4 ms·

Economics is .. mostly just not good as a discipline. Micro can be pretty useful to individuals, but Macro is literally no better than astrology, and perhaps wo

by jrm4 4y ago

Economics is .. mostly just not good as a discipline. Micro can be pretty useful to individuals, but Macro is literally no better than astrology, and perhaps worse because people have a better sense of astrology's limitations. It's important to study economics primarily not because "it's good at predicting things," but more to understand how most everything is made up and then people use economics to back into ideas. Roughly, the problem is not just "All models are wrong, and some are useful," but additionally that "many models are harmful and unchecked."

rufus_foreman 4y ago
>> Macro is literally no better than astrology, Macroeconomics: "Macroeconomics is a branch of economics that studies how an overall economy—the market or other systems that operate on a large scale—behaves" Astrology: "The divination of the supposed influences of the stars and planets on human affairs and terrestrial events by their positions and aspects" Astrology is irredeemable. If current macroeconomics is no better than astrology, that is an opportunity. >> Micro can be pretty useful to individuals This is the crazy part. Micro relies on assumptions that just aren't true. Micro is much closer to astrology than macro. If you build an extensive mathematical framework on top of assumptions that are not just false, but sort of crazy, you've got nothing.
- JumpCrisscross 4y ago
  > Micro relies on assumptions that just aren't true I'm going to assume this refers to the rational actor assumption? If so, it's like Econ 102 that this is an Econ 101 simplifying assumption, similar to our ignorance of friction and turbulence in Physics 101.
  - worik 4y ago
    > I'm going to assume this refers to the rational actor assumption? Yes. And: * More is better * Demand curves are smooth * Demand curves are deterministic * Everything happens on the margin * Information is free * Ethics does not influence behaviour. * Nature allows steady states That are the flawed assumptions just off of the top of my head. If you spend years studying economics (like I did) then some these assumptions get questioned some of the time. But they all break down, regularly. The micro economic models work in snapshots, but the interesting part is in the breakdown. The models are useful when they are not very interesting.
    - zubiaur 4y ago
      “I love the observation that in Chapter 1 of an economics textbook, they'll say, 'We're just describing people as they are. People are rational, and this is how it goes.' And then, in Chapter 2, they'll say, 'And most people fail to'--you know, 'respect the sunk costs.' And they never even notice that there's a small tension there.” — Mary Hirschfeld, discussing her book, Aquinas and the market. She touches on a lot of the points you mention.
- jrm4 4y ago
  I guess what I would say on this is: Consider your average Microeconomics 101 and Macroeconomics 101. Micro will probably give the average person a few useful tools for business, because it's pretty easy to see where the model is just a model, but basic supply/demand stuff might come in handy. Macro, on the other hand, will literally make you dumber.
  - slowmovintarget 4y ago
    This seems exactly backward. Macro is the useful one based on data, micro is the hand-wavy made up stuff based on assumptions of human behavior.
    - jrm4 4y ago
      Don't look at the inputs, look at the outputs. Good data in still equals garbage out if your models are no good.
- jrm4 4y ago
  Dictionary definitions? This observation suffers from the exact same problem that economics does. Theory and practice are very often completely different.
Aunche 4y ago
Macroeconomics does work though. Central banks do a pretty good job of tuning the knobs that steer GDP or inflation towards the direction where they want it to go. You just have to recognize that these aren't and can't replace structural reform.
- curiousgal 4y ago
  >Central banks do a pretty good job of tuning the knobs that steer GDP or inflation towards the direction where they want it to go. We'll see.
  - ChrisLomont 4y ago
    We have. Look at the Wikipedia page on history of recessions as a place that makes it clear.
JumpCrisscross 4y ago
> Macro is literally no better than astrology Pop economics is notoriously bad. But if the popular version of a science were its judgement, physics and climatology fare little better. Concepts like unemployment, production and risk premiums were macroeconomic inventions. Would you prefer nobody thought or talked about credit crises, the relationship between mortgage rates and housing prices or business cycles? Because before 19th-century macroeconomic theorizing, concepts like inflation were colloquial [1]. [1] https://en.wikipedia.org/wiki/Inflation#Classical_economics https://en.wikipedia.org/wiki/Inflation#Classical_economics
Phil_Latio 4y ago
> Micro can be pretty useful to individuals, but Macro is literally no better than astrology Macro brought a whole new dimension to the economic thought. Example: Due to leaving out the macro dimension when deciding the fate for Greece in the eurocrisis, they forced them to lower the income of all people by 20% or something. Because the neoliberal labour market theory (micro) assumes the labour market functions like a normal market. They assumed the lower wages would be subsidized by higher employment (lower price of goods = higher demand). The opposite was the case. Unemployment increased drastically. And it's very simple to understand why. The income is cut by 20% -> the demand is automatically cut by 20% -> companies don't have incentive to employ new people -> instead they let people go despite the low wages so they can maximize their profits. This chain of events does not exist in micro. Another fundamental aspect is savings and debt. People don't realize, that every new savings in an economy have a debt counterpart in the same amount. So to say for example: "the government has to decrease it's debt" means nothing without explaining who should make less savings / more debt in return. This accounting logic can be used in cases like Germany with their export surplus: If everyone in Germany is saving (private households, companies and government), then who is the debt counterpart? The foreign countries. Then one should ask whether such a sitution is sustainable, were one country always saves while all it's trade partners always have to make debt. Obviously not. Micro economists would find ways to put a "everything perfect" stamp on Germany though. Because they are stuck on a micro level.
- t_mann 4y ago
  Fyi, modern macroeconomics is essentially a flavour of microeconomics. They call it microfoundations for macro. They share all the important formalisms like general equilibrium. Macro is just where the inadequacies of that formalism are most evident because it gets the most attention outside academia.
  - worik 4y ago
    That is a style of teaching, and a wee bit ideological. Not a description of "modern macroeconomics"
- roenxi 4y ago
cutler 4y ago
I know of a number of astrologers, such as Ray Merriman (USA) and Christine Skinner (UK), who made some pretty accurate predictions about the markets and the economy in general.
- sudosysgen 4y ago
  There is a sufficient number of astrologers that eventually some will happen to individually make a certain number of accurate predictions.
  - jrm4 4y ago
    Just like the macroeconomists!
abigail95 4y ago
ever feel like igneous rocks are just bullshit?

