On logic and science

31 Aug, 2021 at 15:42 | Posted in Theory of Science & Methodology | 10 Comments

That logic should have been thus successful is an advantage which it owes entirely to its limitations, whereby it is justified in abstracting — indeed, it is under obligation to do so — from all objects of knowledge and their differences, leaving the understanding nothing to deal with save itself and its form. But for reason to enter on the sure path of science is, of course, much more difficult, since it has to deal not with itself alone but also with objects. Logic, therefore, as a propaedeutic, forms, as it were, only the vestibule of the sciences; and when we are concerned with specific modes of knowledge, while logic is indeed presupposed in any critical estimate of them, yet for the actual acquiring of them we have to look to the sciences properly so called, that is, to the objective sciences. 

In mainstream economics, both logic and mathematics are used extensively. And most mainstream economists sure look upon themselves as “twice blessed.”

Is there any scientific ground for that blessedness? None whatsoever!

If scientific progress in economics lies in our ability to tell ‘better and better stories’ one would, of course, expect economics journals being filled with articles supporting the stories with empirical evidence confirming the predictions. However, the journals still show a striking and embarrassing paucity of empirical studies that (try to) substantiate these predictive claims. Equally amazing is how little one has to say about the relationship between the model and real-world target systems. It is as though explicit discussion, argumentation and justification on the subject aren’t considered to be required.

In mathematics, the deductive-axiomatic method has worked just fine. But science is not mathematics. Conflating those two domains of knowledge has been one of the most fundamental mistakes made in modern economics. Applying it to real-world open systems immediately proves it to be excessively narrow and hopelessly irrelevant. Both the confirmatory and explanatory ilk of hypothetico-deductive reasoning fails since there is no way you can relevantly analyse confirmation or explanation as a purely logical relation between hypothesis and evidence or between law-like rules and explananda. In science, we argue and try to substantiate our beliefs and hypotheses with reliable evidence. Propositional and predicate deductive logic, on the other hand, is not about reliability, but the validity of the conclusions given that the premises are true.

Levels of aspiration among economists

31 Aug, 2021 at 10:10 | Posted in Economics | Comments Off on Levels of aspiration among economists

225px-allais_pn_maurice-24x30-2001bSubmission to observed or experimental data is the golden rule which dominates any scientific discipline. Any theory whatever, if it is not verified by empirical evidence, has no scientific value and should be rejected.

Maurice Allais

Formalistic deductive ‘Glasperlenspiel’ can be very impressive and seductive. But in the realm of science it ought to be considered of little or no value to simply make claims about models and lose sight of reality.

Mainstream economics has since long more or less given up on the real world and contents itself with proving things about thought up worlds. Empirical evidence — still — only plays a minor role in economic theory, where models largely function as a substitute for empirical evidence. Hopefully humbled by the ever growing manifest failure of its theoretical pretences, the one-sided, almost religious, insistence on axiomatic-deductivist modeling as the only scientific activity worthy of pursuing in economics will give way to methodological pluralism based on ontological considerations rather than formalistic tractability.

To have valid evidence is not enough. What economics needs is sound evidence. Why? Simply because the premises of a valid argument do not have to be true, but a sound argument, on the other hand, is not only valid, but builds on premises that are true. Aiming only for validity, without soundness, is setting the economics aspiration level too low for developing a realist and relevant science.

Italian hours (personal)

28 Aug, 2021 at 19:14 | Posted in Varia | 2 Comments

firenzeWith four of our kids — the youngest, Linnea, wasn’t yet born — in Florence, twenty years ago. One of the most beautiful cities I’ve ever lived in (yours truly studied Italian there back in 1987).

Venice

28 Aug, 2021 at 17:54 | Posted in Varia | Comments Off on Venice

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Wonderful Venice scenes from Brideshead Revisited — television’s greatest literary adaptation, bar none.

John Keats quote: A thing of beauty is a joy forever: its loveliness...

