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Danish government makes its new economic model open source

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Re: Danish government makes its new economic model open source

#81

Post by tomrod »

charcircuit wrote: post #76
mbar84 wrote: post #67

Economics is not a science like physics. We can't do controlled experiments, we can't falsify hypothesis. This leads to very muddy waters and what you are left with are two kinds of economists: Those who tell people what they want to hear and those nobody listens to. Econometrics gives people everything they want to hear, and with a scientific veneer as a bonus. The HN crowd should however appreciate how susceptible…

>We can't do controlled experiments Why not?

Randomized controlled trials happen all the time. The OP is echoing a common Austrian economics approach in claiming that economics cannot apply the scientific method ever.

Re: Danish government makes its new economic model open source

#82

Post by tomrod »

mbar84 wrote: post #77
charcircuit wrote: post #76

Earlier quoted context omitted.

>We can't do controlled experiments Why not?

Because people aren't lab mice. My favourite example are claims wrt. experiments for the Universal basic income. These experiments always pertain to people who receive more money than previously, but somehow never include a proportional group of people from whom the money is taken away. To do this experiment correctly, you would have to pick a random sample of the population and do the redistribution regardless of wh…

Except UBI is simply a guarantee of a minimum income, not a distribution without other means of income. If UBI is 5k, everyone makes at least 5k. If you make 15k before, now you make 20k (modulo market adjustments).

Re: Danish government makes its new economic model open source

#83

Post by zwaps »

mbar84 wrote: post #67

Economics is not a science like physics. We can't do controlled experiments, we can't falsify hypothesis. This leads to very muddy waters and what you are left with are two kinds of economists: Those who tell people what they want to hear and those nobody listens to. Econometrics gives people everything they want to hear, and with a scientific veneer as a bonus. The HN crowd should however appreciate how susceptible…

Economists do plenty of experiments.

As for Econometrics, I agree that studies employing observational causal inference in statistics are much harder (and harder to swallow) than experiments. Usually.

But perhaps, if you dig a bit deeper and ask yourself things like: "what makes a hypothesis falsifyable" or, "could there be a hypothesis falsifyable by observational data?". Have your ever written down the exact exclusion condition (or exogeneity condition or whatever) you use in your experiment? You might find out something interesting.

Controlled experiments, much like any econometric (or statistic) technique, require identification assumptions. And of course, these can not be proven. Even though many people believe it is so, experiments are not really different in kind, the assumptions are just usually easier to believe. Not always, though, which can also be fun. Even in an experiment, you - in fact - observe reality only once. In other cases, however, we find out that our assumptions about the identification in the experiment were wrong, due to factors we didn't know about. This happens even in physics (shocker, I know).

Keep an open mind, would be my advise. Your critiques are well known, and in the broad sense tackling them is the business of statistics. By the way, there are indeed smart people here and there.

A good heuristic: If your find yourself rejecting entire disciplines, like econometrics, all while implictily using auction theory, regulation, pricing etc. in your amazon, ebay, cellphone, or energy grid, you are probably on the wrong peak of a Dunning Kruger curve.

Re: Danish government makes its new economic model open source

#85

Post by zwaps »

mbar84 wrote: post #77
charcircuit wrote: post #76

Earlier quoted context omitted.

>We can't do controlled experiments Why not?

Because people aren't lab mice. My favourite example are claims wrt. experiments for the Universal basic income. These experiments always pertain to people who receive more money than previously, but somehow never include a proportional group of people from whom the money is taken away. To do this experiment correctly, you would have to pick a random sample of the population and do the redistribution regardless of wh…

A representative sample features the same external validity issues you have in many (any) experiments, including in the hard sciences. That's part of science, and it would be unfair to attribute it otherwise. One experiment won't do it.

As for your other point, I guess the issue the lack of a hypothesis regarding basic income. You can't test "basic income" as such, and with such unspecific setup you are sure to conflate rather than illuminate mechanisms of relevance. In any case, it depends on your question whether you need to take income away from anyone. Are you going to start by examining distributive effects? Really? No physisict would test their airflow experiment on a flying rocket, while also trying to measure how he exhaust affects the wind in Costa Rica next week and saying 'something' about the future climate. They would start by putting their airflow gizmo into an isolated chamber - which is, afaik, more or less where UBI experiments are.

