Tag: Economics

Passages from “Cribsheet” by Emily Oster on the use and limitations on data and studies on parenting

February 13, 2021

Attached are some passages from the book, Cribsheet by Emily Oster, an economist who wrote a data-driven guide to parenting. I put together some interesting passages from the introduction and from one of the chapters that does a nice job contextualizing the concepts of data driven decision making, what a good study is, the limits of those studies, and the ultimate uncertainty of all the knowledge produced using data.

Meaningful connections to constructing knowledge and data collection in the human sciences (particularly economics), natural sciences, and cognitive biases. Also deals well with problems of sorting out the differences between correlation and causation.

Generally great book for parenting, not just for its TOK connections.

How can you identify a good study? This is a hard question. Some things you can see directly. Certain approaches are better than others – randomized trials, for example, are usually more compelling than other designs. Large studies tend, on average, to be better. More studies confirming the same thing tends to increase confidence, although not always – sometimes they all have the same biases in their results

Passages from Cribsheet by Emily Oster

 

“What is ‘truth’ in Economics?”

September 22, 2020

From pages 154-155 of Frank Knight’s 1940 review essay titled “‘What Is Truth’ in Economics?” as this essay is reprinted in Knight’s 1956 collection, On the History and Method of Economics:

Economics and other social sciences deal with knowledge and truth of a different category from that of the natural sciences, truth which is related to sense observation – and ultimately even to logic – in a very different way from that arrived at by the methodology of natural science. But it is still knowledge about reality.

The fact that economists, with relatively rare exception, cannot conduct controlled laboratory experiments which allow a focus on the behavior of a small handful of variables does not render the knowledge arrived at by economic scholarship – observation, research, and reasoning – unscientific…

To fancy that one can gain an adequate understanding of the workings of the economy merely by carefully observing and measuring the relatively few objective pieces of quantified data that are typically available to economic researchers – “the” unemployment rate, “the” four-digit concentration ratio of this and that industry, “the” Gini coefficient for this and that country…is foolish. All such observable empirical facts are the results of vast and complex plan formation and modification and human interactions. Observable facts about the economy have no meaning on their own, and they are not – or ought not to be – the subject-matter of economics.

From Cafe Hayek 9/22/2020

Friedrich August von Hayek’s speech at the Nobel Banquet, December 10, 1974

July 29, 2020

F.A. Hayek on the importance of humility and limitations of Economics and the social sciences in general.

I feared…the Nobel Prize confers on an individual an authority which in economics no man ought to possess.

This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence…

I am not sure that it is desirable to strengthen the influence of a few individual economists by such a ceremonial and eye-catching recognition of achievements, perhaps of the distant past.

https://www.nobelprize.org/prizes/economic-sciences/1974/hayek/speech/

Language and Economic Misunderstanding

May 19, 2020

Interesting post about the nature of language and how it can misconstrue a complex reality and ultimately lead to misunderstandings and poor policy actions by governments.

Muddled thinkers confuse the world of our senses with the way in which it is depicted in language.

Yet as is true of all beneficial institutions, language is imperfect – it has, some might say, its ‘costs.’ Among the ‘costs’ of language is its tendency to cause us to suppose that the abstractions that we describe with words possess a concrete reality that these abstractions don’t possess. 🔥🔥🔥 [flames are my addition]

https://cafehayek.com/2020/05/quotation-of-the-day-3159.html

For more posts related to Economics, click here.

On the nature and fallacies of Economics

February 1, 2019

Below are a few different articles on the shortcomings and false assumptions of modern economics. What’s central to each of these is the difference between the human sciences and the natural sciences and the consequences of mistaking one for the other. Economics is a social science and many problems arise when we treat it as if, because of its sophisticated mathematical models, that it is like a natural science. The last article is an interesting example of the important of models when trying to understand reality.

Old economics is based on false ‘laws of physics’ – new economics can save us

It is time to ditch the belief that economies obey rigid mechanical rules, which has widened inequality and polluted our planet. Economics is evolving

In the 1870s, a handful of aspiring economists hoped to make economics a science as reputable as physics. Awed by Newton’s insights on the physical laws of motion – laws that so elegantly describe the trajectory of falling apples and orbiting moons – they sought to create an economic theory that matched his legacy.