La liberté — le principe et la realité

28 Aug, 2021 at 12:20 | Posted in Politics & Society | 1 Comment

Dans de nombreux pays, et particulièrement en France avec les nouvelles manifestations du samedi, des oppositionnels se regroupent autour d’un slogan clair et mobilisateur : la défense de la liberté, supposée menacée par la montée d’un autoritarisme étatique, voire, pour certains, d’une dictature sanitaire. « J’ai le droit de ne pas me faire vacciner, c’est ma liberté ! »

Vaccination anti-covid : Protection imposée contre liberté restreinteFace à cette importante minorité ancrée dans ses convictions, médecins, scientifiques, journalistes ou politiques, malgré la solidité quasi irréfutable des arguments en faveur du vaccin, non seulement ne parviennent pas à convaincre ceux qui ne veulent rien entendre, mais de plus sont eux-mêmes envahis par un malaise qui rend parfois leurs propos hésitants. Car il n’est jamais aisé de prendre position contre la liberté individuelle dans une société qui l’inscrit comme un principe fondateur …

Les nouvelles conditions du débat dans la société des convictions personnelles portent au contraire à des prises de positions extrêmes, intransigeantes et passionnées, spécialement dans les mouvances complotistes antisystème. Or ceux qui croient ainsi lutter au nom de la liberté ne font qu’accentuer les clivages et renforcer les tenants d’un autoritarisme plus marqué.

Il serait sans doute urgent de comprendre que ce si beau principe de la liberté individuelle s’exerce en fait dans un périmètre infiniment plus étroit que ce que nous imaginons ; il faut arrêter de rêver et regarder la réalité en face.

Jean-Claude Kaufmann/Le Monde

Probability and rationality — trickier than most people think

26 Aug, 2021 at 18:42 | Posted in Statistics & Econometrics | 5 Comments

The Coin-tossing Problem

My friend Ben says that on the first day he got the following sequence of Heads and Tails when tossing a coin:
H H H H H H H H H H

And on the second day he says that he got the following sequence:
H T T H H T T H T H

184bic9u2w483jpgWhich report makes you suspicious?

Most people yours truly asks this question says the first report looks suspicious.

But actually both reports are equally probable! Every time you toss a (fair) coin there is the same probability (50 %) of getting H or T. Both days Ben makes equally many tosses and every sequence is equally probable!

The Linda Problem

Linda is 40 years old, single, outspoken, and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice, and also participated in anti-nuclear demonstrations.

Which of the following two alternatives is more probable?

A. Linda is a bank teller.
B. Linda is a bank teller and active in the feminist movement.

‘Rationally,’ alternative B cannot be more likely than alternative A. Nonetheless Amos Tversky and Daniel Kahneman reported — ‘Judgments of and by representativeness.’ In D. Kahneman, P. Slovic & A. Tversky (Eds.), Judgment under uncertainty: Heuristics and biases. Cambridge, UK: Cambridge University Press 1982 — that more than 80 per cent of respondents said that it was.

Why do we make such ‘irrational’ judgments in both these cases? Tversky and Kahneman argued that in making this kind of judgment we seek the closest resemblance between causes and effects (in The Linda Problem, between Linda’s personality and her behaviour), rather than calculating probability, and that this makes alternative B seem preferable. By using a heuristic called representativeness, statement B in The Linda Problem seems more ‘representative’ of Linda based on the description of her, although from a probabilistic point of view it is clearly less likely.

Miles Davis Quintet, Teatro dell’Arte, 1964

26 Aug, 2021 at 11:19 | Posted in Varia | 2 Comments

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What a treasure!

Keynes was not a Keynesian. He was a Post Keynesian!

24 Aug, 2021 at 20:37 | Posted in Economics | 1 Comment

keynes3But these more recent writers like their predecessors were still dealing with a system in which the amount of the factors employed was given and the other relevant facts were known more or less for certain. This does not mean that they were dealing with a system in which change was ruled out, or even one in which the disappointment of expectation was ruled out. But at any given time facts and expectations were assumed to be given in a definite and calculable form; and risks, of which, tho admitted, not much notice was taken, were supposed to be capable of an exact actuarial computation. The calculus of probability, tho mention of it was kept in the background, was supposed to be capable of reducing uncertainty to the same calculable status as that of certainty itself …

Thus the fact that our knowledge of the future is fluctuating, vague and uncertain, renders Wealth a peculiarly unsuitable subject for the methods of the classical economic theory.