by jrm4 4y ago

rufus_foreman 4y ago

>> Macro is literally no better than astrology, Macroeconomics: "Macroeconomics is a branch of economics that studies how an overall economy—the market or other systems that operate on a large scale—behaves" Astrology: "The divination of the supposed influences of the stars and planets on human affairs and terrestrial events by their positions and aspects" Astrology is irredeemable. If current macroeconomics is no better than astrology, that is an opportunity. >> Micro can be pretty useful to individuals This is the crazy part. Micro relies on assumptions that just aren't true. Micro is much closer to astrology than macro. If you build an extensive mathematical framework on top of assumptions that are not just false, but sort of crazy, you've got nothing.

JumpCrisscross 4y ago
> Micro relies on assumptions that just aren't true I'm going to assume this refers to the rational actor assumption? If so, it's like Econ 102 that this is an Econ 101 simplifying assumption, similar to our ignorance of friction and turbulence in Physics 101.
- worik 4y ago
  > I'm going to assume this refers to the rational actor assumption? Yes. And: * More is better * Demand curves are smooth * Demand curves are deterministic * Everything happens on the margin * Information is free * Ethics does not influence behaviour. * Nature allows steady states That are the flawed assumptions just off of the top of my head. If you spend years studying economics (like I did) then some these assumptions get questioned some of the time. But they all break down, regularly. The micro economic models work in snapshots, but the interesting part is in the breakdown. The models are useful when they are not very interesting.
  - zubiaur 4y ago
    “I love the observation that in Chapter 1 of an economics textbook, they'll say, 'We're just describing people as they are. People are rational, and this is how it goes.' And then, in Chapter 2, they'll say, 'And most people fail to'--you know, 'respect the sunk costs.' And they never even notice that there's a small tension there.” — Mary Hirschfeld, discussing her book, Aquinas and the market. She touches on a lot of the points you mention.
jrm4 4y ago
I guess what I would say on this is: Consider your average Microeconomics 101 and Macroeconomics 101. Micro will probably give the average person a few useful tools for business, because it's pretty easy to see where the model is just a model, but basic supply/demand stuff might come in handy. Macro, on the other hand, will literally make you dumber.
- slowmovintarget 4y ago
  This seems exactly backward. Macro is the useful one based on data, micro is the hand-wavy made up stuff based on assumptions of human behavior.
  - jrm4 4y ago
    Don't look at the inputs, look at the outputs. Good data in still equals garbage out if your models are no good.
jrm4 4y ago
Dictionary definitions? This observation suffers from the exact same problem that economics does. Theory and practice are very often completely different.

