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Can theory override intuition?
Robin Hanson writes:
For good policy advice, what is the best weight to place on economic theory, versus (individual or cultural) intuitive judgment? [TC: that's Robin reproducing someone else's words]
My guess is over 75% weight, so I try to mostly just straightforwardly apply economic theory, adding little personal or cultural judgment [TC: that's Robin].
In a nutshell, this is the major difference between Robin and me. In my view there is no such thing as "straightforwardly applying economic theory," unless your prescriptions are limited to "we cannot prove that Giffen goods do not exist." Theories are always applied and interpreted through our personal and cultural filters and there is no other way it can be. Robin believes in an Archimedean point for using theory, I do not. Furthermore we often need to apply personal and cultural judgment to offset the sometimes-erroneous judgments and biases built into the economic way of thinking. Robin's post is the clearest example I have seen of what I call Robin's logical atomism.
Posted by Tyler Cowen on December 19, 2007 at 11:59 AM in Economics | Permalink
Comments
Hard to get around that damn "personal point of view" and "cultural point of view" thing, isn't it? It just keeps cropping up.
I wonder why some people are so determined to keep trying to conduct life as though the point-of-view conundrum can be willed away. Is it a particular *kind* of person who wants that to be the case? Me, I rather like the fact that we're stuck with the point-of-view problem.
But then I wound up in the arts ...
Posted by: Michael Blowhard at Dec 19, 2007 12:25:51 PM
Intuitions are not magical insights into the fundamental nature of reality. They are something more like intellectual seemings. Just a visual image is a visual seeming (it seems that the cat is on the mat), an intuition is an intellectual seeming (e.g., it seems that 2 + 2 =4 or it seems that Hanson's argument for the importance of eliminating bias is well-supported). Roughly, every argument appeals to intuitions, because it's the intellectual seeming that gets you from the "if x" (the antecedent) to the "then y" the consequence.
That said, how much weight should we attach to theory vs. intuitions about particulars? First, we ask ourselves whether our credence in either is likely to be based on bias, etc. Then, after filtering those out, we ought to go through what Rawls called the process of reflective equilibrium. Sometimes we revise theory in because we are more confident in the judgments than the theory, sometimes vice versa. Revision is based on confidence. There's no rule that says we should have more confidence in theory just because it's theory. Rather, the issue is which one do we have more confidence in.
Of course, this oversimplifies things, but it's a start.
Posted by: J. at Dec 19, 2007 12:32:59 PM
In my view there is no such thing as "straightforwardly applying economic theory," unless your prescriptions are limited to "we cannot prove that Giffen goods do not exist." Theories are always applied and interpreted through our personal and cultural filters and there is no other way it can be.You sound like my Van Til/presuppositionalist friend...sheesh.
:)
Posted by: Bob Montgomery at Dec 19, 2007 12:34:01 PM
What's an Archimedean point?
Posted by: Ken at Dec 19, 2007 12:40:12 PM
In my view there is no such thing as "straightforwardly applying economic theory," unless your prescriptions are limited to "we cannot prove that Giffen goods do not exist."
Correct, and a good thing it is too, in any but the simplest cases.
Posted by: Bernard Yomtov at Dec 19, 2007 12:57:58 PM
What's the economic basis for a 75% weight? Is there a loss function?
Posted by: Andy at Dec 19, 2007 1:51:01 PM
What's the economic basis for a 75% weight? Is there a loss function?
Posted by: Andy at Dec 19, 2007 1:51:37 PM
What's the economic basis for a 0.75 weight? Is there a loss function?
Posted by: Andy at Dec 19, 2007 1:52:19 PM
Haven't we been over this before? People have used "logic" and "rationality" to "prove" all sorts of things throughout history.
Other people are sometimes not able to detect any weaknesses or fallacies in said "logic".
Still bumblebees fly and the world is older than 100 million years etc etc.
I think Robin has yet to face his biases.
Posted by: RobbL at Dec 19, 2007 1:57:18 PM
If Robin hasn't already read "What Is Mathematics, Really?" he might benefit from doing so.
Posted by: jp at Dec 19, 2007 2:28:17 PM
the split in Robin's infinitive is the largest i've seen.
Posted by: samson at Dec 19, 2007 3:39:07 PM
Ken,
I stand to be corrected, but I think that an "Archimedean point" is an
assumed to be completely "outside the system" location from which totally
objective analysis (theoretical or empirical) can be carried out. The
original reference would presumably be to the statement by the ancient
Greek mathematician Archimedes, after he discovered the principle of the
lever, that if he could stand on a point off the earth, he would be able
to move the earth with a sufficiently strong lever.
Posted by: Barkley Rosser at Dec 19, 2007 4:37:39 PM
...i could've answered this from theology. :) "there is no such thing as presuppositionless exegesis." There's an interesting case where (in line with alex's previous post) education is a major determining factor. Robin was ?computer science? in his former life, no? I'd think that would tend to be much more black and white...
Posted by: shawn at Dec 19, 2007 4:46:29 PM
I'm not entirely sure what Robin is arguing.
