tag:blogger.com,1999:blog-17232051.post6913784227020828393..comments2024-03-28T03:16:14.104-04:00Comments on Noahpinion: Book Review: "Economics Rules"Noah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger16125tag:blogger.com,1999:blog-17232051.post-74525916173167859792016-08-25T06:55:54.485-04:002016-08-25T06:55:54.485-04:00Few seconds leaving the alternative leg in a crunc...Few seconds leaving the alternative leg in a crunched function. Alternately switch <a href="http://greentheorygarcinia.com/exoslim-garcinia-cambogia/" rel="nofollow">Exoslim</a> to the alternative leg and keep it completely prolonged above the ground for a few seconds even as crunching the primary leg.For more ==== >>>>>> <a href="http://greentheorygarcinia.com/exoslim-garcinia-cambogia/" rel="nofollow">http://greentheorygarcinia.com/exoslim-garcinia-cambogia/</a><br />JohnVermihttps://www.blogger.com/profile/00790732756284494960noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-6950921979897048002016-02-03T08:36:08.317-05:002016-02-03T08:36:08.317-05:00Noah wanted to get your view on this proposal of m...Noah wanted to get your view on this proposal of mine...I think I might have discovered a way to prevent regulatory capture of a regulator.The idea is simple. Start with the assumption that regulatory capture will happen and nothing you do will prevent it from happening.Then you divide the regulator into three independent wings, like the Legislative, Executive and Judiciary. Have three wings which can act as check and balances to each other. The Holy Trinity. Example in Auto Industry there are three chief regulatory captures.Industry,Workers and Consumers.Let the wings have representatives from each sector. Then we let the Coase theorem come into play, i.e. let the parties bargain with each other and you will get a more efficient result.At the end of the day, the issue is of bargaining,and you cannot capture that that information in a model,because it is in a constant state of flux.Example: when the oil prices were 120$ the bargaining would be very different when the price of oil is 30$.The consumer would be willing to pay higher taxes if the price of oil is going to go down,ask for better,safer cars at cheaper prices etc. The worker will be asking for higher wages as the cost of owning and making a vehicle around the currant market price is lower, hence greater profits,have better bargaining on their protections etc. The Industry would like to maximize the profits of shareholders, want better labor mobility, hire and fire laws,competition, trade, protectionism etc.The Government should not exist in the three mechanisms, not because of any libertarian reasons, but because even if a single team gets it, bargaining becomes asymmetric and the "game" is over.Imagine it as a game with three teams. The Government will at most have the power of a referee in a soccer match or an umpire in a cricket match.Anonymoushttps://www.blogger.com/profile/11826933622252621374noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-36814886269280461462016-01-28T12:52:09.257-05:002016-01-28T12:52:09.257-05:00@Unlearningecon, one possible paradigm here. I'...@Unlearningecon, one possible paradigm <a href="http://informationtransfereconomics.blogspot.com/2016/01/models-and-frameworks.html" rel="nofollow">here</a>. I'm not saying that framework is best, just that it's an example terms of the framework and its relation to individual falsifiable models generated from it. Do you know of another example?Tom Brownhttps://www.blogger.com/profile/17654184190478330946noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-86953911109903714762016-01-28T12:48:56.981-05:002016-01-28T12:48:56.981-05:00This comment has been removed by the author.Tom Brownhttps://www.blogger.com/profile/17654184190478330946noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-27966837396551253302016-01-28T05:50:26.414-05:002016-01-28T05:50:26.414-05:00Even if Rodrik does not directly endorse the clust...Even if Rodrik does not directly endorse the clusterfuck view, is it not where his philosophy leads? And is it not essentially where we are in practice?<br /><br />I'm not saying I have an answer to how and when theories in economics should be rejected. But I can't see much sense in never allowing them to be.Unlearningeconhttps://www.blogger.com/profile/13687413107325575532noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-11489601182847115512016-01-27T20:59:29.731-05:002016-01-27T20:59:29.731-05:00I don't think Rodrik says models "cannot&...I don't think Rodrik says models "cannot" or "should not" be rejected, it's more that they typically "are not." What I think he's suggesting is that since a model proposes certain correlations based on a set of assumptions, it's not generally the case that the correlation doesn't exist at all, but rather that the assumptions require a set of conditions that rarely happen. So it's not "wrong" it just may not be very useful. <br /><br />One might think that the solution is to have fewer models, but extend them so each one accounts for a range of assumptions - he argues against this, though, saying the more robust, more complex model isn't necessarily "better."Steve S.https://www.blogger.com/profile/15276218411346368617noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-47177336551586684272016-01-27T15:11:48.415-05:002016-01-27T15:11:48.415-05:00I'm quite confused about the 'models can n...I'm quite confused about the 'models can never be rejected' point. Doesn't this just invite, to use a technical term, a complete clusterfuck of models?Unlearningeconhttps://www.blogger.com/profile/13687413107325575532noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-80634589079418543282016-01-27T13:24:45.012-05:002016-01-27T13:24:45.012-05:00I can't believe you've only got 9 comments...I can't believe you've only got 9 comments on this. Is that an all time low?Tom Brownhttps://www.blogger.com/profile/17654184190478330946noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-26207208892987704772016-01-25T21:25:13.787-05:002016-01-25T21:25:13.787-05:00One more point - I don't think the purpose of ...One more point - I don't think the purpose of a model is necessarily to "predict the future" per se. If the model adds to our understanding of what's really going on in a system, that can be valuable (and falsifiable) as well.