John Maynard Keynes

And this emphasis on the importance of uncertainty is not even mentioned in ‘IS-LM Keynesianism’ …

Was Kant a racist?

22 Aug, 2021 at 12:28 | Posted in Politics & Society | 6 Comments

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Civilisationskritiska reflektioner

21 Aug, 2021 at 21:55 | Posted in Varia | 1 Comment

Yours truly var för några år sedan inbjuden till en debatt på Handelshögskolan i Göteborg. Temat var tillväxt och miljö. Jag vet inte om jag lyckades övertyga alla som lyssnade om att det faktiskt är möjligt att leva bra och fullvärdiga liv utan att överkonsumera.

De som till äventyrs inte övertygades av mina åberopade teoretiska inspirationskällor — Soddy, Georgeescu-Roegen och Boulding — kanske istället kan få sig åtminstone en tankeväckare av Nina Hedenius underbara — och via SvT:s Öppet arkiv numera nedladdningsbara — dokumentärfilm Gubben i stugan, som handlar om den pensionerade skogsarbetaren Ragnars enkla liv i Dalarnas finnskogar.

I alla moderna människors liv behövs det tid för andhämtning och reflektion. Och ibland — när alla möjliga och omöjliga måsten och krav från omgivningen bara blir för många och högljudda — kan det vara skönt att dra sig undan lite grand och slå av på takten för en stund.

Alla har vi väl olika sätt att göra det på. Själv brukar jag titta på just Gubben i stugan. 

Enkel och vacker civilisationkritik. Och en lisa för själen.

Cancel culture — an Orwellian perspective

20 Aug, 2021 at 19:26 | Posted in Politics & Society | Comments Off on Cancel culture — an Orwellian perspective

Who controls the past controls the future. Who controls the present  controls the past. - George Orwell | id: 5371

Sapere aude!

20 Aug, 2021 at 10:06 | Posted in Politics & Society | 1 Comment

An Answer to the Question: What is Enlightenment? - Immanuel Kant - Ljudbok  - BookBeatEnlightenment is man’s emergence from his self-imposed nonage. Nonage is the inability to use one’s own understanding without another’s guidance. This nonage is self-imposed if its cause lies not in lack of understanding but in indecision and lack of courage to use one’s own mind without another’s guidance. Sapere aude! “Have the courage to use your own understanding,” is therefore the motto of the enlightenment.

Laziness and cowardice are the reasons why such a large part of mankind gladly remain minors all their lives, long after nature has freed them from external guidance … Those guardians who have kindly taken supervision upon themselves see to it that the overwhelming majority of mankind — among them the entire fair sex — should consider the step to maturity, not only as hard, but as extremely dangerous. First, these guardians make their domestic cattle stupid and carefully prevent the docile creatures from taking a single step without the leading-strings to which they have fastened them. Then they show them the danger that would threaten them if they should try to walk by themselves. Now this danger is really not very great; after stumbling a few times they would, at last, learn to walk. However, examples of such failures intimidate and generally discourage all further attempts …

Dogmas and formulas, these mechanical tools designed for reasonable use — or rather abuse — of his natural gifts, are the fetters of an everlasting nonage …

Enlightenment requires nothing but freedom — and the most innocent of all that may be called “freedom”: freedom to make public use of one’s reason in all matters. Now I hear the cry from all sides: “Do not argue!” The officer says: “Do not argue — drill!” The tax collector: “Do not argue — pay!” The pastor: “Do not argue — believe!” Only one ruler in the world says: “Argue as much as you please, but obey!” We find restrictions on freedom everywhere. But which restriction is harmful to enlightenment? Which restriction is innocent, and which advances enlightenment? I reply: the public use of one’s reason must be free at all times, and this alone can bring enlightenment to mankind.

Immanuel Kant

To all my brothers and sisters in Afghanistan.