For good policy advice, what is the best w****t to place on economic theory, versus (individual or cultural) intuitive judgment?
My guess is over 75% w****t, so I try to mostly just straightforwardly apply economic theory, adding little personal or cultural judgment.
Good policy advice is presumably a function of two things: values and facts. If we lack the proper values, it doesn’t matter how good our facts are. And if we lack the proper facts, it doesn’t matter how good our values are.
Economic theory attempts to answer the question “How do people respond to incentives?” That’s a factual matter. If this is all Robin intends by economic theory, then I’m inclined to agree we should give little weight to our personal or cultural judgment. But if that’s the case, I assume that what Robin means by personal judgment is our own anecdotal experiences, and I distrust those because people tend to overweigh the anecdote.
For example, I think this is flimsy: “I know people who would stop working if the income tax rate was raised even one percentage point, therefore the entire economy would stall if taxes were raised.”
Whereas this is stronger: “I’ve read many studies on large samples of the population on the disincentive effects of the income tax, and conclude raising taxes has minimal impact on taxpayers’ amount of labor.”
(Note neither statement says whether or not we should alter tax rates.)
Not only do I think the latter statement is stronger, I think the latter is properly described as being more unbiased than the former.
If this interpretation of Robin’s stance is proper, than Tyler’s argument is either wrong or uninteresting. If Tyler in saying “Theories are always applied and interpreted through our personal and cultural filters and there is no other way it can be” means that no matter how we try, we will always have some residual bias leftover, then that’s true, but trivial. We will always have bias, yes, but we can both do things to reduce and increase that bias--we can move towards or away from an Archimedean point, even if we can never completely reach it.
On the other hand, if Tyler means that there is no such thing as objectivity or no way to lessen our bias, then his point seems intuitively wrong. A postmodernist might accept that assertion, but if any other wants to, he’ll have to also accept much of the more disconcerting aspects of the postmodernist paradigm and its alarming stress on subjectivity.
But, perhaps what Robin is speaking of is not so much the empirics of economics but rather the value of economic efficiency. Perhaps he means efficiency should weigh 75% and other values, presumably personal or cultural, should get 25%.
If that’s so, there’s no reason I’m aware of for that w****ting. And if that’s so, perhaps Tyler’s criticism is simply that all values are either personal or cultural—that there is no objective point to stand on and judge morality. I disagree—I think—but the issue is contentious and I can understand Tyler’s position.
NB: In an attempt to elude the spam filter, I have taken out the word "weight" whenever it occurred.
Posted by: Scott Scheule at Dec 19, 2007 4:57:39 PM
Depends on the branch of computer science. Formal methods types are disproportionately attracted to constructive mathematics. Since that's a minority viewpoint we end up learning a lot of philosophy of mathematics, because we need to justify rejecting the law of the excluded middle to third parties a lot more often than classical mathematicians need to justify its use. And studying the philosophy of mathematics tends to leave you much more circumspect about what the force of a mathematical statement actually is.
Posted by: Neel Krishnaswami at Dec 19, 2007 6:07:57 PM
Once again I am reminded why I love MR's comment section. You gotta love a group of people who can bring up Van Til on an economics blog.
I would take the same line against Robin Hanson myself, but I don't know what that would accomplish. People don't change their presuppositions on the basis of a reasonable argument. By their vary nature presuppositions are beyond the reach of reason.
Posted by: Ape Man at Dec 19, 2007 7:14:18 PM
Give Robin some credit for being willing to change his mind - the entire point of his blog is to meditate on his (and other people's) biases and try to correct for them.
However, I don't see how you can even talk about an answer based partialy on intuition. Isn't it all or nothing? If you fill in the gaps based on what feels right (which in the end is all that intuition is ) then your intuition pretty much determines your conclusions, even if you use the framework of theory to back up your point. See the great Krugman vs. Mankiw debate on the economy if you don't think this is true. And remember, they are both highly respected classical economists.
Posted by: heedless at Dec 19, 2007 9:10:45 PM
Krugman? Respected? Krugman? Highly respected? Paul Krugman, right? Or is there some other Krugman you're talking about? Krugman is a crank. Any economics he used to know leaked out the holes in his head. MIT should demand to have its PhD back.
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Posted by: bjseeksdggc at Dec 21, 2007 3:52:50 AM
I responded at Overcoming Bias, Tyler answered, and I responded again.
Posted by: Robin Hanson at Dec 21, 2007 12:01:52 PM
The wisdom evolved by previous generations, whose brains were as big as ours, and where their ideas have stood the test of time (i.e. have been in continuous use for hundreds of years by many people, even if we disagree with them or can't figure out their logic) should be given about 90% weight. Note that this is very different from "cultural intuition", which is usually just faddish prejudice.
The logic of our generation, as yet untested in the human lifecycle, but starting to account for novel phenomena, should be given about 10% weight. Among that 10% is economic logic. All such logic contains unstated assumptions which, in the social sciences, usually turn out to be highly erroneous.
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