Re: Danish government makes its new economic model open source

#86

Post by beaconstudios »

dane-pgp wrote: post #41

I've often wondered whether the first super-intelligent AI that gets created, if it somehow manages to be both under government control and not put to strictly military uses, might be tasked with modelling the economy and deciding on the "correct" set of economic policies. Extending the scope of AI decision-making outside of the realm of economics seems much harder, though, as there's much less training data for ques…

That was actually likely to happen at one point - either in the Soviet Union through OGAS [1] which was rejected due to bureaucratic politics, or Chile's Project Cybersyn which was cancelled due to, uh, American interests. It would have been extremely interesting to see what a planned economy utilising cybernetics and rudimentary ML would've been capable of, especially as the technology improved.

1: https://en.m.wikipedia.org/wiki/OGAS

2: https://en.m.wikipedia.org/wiki/Project_Cybersyn

Re: Danish government makes its new economic model open source

#87

Post by drran »

tomrod wrote: post #82
mbar84 wrote: post #77

Earlier quoted context omitted.

Because people aren't lab mice. My favourite example are claims wrt. experiments for the Universal basic income. These experiments always pertain to people who receive more money than previously, but somehow never include a proportional group of people from whom the money is taken away. To do this experiment correctly, you would have to pick a random sample of the population and do the redistribution regardless of wh…

Except UBI is simply a guarantee of a minimum income, not a distribution without other means of income. If UBI is 5k, everyone makes at least 5k. If you make 15k before, now you make 20k (modulo market adjustments).

Who will pay for this?

Re: Danish government makes its new economic model open source

#88

Post by mbar84 »

zwaps wrote: post #83
mbar84 wrote: post #67

Economics is not a science like physics. We can't do controlled experiments, we can't falsify hypothesis. This leads to very muddy waters and what you are left with are two kinds of economists: Those who tell people what they want to hear and those nobody listens to. Econometrics gives people everything they want to hear, and with a scientific veneer as a bonus. The HN crowd should however appreciate how susceptible…

Economists do plenty of experiments. As for Econometrics, I agree that studies employing observational causal inference in statistics are much harder (and harder to swallow) than experiments. Usually. But perhaps, if you dig a bit deeper and ask yourself things like: "what makes a hypothesis falsifyable" or, "could there be a hypothesis falsifyable by observational data?". Have your ever written down the exact exclus…

I understand the argument and I accept the idea of natural experiments in principle. The most difficult thing with all of these is the ceteris paribus (holding all else constant), or as a second best, correcting for known confounding factors. This is in such stark contrast to a lab setting, where an adversarial scientist can regard a hypothesis as wrong and construct an experiment to prove it so, only to find out that the hypothesis isn't falsified. With statistics and models on the other hand it always devolves into discussions about variables, confounding factors and there's never a satisfying resolution, especially on controversial results.

The number of places for bias to creep in are way to many. I think the econometrics people have gone down a hopeless path, guided by wishful thinking and demand from people who want us to be able to make statements about things which we just cannot do.

The parts of economics that are valuable are not based on econometrics, but upon reasoning from first principles: Incentives, supply and demand, game theory etc. under which I would argue all of your examples fall.

Re: Danish government makes its new economic model open source

#89

Post by mbar84 »

zwaps wrote: post #85
mbar84 wrote: post #77

Earlier quoted context omitted.

Because people aren't lab mice. My favourite example are claims wrt. experiments for the Universal basic income. These experiments always pertain to people who receive more money than previously, but somehow never include a proportional group of people from whom the money is taken away. To do this experiment correctly, you would have to pick a random sample of the population and do the redistribution regardless of wh…

A representative sample features the same external validity issues you have in many (any) experiments, including in the hard sciences. That's part of science, and it would be unfair to attribute it otherwise. One experiment won't do it. As for your other point, I guess the issue the lack of a hypothesis regarding basic income. You can't test "basic income" as such, and with such unspecific setup you are sure to confl…

> Are you going to start by examining distributive effects? Really?

Fair point. I guess you could run an experiment where money is simply taken away from people, destroyed and then look at the effect of that in isolation.

Re: Danish government makes its new economic model open source

#90

Post by partiallypro »

I'm a skeptic, this could end up as a tyranny of metrics. Even the smartest people are often wrong about what is best for everyone. There's an information problem in that though there are/will be plenty of metrics, not all of the necessary information can always be known. That's ok for a company, but not an economy. Just make the data "open" to everyone, "the model" itself is a misnomer. Denmark already has one of the most free and open economies in the entire world...hopefully this idea doesn't help to kill the golden goose. I frankly think it will have no virtually no influence or impact.
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