Behavioural economics and complexity economics

17 Aug, 2021 at 22:29 | Posted in Economics | 1 Comment

James Galbraith: what Europe needs is solidarity, not austerity | etuiWhat is to take the place of neoclassical economics and its neoliberal policy offshoot? There is no shortage of candidates, grouped under the broad banner of economic heterodoxy. Some of these successor doctrines – behavioral economics and complexity economics are examples of note – take the neoclassical orthodoxies as a point of departure. They therefore continue to define themselves in relation to those orthodoxies. Others avoided the gravitational pull altogether – or, as in the exceptional case of Keynes, made a “long struggle to escape”. The behaviorists depart from neoclassicism by giving up strict assumptions of rational and maximizing behavior. Complexity theorists explore the dynamics of interacting agents and recursive functions. Both achieve a measure of academic reputability by remaining in close dialog with the orthodox mainstream. Neither pays more than a glancing tribute to earlier generations or other canons of economic thought. The model is that of neoclassical offshoots – New Institutionalism, New Classical Economics, New Keynesianism – that make a vampire practice of colonizing older words and draining them of their previous meaning. The dilemma of these offshoots lies in having accepted the false premise of the orthodoxy to which it proposes to serve as the alternative. The conceit is of a dispassionate search for timeless truth, once again pursued by “relaxing restrictive assumptions” in the interest of “greater realism”. Thus, for example, in complexity theories agents follow simple rules and end up generating intricate and unpredictable patterns, nonlinear recursive functions give the same result, the variance of returns turns out to be non-normal, and so forth. But once the starting point is taken to be the neoclassical competitive general equilibrium model, these exercises are largely drained of insight and relevance. The behaviorists can tell us that real people do not appear to fit well into the portrait of autonomous, selfish, commodity-obsessed pleasure-seekers that is “economic man”. The complexity theorists can tell us, as Arthur (2021) does, is that a system constructed from confections of interacting agents may be unstable. These things, even the dimmest observer of real-existing capitalism already knew.

James Galbraith / RWER

Although discounting empirical evidence cannot be the right way to solve economic issues, there are still, in my opinion, a couple of weighty reasons why we — just as Galbraith — perhaps shouldn’t be too excited about the so-called ’empirical’ or ‘behavioural’ revolution in economics.

behBehavioural experiments and laboratory research face the same basic problem as theoretical models — they are built on often rather artificial conditions and have difficulties with the ‘trade-off’ between internal and external validity. The more artificial conditions, the more internal validity, but also less external validity. The more we rig experiments to avoid the ‘confounding factors’, the less the conditions are reminiscent of the real ‘target system.’ The nodal issue is how economists using different isolation strategies in different ‘nomological machines’ attempt to learn about causal relationships. One may have justified doubts on the generalizability of this research strategy since the probability is high that causal mechanisms are different in different contexts and that lack of homogeneity and invariance doesn’t give us warranted export licenses to the ‘real’ societies or economies.

If we see experiments or laboratory research as theory tests or models that ultimately aspire to say something about the real ‘target system,’ then the problem of external validity is central (and was for a long time also a key reason why behavioural economists had trouble getting their research results published).

A standard procedure in behavioural economics — think of e.g. dictator or ultimatum games — is to set up a situation where one induce people to act according to the standard microeconomic — homo oeconomicus — benchmark model. In most cases, the results show that people do not behave as one would have predicted from the benchmark model, in spite of the setup almost invariably being ‘loaded’ for that purpose. [And in those cases where the result is consistent with the benchmark model, one, of course, have to remember that this in no way proves the benchmark model to be right or ‘true,’ since there, as a rule, may be many outcomes that are consistent with that model.]

For most heterodox economists this is just one more reason for giving up on the standard model. But not so for mainstreamers and many behaviouralists. To them, the empirical results are not reasons for giving up on their preferred hardcore axioms. So they set out to ‘save’ or ‘repair’ their model and try to ‘integrate’ the empirical results into mainstream economics. Instead of accepting that the homo oeconomicus model has zero explanatory real-world value, one puts lipstick on the pig and hope to go on with business as usual. Why we should keep on using that model as a benchmark when everyone knows it is false is something we are never told. Instead of using behavioural economics and its results as building blocks for a progressive alternative research program, the ‘save and repair’ strategy immunizes a hopelessly false and irrelevant model.

By this, I do not mean to say that empirical methods per se are so problematic that they can never be used. On the contrary, I am basically — though not without reservations — in favour of the increased use of behavioural experiments and laboratory research within economics. Not least as an alternative to completely barren ‘bridge-less’ axiomatic-deductive theory models. My criticism is more about aspiration levels and what we believe that we can achieve with our mediational epistemological tools and methods in the social sciences.

