Rôles of Prescriptive Models in Economics

30 May 2021

In introductory treatments of economics, one often encounters a distinction drawn between what is called positive economics and what is called normative economics. In these names — and in typical discussion — there are problems.

The meaning of positive here is restricted to fact, as opposed to speculation. Now, on the one hand, supposedly positive economics, like all attempts by human beings to understand the world, is permeated by speculations, which in scientific effort are hypotheses. (The philosophic movement called positivism arose with incompetent aspirations.) On the other hand, contrasting the normative with something called positive entails an implication, insinuation, or declaration that the normative cannot be placed on as solid a foundation as the rest of our understanding. Sometimes a lack of present agreement is treated as if proof that there is no objective ethical truth; sometimes the question is just begged. In any case, the distinction is irrational.

Instead using the terms descriptive and prescriptive steps away from the worst aspect of using positive, though it would be less corrosive to refer to non-prescriptive economics as, well, non-prescriptive or as non-normative.

However, in behavioral science, elements drawn from prescriptive theory are often useful non-prescriptively, either as approximations or as bounding cases. Economic rationality and expected-utility maximization (the latter sometimes conflated with the former) are such elements.

Some economists would not even recognize economic rationality or expected-utility maximization as prescriptive in any case, because they are meta-preferential — they express a preference for structures of preference that have ordering properties such as transitivity and acyclicity, but say nothing about ultimate objectives and thus, in themselves, say nothing about whether one should prefer tomatoes to apples or life over death.

The prescriptive arguments for economic rationality and for expected-utility maximization are to the effect that those who conform realize more of their objectives — regardless of what those objectives might be — than those who do not, with it usually treated as tautologic that one desires such maximization.[1]

The non-prescriptive arguments for economic rationality and for expected-utility maximization as approximations note that these are relatively tractable models of behavior for which evolutionary dynamics will select. Because the models are taken from prescriptive work, some people mistake or misrepresent any use of them as necessarily prescriptive, but the claim is neither that social or other biologic evolution ought to select for something approximated by such behavior nor that agents ought to engage in the behavior for which evolution selects. (If anything, what is illuminated is that evolution selects for a propensity to such prescriptions!)

I endorse use of these models as tractable approximations in many cases, but I also embrace use of a weaker notion of economic rationality as a bounding case. A boundary of economic outcomes is given by considering what those outcomes would be were agents economically rational.

Behavioral economics concerns itself with when-and-how people actually behave, and especially with failures of the aforementioned models. Although this research is not what I do, I acknowledge its value. However, a great deal of what passes for behavioral economics involves an inferential leap from identifying a real or apparent deviation of behavior from one of these models to a conclusion that this-or-that result could be obtained by state intervention, with the researcher looking away from any proper examination of the behavior of agents determining practices of the state. Behavioral economics is thus used as the motte for a statist bailey. Additionally, even behavioral researchers with no apparent statist agenda often fail to recognize when behavior that seems at odds with these models is or may be instead at odds with some presumption of the researcher.[2]

[1] The main-stream of economic theory treats completeness of preferences as a feature of economic rationality but I've never seen a prescriptive argument even attempted for this feature. The prescriptive cases for transitivity and for acyclicity seem to presume an absence of conflicting, prior meta-preferences. The prescriptive argument for expected-utility maximization is especially problematic.

[2] While I have problems with some of the work and with much of the rhetoric of Gerd Gigerenzer, he has ably identified important cases of such failure on the part of researchers.

On Taking the Law into One's Own Hands

17 May 2021

In almost every instance in which the admonition Don't take the law into your own hands! is used, the intention is that one should defer to some other party. But there are various parties to whom one could defer, some of them rival. A choice to defer at all is itself a choice about what is the law and implicitly about how it should be applied. In choosing to defer to one of these parties, rather than to another, one has already taken the law into one's own hands, if only then to let it go. A person is always responsible for such choices. Sometimes, deference is a very appropriate choice, and perhaps even the only appropriate choice, but one is responsible for choosing when and to whom to defer. The only way that a person could perhaps not at all take the law into his-or-her own hands would be in utter passivity — not even acting to draw some other party into the situation as giver or enforcer of law. And, still, to choose passivity would be a choice, and sometimes a morally unacceptable choice.

