Danish government makes its new economic model open source • Hacker News Board

Re: Danish government makes its new economic model open source

#91

Post by mbar84 » Sat, Jan 22, 2022, 2:24 AM UTC

nautilius wrote: post #80

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…

So, if you would want to test if, say, a pair of shoes improves running performance, it's not enough to compare to peers without change, or the situation before the new shoes, but you will reject the study unless you also have a third group where you break people's legs? How would that be necessary?

UBI cannot be implemented unless somebody pays for it. It's necessarily redistributive. All existing experiments only look at one half of the equation. I think it's a fair question to ask what the effect will be on people who on net will pay more than before this system was introduced. Breaking peoples legs is not a prerequisite for others to run faster.

Re: Danish government makes its new economic model open source

#92

Post by tomrod » Sat, Jan 22, 2022, 2:24 AM UTC

drran wrote: post #87

tomrod wrote: post #82

Earlier quoted context omitted.

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?

Many, with the benefit of a prosperous economy and stable polity.

Re: Danish government makes its new economic model open source

#93

Post by zwaps » Sat, Jan 22, 2022, 2:25 AM UTC

ricksunny wrote: post #61

Great! Are you familiar with the economic simulation work Threadneedle under Jacky Mallett in Iceland? https://github.com/jackymallett/Threadneedle

Interesting, although a bit dubious. The claim is that there are no microstructure models in banking, and in the paper he cites two econ 101 textbooks.

I mean, I guess the introduction is technically correct in stating that these textbooks are not sufficient to develop a microfounded model of banking. But then, one might suggest the author to perhaps look a bit further than Mankiw's 101 book? After all, textbooks treating the subject in more detail than even the present paper do exist, even from heterodox sources, if the mainstream is unacceptable.

Re: Danish government makes its new economic model open source

#94

Post by zwaps » Sat, Jan 22, 2022, 2:33 AM UTC

mbar84 wrote: post #88

zwaps wrote: post #83

Earlier quoted context omitted.

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 tha…

Then I don't get it. If you accept first principles, then the world of structural econometrics is open to you. Cake having, and cake eating - at the cost of structural assumptions. All you are doing then is filling your models with some actual data.

Could you be more specific what is a lab setting for you? Natural experiments are not what I meant when I spoke of experiments, as natural experiments are observational inferential methods!

btw did they ever tell you about that physics experiment in a lab that was built just over a subway line? So much confounding!

Jokes aside, your assumptions amount to assumptions about what "controlled" and "in a lab" means. I hope you see it makes more sense to define the requirement for experimental identification mathematically, in which case you'd see that the conditions are not different in kind, only in degree. etc.

Edit:

If that counts as revealed preference data, I can assure you that econometrics are used to great effect in pricing, auctions etc - one of the reasons certain orange and blue companies hiring experts on this have become mucho rich in the past couple of years. Some oldschool econ models may not be the best to describe the altruistic, boundedly rational present-preferrer. But oh boy, can you make some serious dough if you can mechanism design the auction platforms and the best the firms can do is to try to train some machine learning models against it.

Re: Danish government makes its new economic model open source

#95

Post by pdabbadabba » Sat, Jan 22, 2022, 2:35 AM UTC

partiallypro wrote: post #90

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 th…

What are you a skeptic of, exactly? This is the model actually used by the Danish Ministry of Finance to study the effects of various policy changes. I don't think there's any need to speculate about how much influence it will have: it apparently is already in use and guides policymaking. Other advanced economies have their own similar models used for studying and making various aspects of economic policy. I think another poster has provided a link to the model used by the NY Fed.

At a high level, I, like you, am fairly persuaded by the Hayekian point that its impossible to collect enough information or otherwise capture the necessary complexity to reliably model even a moderately complex economy with enough fidelity to allow central planning. But this is far short of that. And there does seem to be a need for general models to allow policymakers to make informed decisions. The only alternative would seem to be to make no decisions at all which a) is itself a decision and 2) does not seem to be an option that many people seriously advance.

I guess your position could be that these efforts are doomed to failure--i.e., no model will provide useful results. But that position--that no model will provide any amount of useful information, even at very low levels of granularity, is a very strong position--much stronger than Hayek's argument against planned economies--that I'd have to see some serious support for. And it certainly doesn't seem like a position that people should accept without a very convincing showing of its futility, given the significant costs of making policy decisions without even attempting to model them, or of making no policy interventions at all.

Re: Danish government makes its new economic model open source

#96

Post by dane-pgp » Sat, Jan 22, 2022, 2:36 AM UTC

danuker wrote: post #79

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…

> UBI, which will also make all economic models obsolete too But how would you decide how much to give through UBI next year? How inflation will change in response? How many people will still be needed in jobs? You still need a model, because the world is changing, and a model helps you understand how.

Sure, you would want a model to aid decision-making, but if there is (initially) no data for how the economy will behave under a UBI and with 80% unemployment, for example, then all existing models might end up generating predictions or recommendations that don't help at all.

Re: Danish government makes its new economic model open source

#97

Post by zwaps » Sat, Jan 22, 2022, 2:39 AM UTC

mbar84 wrote: post #89

zwaps wrote: post #85

Earlier quoted context omitted.

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.

There are experimental Game Theorist experimenting with such schemes, I suspect because they get a great amount of enjoyment from taking things away from people ;-)

Re: Danish government makes its new economic model open source

#98

Post by mbar84 » Sat, Jan 22, 2022, 2:42 AM UTC

zwaps wrote: post #94

mbar84 wrote: post #88

Earlier quoted context omitted.

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 tha…

Then I don't get it. If you accept first principles, then the world of structural econometrics is open to you. Cake having, and cake eating - at the cost of structural assumptions. All you are doing then is filling your models with some actual data. Could you be more specific what is a lab setting for you? Natural experiments are not what I meant when I spoke of experiments, as natural experiments are observational i…

The only thing to which I will object here is the use of the word "only" from "not different in kind, only in degree".

There is a substantial difference in degree when dealing with atoms, molecules, homogenous materials vs. people who think, face incentives and understand game theory.

Re: Danish government makes its new economic model open source

#99

Post by mbar84 » Sat, Jan 22, 2022, 2:44 AM UTC

zwaps wrote: post #97

mbar84 wrote: post #89

Earlier quoted context omitted.

> 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.

There are experimental Game Theorist experimenting with such schemes, I suspect because they get a great amount of enjoyment from taking things away from people ;-)

Fascinating. I wonder where he finds his volunteers. :-)

Re: Danish government makes its new economic model open source

#100

Post by monkeybutton » Sat, Jan 22, 2022, 2:53 AM UTC

c3534l wrote: post #74

k2enemy wrote: post #40

Earlier quoted context omitted.

FYI, the New York Fed's model is written in Julia and also open source. https://github.com/FRBNY-DSGE/DSGE.jl

> # Note: Not sure why the 3 is there. Oh god, our economy is doomed.

>Build: failing