<br /><br />What I mean is - oversimplifying a bit - even if there's no model able to say "if we implement this trade policy, it will have precisely this impact on a certain factory in Ohio," there is value in turning that around, saying OK, this trade policy went into effect, and based on the empirical data and our models we're able to form such-and-such conclusions about this specific factory.Steve S.https://www.blogger.com/profile/15276218411346368617noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-9360473108598993192016-01-25T20:55:28.985-05:002016-01-25T20:55:28.985-05:00Yes, I agree - "forever looking backwards&quo...Yes, I agree - "forever looking backwards" is not what I meant to suggest, and not what Rodrik implies. By "asking better questions" I mean essentially what you're describing - not "one model to rule them all," but a robust set of tools to describe critical assumptions and map them to appropriate models.<br /><br />So the model itself might not be falsifiable (which is why, as Rodrik explains, it's a "model" rather than a "theory") but the "better question" has to do with the rules for applying the model, which ought to be falsifiable, i.e., defining the assumptions under which the model works with increasing level of specificity.Steve S.https://www.blogger.com/profile/15276218411346368617noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-22191501211598762422016-01-25T13:42:24.872-05:002016-01-25T13:42:24.872-05:00... just to be clear, I have yet to read Rodrik...... just to be clear, I have yet to read Rodrik's book: I'm just responding to your comment.Tom Brownhttps://www.blogger.com/profile/17654184190478330946noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-41771356004626076262016-01-25T13:00:54.128-05:002016-01-25T13:00:54.128-05:00But if you're forever looking backwards for th...But if you're forever looking backwards for the best explanation of what just happened, and pulling from a vast library of never-to-be-falsified models in the process (perhaps creating a new addition if none of the existing ones fit), how do you know that's not just an exercise in sophisticated <a href="https://en.wikipedia.org/wiki/Just-so_story" rel="nofollow">just-so story telling</a>?<br /><br />Making predictions by selecting models ahead of time (based on the context, and according to some hypothesized algorithm for model selection <b>that anybody can use</b>), allows you to both get feedback about your algorithm and the model, and maybe even give you confidence to shelve one or both permanently.<br /><br />Failing to expose ideas to the risk of falsification seems like cutting yourself off from the only possible feedback the real world can give you.Tom Brownhttps://www.blogger.com/profile/17654184190478330946noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-56340081614318908892016-01-25T09:26:24.768-05:002016-01-25T09:26:24.768-05:00As a non-economist who's been dipping his toe ...As a non-economist who's been dipping his toe into economics blogs, I enjoyed the book - it gave me some insight into a number of questions I've been asking. I'd appreciate a couple more chapters with some specifics about how to apply his thinking to various models, though - some details.<br /><br />He convinced me that economics is indeed a science, in that (in my view) science isn't so much about a search for "answers" as it is the search for better questions. I see that in his approach to models - in contrast to "public policy" economists who are in the business of making predictions, he provided a view into his world where it's more about understanding what's really going on, to the best of our ability, then asserting "inflation is coming" or "inflation is not coming."<br /><br />Unlike that uninteresting yes/no question, an observation that while a certain model suggests immigration ought to lead to lower wages, say, but the empirics do not show this happening, enables an open-ended question about which assumptions are not correct, etc., and a much more useful, interesting line of inquiry.Steve S.https://www.blogger.com/profile/15276218411346368617noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-32441271266215163702016-01-25T00:46:24.649-05:002016-01-25T00:46:24.649-05:00Basically, Rodrik thinks data is there to tell you...Basically, Rodrik thinks data is there to tell you which model to use in specific cases. In my opinion, data is also there to tell you which models *never* to use, ever.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-12406417438852266012016-01-24T18:29:04.453-05:002016-01-24T18:29:04.453-05:00Noah, here's a related post about choosing mod...Noah, <a href="http://ramblingsofanamateureconomist.blogspot.com/2016/01/choosing-best-model-for-each-context.html" rel="nofollow">here's a related post</a> about choosing models to fit the context. The author there (John Handley) defends neoclassical models in some contexts (which sounds like it's at odds with Rodrik). Your thoughts?Tom Brownhttps://www.blogger.com/profile/17654184190478330946noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-90706855305255927652016-01-24T17:57:03.552-05:002016-01-24T17:57:03.552-05:00There seems to be a tension between:
In doing so,...There seems to be a tension between:<br /><br /><i>In doing so, [Rodrik] basically says "The evidence shows that norms often matter, and economists pay attention to the evidence." This demonstrates Rodrik's deep respect for data and evidence.</i><br /><br />And this:<br /><br /><i>[Rodrik] says that economics, unlike science, doesn't replace bad models with better ones - it just makes new models, expanding the menu of models that policy advisors have to choose from. That seems very true in practice. You rarely hear economists talk about models being "disproven", "falsified", or "rejected".</i><br /><br />Paying attention to evidence to add to models (or make new ones) is important, but so is using evidence to reject models. It's my opinion, but you need both to truly respect the data.Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.com