Their mechanical metaphor sounds authoritative, but it was ill-chosen from the start

Continue reading “On the nature and fallacies of Economics”

Why raising the minimum wage in Seattle did little to help workers, according to a new study

July 29, 2016

This is an interesting article on the effect of raising the minimum wage. What’s interesting about it is that it raises a lot of issues that speak to the challenge of proving things in the human sciences, particularly in Economics. Because we can’t create two perfectly identical situations in real life with which to test out variables, we are left with having to determine the effects of variables like changing the minimum wage in imperfect, real life, experiments. If you pay close attention to the language, the writer communicates the experimental conclusions which often times sounds equivocal, weakly worded, or uncertain and that is because those people who conduct the experiments or undertake the research understand that it is very difficult to come up with solid, definitive conclusions like you can in the natural sciences. For example, you can say definitively in the natural sciences that if you heat up a gas and keep volume constant, that you will increase pressure. This is a consistent finding, backed up by experiments. Can you come to the same type up of definitive conclusion in the human sciences? Can you definitively answer the question, “what is the effect of raising the minimum wage?” The answer to that question is probably no. You will get answers that have a lot of qualifiers and adjectives like “probably” and “sometimes” and “maybe.”

“Overall, there was almost no effect on workers’ average total earnings, but Vigdor pointed out that the average could be misleading. The consequences for many individual workers — both positive and negative — could have been more significant.”

https://www.washingtonpost.com/news/wonk/wp/2016/07/29/study-raising-the-minimum-wage-did-little-for-workers-earnings-in-seattle/

What Economics Can (and Can’t) Do

July 19, 2015

“In John Stuart Mill’s view, which I believe is basically correct, economics is a separate and inexact science. It is separate from the other social sciences, because it focuses on only a small number of the causal factors that influence social phenomena. It is inexact because the phenomena with which it deals are influenced by many other causes than the few it focuses on.”

http://opinionator.blogs.nytimes.com/2015/07/14/what-economics-can-and-cant-do/

Finally, an Answer to the Minimum Wage Question

May 27, 2015

How can we prove anything in the human sciences when it is virtually impossible to run reproduceable experiments the way you can in the natural sciences? Every so often a “natural experiment” presents itself and we can come to conclusions about truths in fields such as economics. The problems of economics are present in fields throughout the human sciences for the same reasons. Below is an article that discusses the issue the effects of raising the minimum wage.

“In statistics, ‘identification’ just means separating two groups in order to tell if a treatment works. You give Group A the pill and you give Group B a placebo, and you see if Group A does better than Group B. In laboratory experiments this is usually possible to do. In the real world, it’s a lot harder — you have to wait for a policy to bring about a difference between two areas that are roughly comparable.”

http://www.bloombergview.com/articles/2015-05-27/finally-an-answer-to-the-old-minimum-wage-question?cmpid=yhoo

‘By separating nature from economics, we have walked blindly into tragedy’

March 11, 2015

“We need a new way of thinking, one that tightly links the human-made world of economics and politics with the natural world of climate and biodiversity and with the designed world of 21st century technology. Consider my own home field of study, economics. Sometime in the 19th century, economics largely dropped its traditional attention to land, water and food, as industry replaced agriculture as the leading economic sector. Economists decided, by and large, that they could ignore nature – take it ‘as given’ – and instead focus on market-based finance, saving, and business investment. Mainstream economists derided the claims of ‘limits to growth.'”

http://www.theguardian.com/global-development-professionals-network/2015/mar/10/jeffrey-sachs-economic-policy-climate-change

What The IRS Could Learn From Mormons

March 4, 2015

How does a person’s notion of faith affect their charitable giving? How does it affect how honestly they donate their money? In an interesting Planet Money podcast and accompanying article, economists study how Mormons think about what they give to the church and what they don’t and principles the IRS could learn from them.

“I asked a Mormon bishop in Salt Lake City if a few more rules defining income might make tithing easier on Mormons or bring in more money for the church. He said all this soul-searching about what you owe God is kind of the point.”

http://www.npr.org/blogs/money/2012/03/02/147749784/what-the-irs-could-learn-from-mormons