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I’ve also taken a few economic classes during my engineering degree and the math was, most of the time, trivial. But they were proud of it and applying like phy
by ploum 3y ago
I’ve also taken a few economic classes during my engineering degree and the math was, most of the time, trivial. But they were proud of it and applying like physics, like you said. The basic hypothesis is "people will act rationally in their own interest".
Well, they just forgot one aspect: people are not rationales. They never are. The whole advertising business relies on people not being slightly rationale at all. There’s no even a point in making people rationales. And this is not always bad: people will sometimes act kindly despise their own interest.
The whole "people act rationally for their own selfish short-term interest" is what gave us most economical theology from Smith to this day (cheers to Ayn Rand for writing the fairy tales about it). It’s mostly as reliable as astrology: sounds mathematics applied on a completely false hypothesis.
And, yes, politicians have been using it exactly like astrology with similar results because one of the key principle is that it justifies the existence of rich people (those are who acted the more rationally and thus are rewarded. Did I say that everyone acts rationally? Well, yes, that’s the hypothesis. Don’t try to confuse me).
Just to highlight how far fetched mainstream economical "science" is, just consider that there is a new field called "behavioral economy". Behavioral economy introduces a whole new paradigm: "what if, instead of assuming that people are rational selfish, we actually observes and make theory from observations".
Which is, you know, what we call "science". And, unsurprizingly, every behavioral economist start to say thing like "hey, if we tax the rich, it works!" "hey, we can help the poor by handing them money". "hey, we should not let banks create money and then hand them the money they created and lost themselves".
It’s a bit like a few astrologists started to consider "what if really tried to look at the starts?" and invented astronomy. But every king, every government was laughing at them for being young and naives.
- checkyoursudo 3y agoThe error was that somewhere along the way between Aristotle and modern times, humans went from being seen as rationally-capable to rationally-driven. Nobody seriously disputes that we are capable of rationality; it is just that we are still driven more by instinct and emotion in our default modes.
- automatic6131 3y ago>The basic hypothesis is "people will act rationally in their own interest" This is, as we all know, true to the "first order" approximation. We know it in business - you get what you incentivise - it's behind Goodhart's law (when a measure becomes a target, it stops being a good measure). It is however, an incomplete description of human behaviour, again, as we all know. But since "second and higher" approximations of human behaviour are hard to model... they don't do it. And just so you know, it's just as easy to do bad, "left wing", Lysenkoist economics.