The increasing use of natural and quasi-natural experiments in economics during the last couple of decades has led several prominent economists to triumphantly declare it as a major step on a recent path toward empirics, where instead of being a deductive philosophy, economics is now increasingly becoming an inductive science.

Limiting model assumptions in economic science always have to be closely examined since if we are going to be able to show that the mechanisms or causes that we isolate and handle in our models are stable in the sense that they do not change when we ‘export’ them to our ‘target systems,’ we have to be able to show that they do not only hold under ceteris paribus conditions and a fortiori only are of limited value to our understanding, explanations or predictions of real economic systems.

‘Ideally controlled experiments’ tell us with certainty what causes what effects — but only given the right ‘closures.’ Making appropriate extrapolations from (ideal, accidental, natural or quasi) experiments to different settings, populations or target systems, is not easy. ‘It works there’ is no evidence for ‘it will work here.’ Causes deduced in an experimental setting still have to show that they come with an export-warrant to the target system. The causal background assumptions made have to be justified, and without licenses to export, the value of ‘rigorous’ and ‘precise’ methods is despairingly small.

Taking assumptions like utility maximization or market equilibrium as a matter of course leads to the ‘standing presumption in economics that, if an empirical statement is deduced from standard assumptions then that statement is ‘reliable’ …

maxresdefaultThe ongoing importance of these assumptions is especially evident in those areas of economic research, where empirical results are challenging standard views on economic behaviour like experimental economics or behavioural finance … From the perspective of Model-Platonism, these research-areas are still framed by the ‘superior insights’ associated with early 20th century concepts, essentially because almost all of their results are framed in terms of rational individuals, who engage in optimizing behaviour and, thereby, attain equilibrium …

While the mere emergence of research areas like experimental economics is sometimes deemed a clear sign for the advent of a new era … a closer look at these fields allows us to illustrate the enduring relevance of the Model-Platonism-topos and, thereby, shows the pervasion of these fields with a traditional neoclassical style of thought.

Jakob Kapeller

So — although it is good that behavioural economists are rewarded ‘Nobel prizes’ and that much of their research has vastly undermined the lure of axiomatic-deductive mainstream economics, there is still a long way to go before economics has become a truly empirical science. The great challenge for future economics is not to develop methodologies and theories for well-controlled laboratories, but to develop relevant methodologies and theories for the messy world in which we happen to live.

An economic theory that does not go beyond proving theorems and conditional ‘if-then’ statements — and do not make assertions and put forward hypotheses about real-world individuals and institutions — is of little consequence for anyone wanting to use theories to better understand, explain or predict real-world phenomena.

Building theories and models on patently ridiculous assumptions we know people never conform to, does not deliver real science. Real and reasonable people have no reason to believe in ‘as-if’ models of ‘rational’ robot-imitations acting and deciding in a Walt Disney-world characterised by ‘common knowledge,’ ‘full information,’ ‘rational expectations,’ zero transaction costs, given stochastic probability distributions, risk-reduced genuine uncertainty, and other laughable nonsense assumptions of the same ilk. Science fiction is not science.

For decades now, economics students have been complaining about the way economics is taught. Their complaints are justified. Force-feeding young and open-minded people with unverified and useless autistic mainstream theories and models cannot be the right way to develop a relevant and realist economic science.

Much work done in mainstream theoretical economics is devoid of any explanatory interest. And not only that. Seen from a strictly scientific point of view, it has no value at all. It is a waste of time. And as so many have been experiencing in modern times of austerity policies and market fundamentalism — a very harmful waste of time.

An alternative to mainstream orthodoxy that has been discussed much lately is so the called complexity economics and its agent-based modelling.

Agent-based models are formal models usually constructed using mathematical programming and performing simulations and ‘artificial experiments’ with the intention of being able to (more explicitly than in conventional mainstream game theory) describe aggregate effects and dynamics of interacting individuals and socio-economic structures without standardly having to assume equilibria, non-emergence, Walrasian auctioneers, representative agents, rational expectations, etc., etc..