Those who insist that we should not take the law into our own hands almost always intend that we should defer to those with the most social power concerning law. Various concerns might motivate that intention, but most often the admonition comes from members of that group (state officials), or from people who take it that the social power somehow arises from virtue of some sort, or from those who believe that the only alternative to deferring to those with the most social power is so obviously barbarism that no argument need be made. If a reader believes that I need to critique any of these cases, then he-or-she should comment below to that effect.

As a man thinketh

3 May 2021

Assuming something that is not necessarily believed by oneself or by one's audience or by either is a regular practice in various intellectual pursuits.

In discussion of policy, appropriateness of the set objectives of a real or imagined audience will often be assumed by economists who are either attempting to proceed in a wertfrei[1] manner or to argue for or against some ostensible means of accomplishing that set of objectives because of how those means would affect other matters about which the economist has a normative position. Thus, an economist who does not believe that an objective is right and proper may none-the-less assume that it is, to explain

  • that some policy will not accomplish the objective; or
  • that some policy will be most effective at accomplishing the objective; or
  • that some policy might be very effective at accomplishing the objective, but would, will, or does come at unacknowledged costs of importance to some in the audience; or
  • that some policy will be very effective in accomplishing the objective, and would, will, or does bring unrecognized benefits of importance to some in the audience.

One of the various things that I find uncomfortable about engaging in discussion of policy is that some people lose or never catch sight of the point that my assumption of objectives is not an endorsement of those objectives. However, I think that repeatedly assuming objectives in the context of being socially surrounded by people with those objectives will indeed lead some analysts to fall into the habit of presuming those objectives — of implicitly embracing those objectives — and may eventually lead them to endorsing those objectives overtly.

Unhappiness prevails amongst various libertarians and near-libertarians, concerning the comportment of what are called beltway libertarians, who are scholars, intellectuals, and professional political operatives located in or near the District of Columbia, and who self-identify with libertarian yet who have been silent about some of the most illiberal[2] policies of our day, or contort themselves to argue that these policies are actually libertarian, or even assert that circumstances warrant policies that they acknowledge to be illiberal. For the most part, the liberal community elsewhere simply takes it that the beltway libertarians have been corrupted by their context; I am here suggesting part of the mechanism of corruption.

[1]  Normatively neutral.

[2] I use liberal and illiberal in their original and proper senses.

Nick Hudson on SARS-CoV-2 and the Policy Response

1 April 2021

Alphabet has removed this video from YouTube:

The Paradox of Shadows

5 March 2021

For many years, one of the projects on a back-burner in my mind has been the writing of a novel, A Paradox of Shadows, in which the principal character is attempting to reconstruct or to otherwise recover an ancient work, the title of which might have been περὶ τοῦ ἀτόπου τοῦ τῶν σκιῶν, or De [Anomalia de] Obumbratio, or perhaps something else.

Everything about the work is a matter of doubt or of conjecture, including its author and the era and language in which it were originally composed; even that there ever were such a work is uncertain. Its existence is primarily inferred from how parts of it seem to be esoterically embedded in other works; sometimes these passages can be made to fit together like bits of a jigsaw, but different ways of fitting are possible, especially allowing for lacunæ, interpolations, and unintended errors in translation or in transcription. In ancient art and literature are found what may be other references to the work, but these apparent references are subject to alternate interpretation, especially as many of them would be quite oblique if indeed they refer to the work. The search is largely a matter of poring over old manuscripts and documents.

No rational person would look at any one piece of evidence known to the main character and conclude that the work must have existed or just probably existed. Few would take the evidence as jointly establishing such a probability. There is both too much and too little information, so that bold intellectual leaps must be made in chaos or in darkness. A searcher may encounter unscalable cliffs or unbridgable chasms; and, if forced to stop at any point, one is likely to look pathetic. But the evidence, taken jointly, associates a relative plausibility of recovery with each of various possibilities as to the nature of the work. In that context, the possible profundity is enough to drive the search by the principal character, even with likely failure.