Aunche 4y ago

Macroeconomics does work though. Central banks do a pretty good job of tuning the knobs that steer GDP or inflation towards the direction where they want it to go. You just have to recognize that these aren't and can't replace structural reform.

curiousgal 4y ago
>Central banks do a pretty good job of tuning the knobs that steer GDP or inflation towards the direction where they want it to go. We'll see.
- ChrisLomont 4y ago
  We have. Look at the Wikipedia page on history of recessions as a place that makes it clear.

JumpCrisscross 4y ago

> Macro is literally no better than astrology Pop economics is notoriously bad. But if the popular version of a science were its judgement, physics and climatology fare little better. Concepts like unemployment, production and risk premiums were macroeconomic inventions. Would you prefer nobody thought or talked about credit crises, the relationship between mortgage rates and housing prices or business cycles? Because before 19th-century macroeconomic theorizing, concepts like inflation were colloquial [1]. [1] https://en.wikipedia.org/wiki/Inflation#Classical_economics https://en.wikipedia.org/wiki/Inflation#Classical_economics

Phil_Latio 4y ago

> Micro can be pretty useful to individuals, but Macro is literally no better than astrology Macro brought a whole new dimension to the economic thought. Example: Due to leaving out the macro dimension when deciding the fate for Greece in the eurocrisis, they forced them to lower the income of all people by 20% or something. Because the neoliberal labour market theory (micro) assumes the labour market functions like a normal market. They assumed the lower wages would be subsidized by higher employment (lower price of goods = higher demand). The opposite was the case. Unemployment increased drastically. And it's very simple to understand why. The income is cut by 20% -> the demand is automatically cut by 20% -> companies don't have incentive to employ new people -> instead they let people go despite the low wages so they can maximize their profits. This chain of events does not exist in micro. Another fundamental aspect is savings and debt. People don't realize, that every new savings in an economy have a debt counterpart in the same amount. So to say for example: "the government has to decrease it's debt" means nothing without explaining who should make less savings / more debt in return. This accounting logic can be used in cases like Germany with their export surplus: If everyone in Germany is saving (private households, companies and government), then who is the debt counterpart? The foreign countries. Then one should ask whether such a sitution is sustainable, were one country always saves while all it's trade partners always have to make debt. Obviously not. Micro economists would find ways to put a "everything perfect" stamp on Germany though. Because they are stuck on a micro level.

t_mann 4y ago
Fyi, modern macroeconomics is essentially a flavour of microeconomics. They call it microfoundations for macro. They share all the important formalisms like general equilibrium. Macro is just where the inadequacies of that formalism are most evident because it gets the most attention outside academia.
- worik 4y ago
  That is a style of teaching, and a wee bit ideological. Not a description of "modern macroeconomics"
roenxi 4y ago

cutler 4y ago

I know of a number of astrologers, such as Ray Merriman (USA) and Christine Skinner (UK), who made some pretty accurate predictions about the markets and the economy in general.

sudosysgen 4y ago
There is a sufficient number of astrologers that eventually some will happen to individually make a certain number of accurate predictions.
- jrm4 4y ago
  Just like the macroeconomists!

abigail95 4y ago

ever feel like igneous rocks are just bullshit?