3 ms·

The use of the scientific method.

by sampo 3y ago

RandomLensman 3y ago
Fair point. Economics is a real science then.
throw0101c 3y ago
Plenty of hypothesis are formed and experiments done in economics: > The Kansas experiment refers to Kansas Senate Bill Substitute HB 2117, a bill signed into law in May 2012 by Kansas state Governor Sam Brownback, and its impact on Kansas.[1][2] It was one of the largest income tax cuts in the state's history.[3] The Kansas experiment has also been called the "Great Kansas Tax Cut Experiment",[4] the "Red-state experiment",[5] "the tax experiment in Kansas",[6] and "one of the cleanest experiments for how tax cuts affect economic growth in the U.S."[7] The cuts were based on model legislation published by the conservative American Legislative Exchange Council (ALEC),[8][9][10][11] supported by supply-side economist Arthur Laffer,[12] and anti-tax leader Grover Norquist.[13] The law cut taxes by US$231 million in its first year, and cuts were projected to total US$934 million annually after six years,[14] by eliminating taxes on business income for the owners of almost 200,000 businesses and cutting individual income tax rates.[14] > Brownback compared his tax policies with those of Ronald Reagan, and described them as "a real live experiment",[15] which would be a "shot of adrenaline into the heart of the Kansas economy",[16] and predicted that by 2020 they would have created an additional 23,000 jobs.[3] By 2017, state revenues had fallen by hundreds of millions of dollars,[17] causing spending on roads, bridges, and education to be slashed.[18][19] With economic growth remaining consistently below average,[4] the Republican Legislature of Kansas voted to roll back the cuts; although Brownback vetoed the repeal, the legislature succeeded in overriding his veto.[20] * https://en.wikipedia.org/wiki/Kansas_experiment https://en.wikipedia.org/wiki/Kansas_experiment When the Fed first announced 'quantitative easing' in 2010, it was an experiment on the economy and a whole bunch of folks made predictions on what would happen: > We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment. * https://www.wsj.com/articles/BL-REB-12460 https://www.wsj.com/articles/BL-REB-12460 A bunch of others said the above was non-sense: one group's models were right, and the other groups' were wrong (the folks who wrote the letter). Even true on Wall Street, where Gross of PIMCO famously predicted things would go a certainly way and put up a lot of money… and his predictions were wrong (as certain economists said they were): > But why was Gross betting so heavily against Treasuries? Brad DeLong tries to rationalize[1] Gross’s behavior in terms of a coherent story about an impending U.S. recovery, which would lift us out of the liquidity trap. But Gross wasn’t saying anything like that. Instead, he was claiming that the Fed’s asset purchases — QE2 — were holding rates down, and warned that the impending spike in rates when QE2 ended would derail recovery. > So why did he believe all that? It all comes down, I’d argue, to liquidity trap denial. > Since 2008 the basic logic of the economic situation has been that the private sector is trying to run a huge surplus, and the public sector isn’t willing to run a corresponding deficit. The result is an economy awash in desired savings with nowhere to go. This in turn means that budget deficits aren’t competing with private borrowing, and therefore need not drive up interest rates. This isn’t hindsight; it’s what I and others have been saying since the very beginning[2]. * https://archive.nytimes.com/krugman.blogs.nytimes.com/2014/09/30/the-pimco-perplex/ https://archive.nytimes.com/krugman.blogs.nytimes.com/2014/0... See also: * Minimum wage policies: https://www.cbc.ca/news/canada/toronto/ontario-minimum-wage-rises-1.6983918 https://www.cbc.ca/news/canada/toronto/ontario-minimum-wage-... * Real estate and banning investors: https://www.dutchnews.nl/2023/06/buy-to-let-ban-is-good-for-first-time-buyers-but-bad-for-tenants/ https://www.dutchnews.nl/2023/06/buy-to-let-ban-is-good-for-... * Government spending / austerity: https://www.imf.org/external/pubs/ft/wp/2011/wp11158.pdf https://www.imf.org/external/pubs/ft/wp/2011/wp11158.pdf I once read a quip by a physicist (Feynman?): My job would be much harder if particles had free will.
- jpadkins 3y ago
  what is the control in these experiments?
  - throw0101c 3y ago
    > what is the control in these experiments? What was the control in Eddington? * https://en.wikipedia.org/wiki/Eddington_experiment https://en.wikipedia.org/wiki/Eddington_experiment Einstein's models made a prediction, people tested/measured that prediction, it turned out true/accurate. General theory has made other predictions, and empirical observations have found them to be accurate as well. A phenomena was going to happen (e.g., tax law changes): some economic models predicted X would happen, and some predicted Y would. We can see which were more accurate. Plenty of "real" science is/was done outside of controlled experiments.
braelen7 3y ago
[flagged]

The use of the scientific method.

by sampo 3y ago

The use of the scientific method.