Obscured Tautology and the Persistence of Socialism

28 January 2021

Since sometime in my childhood, I have repeatedly encountered arguments of the form

If X were Y enough, then X would be able to Z.

For example

If you were smart enough, then you'd be able to fix that widget.

The enough makes this claim a tautology; it really just unpacks to

If X were Y enough to Z, then X would be able to Z.

But the tautology is vacuous and useless in cases in which

Y enough to Z

is not possible, as in

pretty enough to solve Hilbert's Fifteenth Problem

It is true that

If Madeline were pretty enough to solve Hilbert's Fifteenth Problem, then Madeline would be able to solve Hilbert's Fifteenth Problem.

It just isn't true that

Someone could be pretty enough to solve Hilbert's Fifteenth Problem.

Outside of pædogogic exercises, when someone makes a declaration of form

If X were Y enough, then X would be able to Z.

he or she is presuming or insinuating that

At the margin, there is some level of Y that is sufficient to be able to Z.

but this proposition may not be true, and certainly ought to be examined before accepting

If X were Y enough, then X would be able to Z.

as part of an argument that

X ought to be more Y

or that

Z can be accomplished.

The reason that I write about this issue of logic now is that is seems to me that a great many people essentially believe that

All that is necessary for socialism to work is for us to take control and to be sufficiently virtuous; thus, when socialism fails it is either because we are not in control or are not sufficiently virtuous; and thus, no matter how much or how often attempts at socialism fail, we must struggle to take control and to be virtuous — perhaps by finding ways to incentivize virtuousness — until socialism succeeds.

Some critics would perhaps want to ask the genuinely important question of to just whom this we and us refer, but for my purpose here they can be left as a variable to be assigned whatever value the political left might want. My objection is that lurking in the argument is

If X were virtuous enough, then X would be able to make socialism work.

And, in this context, even a genuine failure of socialism will not be seen as a reason to quit trying. The socialists can always tell themselves We can succeed next time, or at least fail better.

The typical opponent of socialism argues that socialism will fail because people will not be motivated to expend sufficient effort. Not only can this been seen as a problem of virtue by the political left; it has been seen as a problem of virtue by the political right, who sometimes ascribe the impossibility of well functioning socialism to Original Sin.

But a motivation to work with sufficient intensity is not the deepest practical problem of socialism. The problem of knowing at what to workthe Problem of Economic Calculation — is the deepest problem. We can presume that, somehow, everyone conforms utterly to a left-wing notion of virtue, and still the Problem of Economic Calculation will abide.

At the margin, there is no level of virtue on the part of any us or of any them that is sufficient to be able to make socialism work.

But, hidden behind an obscured and misapplied tautology, the presumption that such a level exists can keep socialists banging their heads against the wall indefinitely and putting other people against the wall indefinitely.

Tiny Spaces

20 January 2021

Famously, the Euclidean axiomata for space seemed necessary to many, so that various philosophers concluded or argued that some knowledge or something playing a rôle like that of knowledge derived from something other than experience. Yet there were doubters of one of these axiomata — that parallel lines would never intersect — and eventually physicists concluded that the universe would be better described were this axiom regarded as incorrect. Once one axiom was abandoned, the presumption of necessity of the others evaporated.

I think that our concept of space is built upon an experience of an object sometimes affecting another in ways that it sometimes does not, with the first being classified as near when it does and not near when it does; which ways are associated in the concept of near-ness are selected by experience. The concept of distance — variability of near-ness — develops from the variability of how one object affects another; and it is experience that selects which variabilities are associated with distance. Our concept of space is that of potential (realized or not) of near-ness.

The axiomata of Euclid were, implicitly, an attempted codification of observed properties of distance; in the adoption of this codification or of another, one might revise which variabilities one associated with distance. One might, in fact, hold onto those axiomata exactly by revising which variabilities are associated with distance. In saying that space is non-Euclidean, one ought to mean that the Euclidean axiomata are not the best suited to physics.

Just as the axiomata of Euclid become ill-suited to physics when distances become very large, they may be ill-suited when distances become very small.

