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> The only predictions (both positive and negative) that I've seen have come from dogmatism and not from data. Well, that's because we've never had a cryptocur

> The only predictions (both positive and negative) that I've seen have come from dogmatism and not from data. Well, that's because we've never had a cryptocurrency of this scale before. Of course, we've had other alternate currencies (Ithaca Hours, anyone), and based on that data, Bitcoin's future doesn't look too bright? But you could make the argument that those aren't the same. One reason that you aren't seeing much "hard" data in favor of Bitcoin is that the Austrian school of economics (which provides the foundation for deflationary economics) actively rejects empirical research and deductive reasoning[0][1]. In contrast, virtually all economic models that are taken seriously[2] do try to incorporate fundamental principles (inductive reasoning), but revise those in the face of empirical evidence when necessary (a process that's not dissimilar to what is done in, eg., quantum mechanics - a field in which theory oftentimes advances beyond the means to test theories empirically). [0] https://en.wikipedia.org/wiki/Austrian_School https://en.wikipedia.org/wiki/Austrian_School [1] https://mises.org/etexts/austrian.asp https://mises.org/etexts/austrian.asp [2] Yes, I am excluding Austrian economics, because very few non-Austrian economists actually take them seriously

Xdes 13y ago
I do not see where in your sources Austrian Economics "actively rejects empirical research and deductive reasoning." The foundation of Austrian Economics is in studying human behavior in the market (Praxeology[0]). Austrian economists use praxeology give meaning to economic models. [0] https://en.wikipedia.org/wiki/Praxeology https://en.wikipedia.org/wiki/Praxeology
- chimeracoder 13y ago
  Well, for starters the "Methodology' section opens with > Critics generally argue that Austrian economics lacks scientific rigor and rejects scientific methods and the use of empirical data in modelling economic behavior. Some economists describe Austrian methodology as being a priori or non-empirical a statement which includes citations from five different sources. You may disagree with that conclusion, but I think it's clear where I found it in those two links. And if you dig a bit more into both of links that I provided, you'll find a more detailed exposition, even in sections that don't use the word "data" explicitly.
- rayiner 13y ago
  But their "studying of human behavior" isn't based on empirical models. Its based on idealized assumptions. For example, they continue to use rational actor abstractions despite empirical research showing that human behavior is irrational in predictable ways. We are going to realize, sooner or later, that cognitive psychology pretty much obliterates the assumptions underlying Austrian economics.
  - AnIrishDuck 13y ago
    > human behavior is irrational in predictable ways. My favorite example of this is the ultimatum game [1]. The game has two players. The first player proposes a split of a "pot" of money. The second player can accept that split and take their share, or reject the split leaving both players with NOTHING. The "rational" action for the first player to take is to suggest a split where he keeps the largest amount of the pot possible. The "rational" action for the second player is to then accept that split, because something is better than nothing. As you can imagine, real-world runs of this game have proven that nobody acts "rationally" (splits of less than 20%, when proposed, are often rejected). Homo economicus [2] doesn't have emotions or empathy. It doesn't value extrinsic things like "justice" or "fairness". Homo sapiens does. In other words, while people might act rationally, the economic definition of "rational" and the common definition of "rational" are often two entirely different things. 1. http://en.wikipedia.org/wiki/Ultimatum_game http://en.wikipedia.org/wiki/Ultimatum_game 2. http://en.wikipedia.org/wiki/Homo_economicus http://en.wikipedia.org/wiki/Homo_economicus
    - dllthomas 13y ago
      The rational act for the first player is only to suggest a poor split if they are assuming a rational second player. Given that they know they're playing against a human, that's not a good assumption. Doesn't really take away from the point, though.
gphil 13y ago
> Well, that's because we've never had a cryptocurrency of this scale before. I agree. I was mostly trying to assert that we shouldn't confidently make predictions in the absence of data. I didn't know about the Austrian School's attitude toward empirical research--no wonder I don't agree with what they say.

Xdes 13y ago

I do not see where in your sources Austrian Economics "actively rejects empirical research and deductive reasoning." The foundation of Austrian Economics is in studying human behavior in the market (Praxeology[0]). Austrian economists use praxeology give meaning to economic models. [0] https://en.wikipedia.org/wiki/Praxeology https://en.wikipedia.org/wiki/Praxeology

chimeracoder 13y ago
Well, for starters the "Methodology' section opens with > Critics generally argue that Austrian economics lacks scientific rigor and rejects scientific methods and the use of empirical data in modelling economic behavior. Some economists describe Austrian methodology as being a priori or non-empirical a statement which includes citations from five different sources. You may disagree with that conclusion, but I think it's clear where I found it in those two links. And if you dig a bit more into both of links that I provided, you'll find a more detailed exposition, even in sections that don't use the word "data" explicitly.
rayiner 13y ago
But their "studying of human behavior" isn't based on empirical models. Its based on idealized assumptions. For example, they continue to use rational actor abstractions despite empirical research showing that human behavior is irrational in predictable ways. We are going to realize, sooner or later, that cognitive psychology pretty much obliterates the assumptions underlying Austrian economics.
- AnIrishDuck 13y ago
  > human behavior is irrational in predictable ways. My favorite example of this is the ultimatum game [1]. The game has two players. The first player proposes a split of a "pot" of money. The second player can accept that split and take their share, or reject the split leaving both players with NOTHING. The "rational" action for the first player to take is to suggest a split where he keeps the largest amount of the pot possible. The "rational" action for the second player is to then accept that split, because something is better than nothing. As you can imagine, real-world runs of this game have proven that nobody acts "rationally" (splits of less than 20%, when proposed, are often rejected). Homo economicus [2] doesn't have emotions or empathy. It doesn't value extrinsic things like "justice" or "fairness". Homo sapiens does. In other words, while people might act rationally, the economic definition of "rational" and the common definition of "rational" are often two entirely different things. 1. http://en.wikipedia.org/wiki/Ultimatum_game http://en.wikipedia.org/wiki/Ultimatum_game 2. http://en.wikipedia.org/wiki/Homo_economicus http://en.wikipedia.org/wiki/Homo_economicus
  - dllthomas 13y ago
    The rational act for the first player is only to suggest a poor split if they are assuming a rational second player. Given that they know they're playing against a human, that's not a good assumption. Doesn't really take away from the point, though.

gphil 13y ago

> Well, that's because we've never had a cryptocurrency of this scale before. I agree. I was mostly trying to assert that we shouldn't confidently make predictions in the absence of data. I didn't know about the Austrian School's attitude toward empirical research--no wonder I don't agree with what they say.