RandomLensman 3y ago

Fair point. Economics is a real science then.

throw0101c 3y ago

Plenty of hypothesis are formed and experiments done in economics: > The Kansas experiment refers to Kansas Senate Bill Substitute HB 2117, a bill signed into law in May 2012 by Kansas state Governor Sam Brownback, and its impact on Kansas.[1][2] It was one of the largest income tax cuts in the state's history.[3] The Kansas experiment has also been called the "Great Kansas Tax Cut Experiment",[4] the "Red-state experiment",[5] "the tax experiment in Kansas",[6] and "one of the cleanest experiments for how tax cuts affect economic growth in the U.S."[7] The cuts were based on model legislation published by the conservative American Legislative Exchange Council (ALEC),[8][9][10][11] supported by supply-side economist Arthur Laffer,[12] and anti-tax leader Grover Norquist.[13] The law cut taxes by US$231 million in its first year, and cuts were projected to total US$934 million annually after six years,[14] by eliminating taxes on business income for the owners of almost 200,000 businesses and cutting individual income tax rates.[14] > Brownback compared his tax policies with those of Ronald Reagan, and described them as "a real live experiment",[15] which would be a "shot of adrenaline into the heart of the Kansas economy",[16] and predicted that by 2020 they would have created an additional 23,000 jobs.[3] By 2017, state revenues had fallen by hundreds of millions of dollars,[17] causing spending on roads, bridges, and education to be slashed.[18][19] With economic growth remaining consistently below average,[4] the Republican Legislature of Kansas voted to roll back the cuts; although Brownback vetoed the repeal, the legislature succeeded in overriding his veto.[20] * https://en.wikipedia.org/wiki/Kansas_experiment https://en.wikipedia.org/wiki/Kansas_experiment When the Fed first announced 'quantitative easing' in 2010, it was an experiment on the economy and a whole bunch of folks made predictions on what would happen: > We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment. * https://www.wsj.com/articles/BL-REB-12460 https://www.wsj.com/articles/BL-REB-12460 A bunch of others said the above was non-sense: one group's models were right, and the other groups' were wrong (the folks who wrote the letter). Even true on Wall Street, where Gross of PIMCO famously predicted things would go a certainly way and put up a lot of money… and his predictions were wrong (as certain economists said they were): > But why was Gross betting so heavily against Treasuries? Brad DeLong tries to rationalize[1] Gross’s behavior in terms of a coherent story about an impending U.S. recovery, which would lift us out of the liquidity trap. But Gross wasn’t saying anything like that. Instead, he was claiming that the Fed’s asset purchases — QE2 — were holding rates down, and warned that the impending spike in rates when QE2 ended would derail recovery. > So why did he believe all that? It all comes down, I’d argue, to liquidity trap denial. > Since 2008 the basic logic of the economic situation has been that the private sector is trying to run a huge surplus, and the public sector isn’t willing to run a corresponding deficit. The result is an economy awash in desired savings with nowhere to go. This in turn means that budget deficits aren’t competing with private borrowing, and therefore need not drive up interest rates. This isn’t hindsight; it’s what I and others have been saying since the very beginning[2]. * https://archive.nytimes.com/krugman.blogs.nytimes.com/2014/09/30/the-pimco-perplex/ https://archive.nytimes.com/krugman.blogs.nytimes.com/2014/0... See also: * Minimum wage policies: https://www.cbc.ca/news/canada/toronto/ontario-minimum-wage-rises-1.6983918 https://www.cbc.ca/news/canada/toronto/ontario-minimum-wage-... * Real estate and banning investors: https://www.dutchnews.nl/2023/06/buy-to-let-ban-is-good-for-first-time-buyers-but-bad-for-tenants/ https://www.dutchnews.nl/2023/06/buy-to-let-ban-is-good-for-... * Government spending / austerity: https://www.imf.org/external/pubs/ft/wp/2011/wp11158.pdf https://www.imf.org/external/pubs/ft/wp/2011/wp11158.pdf I once read a quip by a physicist (Feynman?): My job would be much harder if particles had free will.

jpadkins 3y ago
what is the control in these experiments?
- throw0101c 3y ago
  > what is the control in these experiments? What was the control in Eddington? * https://en.wikipedia.org/wiki/Eddington_experiment https://en.wikipedia.org/wiki/Eddington_experiment Einstein's models made a prediction, people tested/measured that prediction, it turned out true/accurate. General theory has made other predictions, and empirical observations have found them to be accurate as well. A phenomena was going to happen (e.g., tax law changes): some economic models predicted X would happen, and some predicted Y would. We can see which were more accurate. Plenty of "real" science is/was done outside of controlled experiments.

braelen7 3y ago

[flagged]