engineer." Hmm? I don't think I'm going to convince you that economics is pre-scientific, and you're not going to convince me that it's a proper science. But let me try to be a little bit constructive. To me a legit scientific economics would have to be essentially: Ecology + Psychology Ecology is scientific (because it studies physical systems and our physics is solid. It deals in vastly complex networks but traction is gained through statistical methods, and our understanding of statistics is pretty strong too.) Psychology, on the other hand, is a huge mess, far worse than economics. I'm not going to get into it here but the only rigorous engineer-able psychology I know of is dismissed as pseudoscience by academics, so there we are. We're halfway there, viewed optimistically. - - - - > Can you explain what's wrong with WARP? I can pick apart the definition and maybe that will illustrate where I'm coming from. > This axiom states that given incomes and prices, if one product or service is purchased instead of another, then, as consumers, we will always make the same choice. The weak axiom also states that if we buy one particular product, then we will never buy a different product or brand unless it is cheaper, offers increased convenience, or is of better quality (i.e. unless it provides more benefits). As consumers, we will buy what we prefer and our choices will be consistent, so suggests the weak axiom. To me, this is obviously a statement about psychology, but it's trying to treat the human being as a kind of "black box" by applying an abstraction ("as consumers") that's almost cartoonish, and then reasoning over this abstraction in ways that don't particularly match up to what you see in the real world, where people buy things for all kinds of reasons, most of them largely unconscious. There's the phenomenon where the price of something goes up and people want it more. Or the package changes and the sales go up (or down) even though the other qualities (price, convenience, quality) are the same. Then there's the methodological difficulties. How do you actually measure these things to test the theories? How are these predictions stated? To me, WARP says "people have habits" without adding anything of substance. It's taking a commonsense, prosaic truism and dressing it up in a lab coat. > My point is not to disdain these sources of information, it's that they aren't strictly necessary: preferences exist to predict choices and a given claim about someone's preferences can be falsified by observing their choices. If you have access to lots of purchasing data then, yes, I'm sure you can find regularities. If you're talking about predicting individual behaviour than again, how are you measuring this stuff? Are people following subjects around and recording them? I want to be clear, I am pro-science. I'm not trying to undermine the authority of science, I'm trying to protect it. If we restrict the word to mean those fields of study that can make reliable predictions, or in other words that lead to reliable engineering disciplines, then it becomes pretty much unassailable. Only a fool doubts a physicist (in re: physics) eh? Chemistry is already a little squiffy though: e.g. nicotine "research". If we continue to insist that psychology, sociology, economics, and the other "soft" sciences should carry the same authority when it's obvious to a lot of people that they are nothing like physics, then it seems to me we risk throwing the baby out with the bathwater. I'm not going to go through those examples you gave, and I apologize for that. The first one sounds like it might be a statistical correlation backed by a lot of data, so perhaps it's okay? The second two sound like numerical naval gazing. Why study poverty? Just give people food and money. The reason poverty exists is that we lack love. > You blame economists for the loss of the Aral Sea. In re: the Aral sea. I do not blame the economists, or even the Soviets per se, I blame human nature. We are dumb, ignorant, and prone to hallucinations. That's why science is so important. These folks thought they had a correct economic theory but they were wrong and they didn't have the ability to notice and react. We (modern, Western) folks tend to talk and act like we have a correct economic theory but then things like the 2008 meltdown come along and Alan Greenspan is like, "Whoops." To the extent that economics helps us see and understand reality, it's terrific! To the extent that it helps us fool ourselves, it's as dangerous as relying on astrologers.