Space might not even be divisible without limit. The mathematical construct of continuity may not apply to the physical world. At least some physical quantities that were once imagined potentially to have measures corresponding to any real number are now regarded as having measures corresponding only to integer multiples of quanta; perhaps distance cannot be reduced below some minimum.

And, at some sub-atomic level, any useable rules of distance might be more complex. On a larger scale, non-Euclidean spaces are sometimes imagined to have worm-holes, which is really to say that some spaces would have near-ness by peculiar paths. Perhaps worm-holes or some discontinuous analogue thereöf are pervasive at a sub-atomic level, making space into something of a rat's nest.

Illuminating a Bit of Urban-Myth Economics

16 January 2021

On YouTube, I encountered a video selling something (I didn't get to whatever it was) based upon a controversial theory, and using economic prejudices to make his case. To make the economic part of his case, he told an old, true story, but left-out an important detail.

There are a few incandescent light-bulbs that have been in continual use for many decades. (He referred to one of these.) They haven't needed to be changed. But that doesn't somehow prove that the manufacturers of light-bulbs have formed a cartel that avoids selling us cost-effective light-bulbs that will last many decades.

The bulbs that last for decades run on DC (direct current) rather than AC (alternating current). AC displaced DC because of issues of generation and of transmission; you'd be paying more for electricity if your power company used direct current. And, that these bulbs are run continuously means that they are never turned-off, and thus have only been turned-on once. It is the strains on the filament from being turned-on repeatedly and from running alternating current that cause our incandescent bulbs to fail more quickly. If you really want your bulbs to last longer, then install rectifiers in your lamps, and either never turn the bulbs off or also install devices that gradually increase the current when the light is turned-on.

Or just accept that you're trading higher bulb costs for lower power costs and lower costs of lamps.

Adapting Images to Small Displays

15 January 2021

This 'blog has yet to fully accommodate mobile computing. Images in entries have usually had an absolute width of 450 pixels, which made sense when displays were 640 pixels or more wide (and seldom more than 1920 pixels wide), but is now too wide for some devices.

I've been occasionally patching old entries to fix this problem. With IMG and IFRAME elements, the trick is to add

max-width: 100% ; max-height: Rvw ;

to the string-value of the style attribute, where R is the ratio of the height divided by the width, multiplied by 100. For example, if the image is 450 pixels wide and 900 pixels tall, then

R = 100 · (900 / 450) = 200

Just what happens when R is not an integer seems to be browser-dependent.

An example of an IMG element could be

<img src="wp-content/uploads/2020/11/A6_corrected.png" alt="[image of formula]" width="449" height="92" style="display: block ; margin-left: auto ; margin-right: auto ; margin-top: 1em ; margin-bottom: 1em ; border: none ; width: 26.4em ; height: 5.4em ; max-width: 100% ; max-height: 20.5vw ;" />

When BitChute gives code to embed a video, it looks something like this:

<iframe width="640" height="360" scrolling="no" frameborder="0" style="border: none;" src="https://www.bitchute.com/embed/QKOTRHgzsuQE/"></iframe>

It should look something like this:

<iframe width="640" height="360" scrolling="no" frameborder="0" style="border: none ; max-width: 100% ; max-height: 56.25vw ;" src="https://www.bitchute.com/embed/QKOTRHgzsuQE/"></iframe>

Privacy Concerns

14 January 2021

Those of you concerned with privacy may appreciate that no website in any of my domains has ever used Google Analytics. Nor have these websites ever had a reäction button (such as to Like an entry) connected to Facebook or any other such service. (Those reäction buttons allow visitors to be tracked even if the visitors do not click on them.)

On the other hand, the videos embedded in some of my entries use IFRAME elements, and those elements involve sending a request from your browser to the host of the video file, even if a visitor doesn't start the video, so they might be used to track him or her. All these videos were once hosted on YouTube, most but not all have since been moved to BitChute. I may move every video to BitChute, to reduce potential tracking of my visitors.

[Up-Date (2021:01/15): At this point, visitors are simply not tracked by Alphabet while here. All embedded videos are hosted on BitChute. There are links to some videos on YouTube; but, unless a visitor follows these links, Alphabet is unaware of the visit to a page containing the link.]