Agent-based models come in different degrees of realism and are usually conceptualised as different kinds of self-organising complex systems. But one thing they all have in common is reliance on mathematical formalism. In essence the agent-based modelling endeavour in macroeconomics is an attempt at providing new alternative mathematical models where many of the bizarre and ridiculous known-to-be ‘unrealistic’ assumptions in standard DSGE models are replaced with other less ‘unrealistic’ assumptions. But the idea that mathematical modelling as such is always appropriate to apply is never seriously questioned. And that’s where I find it hard to follow. One set of mathematical tractability assumptions are substituted for another. But what if the mathematical modelling in itself is the problem? What if the use of mathematical-formalistic modelling in itself biases your research efforts in specific directions? If it is the mathematical-formalistic approach in itself that is the problem, we only end up with different models based on the same unquestioned mathematical modelling strategy. From my own critical realist perspective I can’t see that mathematical modelling is the self-evidently appropriate way to perform analyses of societies and economies. The kind of ‘closures’ demanded of the target systems for warranting the analyses, I would argue, simply often aren’t there.

As a critique of mainstream economics, yours truly fully appreciates the work done by the ‘complexity’ economists. But although their alternative agent-based models in many ways are superior to the more traditional mainstream ‘Walt Disney’ kind of models, I am not convinced that their unquestioned attachment to mathematical-formalist modelling is the right way to move forward in making economics a more realist and relevant science.

How to do philosophy

16 Aug, 2021 at 19:25 | Posted in Theory of Science & Methodology | Comments Off on How to do philosophy

Introducing philosophy - OpenLearn - Open University - A211_1A contest was announced to see who could do the best job of carving up a side of beef.  The judge was announced as a famous chef, who had earned two Michelin stars.  Attracted by the prize money, a butcher and an analytic philosopher entered the contest.

The Analytic Philosopher went first.  A fresh side of beef was placed on a large wooden table, and he approached to begin.  He was dressed in freshly pressed chinos and a button-down shirt.  The Analytic Philosopher laid a leather case on one corner of the table and opened it, revealing a gleaming set of perfectly matched scalpels, newly sharpened.  He selected one scalpel carefully and addressed the side of beef.  After inspecting its surface carefully, he raised his hand and made the first cut, a precise slice in a perfectly straight line.  Working steadily, but with meticulous care, he proceeded to make slices and cross slices until he had completed the carving of the beef, a task that took him the better part of an hour.  When he had finished, he stepped back, wiped the scalpel clean on a piece of paper toweling, replaced it in the case, and with a bow to the judge, withdrew.

The butcher was next up.  Her side of beef was on a table next to that on which the Analytic Philosopher had been working.  She was dressed in overalls and a butcher’s apron, on which one could see spots of blood and stains from her work.  She took out a cleaver, a saw, and a sharp butcher’s knife, and went to work on her side of beef, wasting no time.  Bits of fat and gristle flew here and there, some ending up on her apron and even in her hair, which she had covered with a net.  She whistled as she worked at the table, until with a flourish, she put down her saw, bowed to the judge, and stepped back.

The judge examined each table for no more than a moment, and then without the slightest hesitation, handed the prize to the butcher.  The Analytic Philosopher was stunned.  “But,” he protested, “there is simply no comparison between the results on the two tables.  The butcher’s table is a shambles, a heap of pieces of meat, with fat and bits of bone and drops of blood all over the place.  My table is pristine — a careful display of perfectly carved cubes of meat, all with parallel sides and exactly the same size.  Why on earth have you given the prize to the butcher?”

The Judge explained.  “The butcher has turned her side of beef into a usable array of porterhouse steaks, T-bone steaks, sirloin steaks, beef roasts, and a small pile of beef scraps ready to be ground up for chop meat.  She clearly knew where the joints were in the beef, how to cut against the grain with the tough parts, where to apply her saw.  You, on the other hand, have reduced a perfectly good grade-A side of beef to stew meat.”

Moral:  When butchering a side of beef, it is best to know something about what lies beneath its surface.

Observation:  This is also not a bad idea when doing Philosophy.

Was aus dem Arabischen Frühling wurde

16 Aug, 2021 at 18:36 | Posted in Politics & Society | Comments Off on Was aus dem Arabischen Frühling wurde

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