tag:blogger.com,1999:blog-1740670447258719504.post8102729604163731248..comments2024-03-27T03:00:27.024-04:00Comments on Facts & other stubborn things: Macro, science, and falsificationEvanhttp://www.blogger.com/profile/12259004160963531720noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-1740670447258719504.post-48704881016518536652012-07-02T15:07:19.951-04:002012-07-02T15:07:19.951-04:00If Friedman lived to see the falsification of mone...If Friedman lived to see the falsification of monetarism of the day, it is not entirely non falsifiable.Lordhttps://www.blogger.com/profile/06747994571555237739noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-21509933175767984682012-07-01T19:45:50.459-04:002012-07-01T19:45:50.459-04:00Daniel Kuehn: "I'm separating financial e...Daniel Kuehn: "I'm separating financial economics from macroeconomics."<br /><br />Aren't financial crises macroeconomic phenomena?<br /><br />D. K. : "I'm saying don't expect a macro model to predict a financial crisis - that's not what they're designed for. How could they?"<br /><br />Ah! The problem in a nutshell! :)Minnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-75739359454479751922012-06-30T11:52:44.158-04:002012-06-30T11:52:44.158-04:00Daniel,
isn't the state of financial markets d...Daniel,<br />isn't the state of financial markets deeply tied to macrophenomena? If so, why separate macro- and financial economics then?<br /><br />Also, what is your opinion on Keen's models of debt acceleration? Don't get me wrong, I am not intending to start a flame war on it, I am just interested in your outlook as a professional economist. Do you read that sort of heterodox theories?Roman P.https://www.blogger.com/profile/17384153967221979673noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-34626316292388689532012-06-29T13:32:50.158-04:002012-06-29T13:32:50.158-04:00I'm not separating finance and economics. I...I'm not separating finance and economics. I'm separating financial economics from macroeconomics. I'm saying don't expect a macro model to predict a financial crisis - that's not what they're designed for. How could they? Do we say that other non-finance models haven't fared well because they failed to predict the financial crisis?Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-34522425283321333502012-06-29T13:27:36.714-04:002012-06-29T13:27:36.714-04:001.) The econophysicists do cite Popper as having p...1.) The econophysicists do cite Popper as having put into words what physicists have long done in terms of practice.<br /><br />2.) I think you separate finance and economics a bit too much on this part. There's a reason financial economics exists.<br /><br />3.) Prediction may be possible in terms of financial markets, actually. According to Dr. Michael Emmett Brady, Benoit Mandelbrot's research provides evidence that the financial markets ARE ergodic. They demonstrate ergodicity in their spikes and crashes. Therefore, it is perfectly possible to predict the rise and fall of a speculative bubble.Blue Auroranoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-46895019412794998502012-06-29T12:49:57.050-04:002012-06-29T12:49:57.050-04:00On falsifiability:
The extreme claim is that conf...On falsifiability:<br /><br />The extreme claim is that confirmatory evidence is no evidence at all. Hypotheses can only be disconfirmed. That is the basis for standard (non-Bayesian) statistical tests.<br /><br />But even if we admit confirmatory evidence, it is very weak, weaker than most people think. The observation of a white swan is confirmatory evidence for the hypothesis that something is a swan only if it is white (a logical formulation of the hypothesis that all swans are white, which is ambiguous in Engish). But so is the observation of a red Ford, and to the same degree.Minnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-25387376838410632442012-06-29T12:25:44.114-04:002012-06-29T12:25:44.114-04:00If people are down on macroeconomics, a few reason...If people are down on macroeconomics, a few reasons come to mind:<br /><br />1) Macroeconomists claim to know more than they do. Example: The Charter Cities people claim, "We know the right rules." <br /><br />2) Related to the above, the failure of macroeconomists to recommend experimental policies. During the Great Depression, FDR tried a number of things, some of which did not work. Even Hoover could not stand by and do nothing, despite Mellon's advice to "purge the rot".<br /><br />3) Macroeconomists, on the whole, seem to take the viewpoint of creditors and the wealthy. Examples: The policies of the Troika in Europe, the American bailout of Wall Street but not Main Street, the claim that fiscal stimulus would not work, because "people" would save against future taxes, completely ignoring the existence of poor people.<br /><br />BTW, I am not down on macroeconomics, myself. :)Minnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-28500048980257844772012-06-29T12:00:05.035-04:002012-06-29T12:00:05.035-04:00And there we go, Noah Smith in the comments:
&quo...And there we go, Noah Smith in the comments:<br /><br />"You know, I've never read Popper? <br /><br />"Falsification" is shorthand. A term of convenience because it's too annoying to write something longer every time. What it really means is just "deciding that some ideas don't work by comparing them with reality." If you can't do that you've got nothing. One doesn't Popper to see the truth in that."<br /><br />I can't say for English, but German has a couple of words to say what Smith means - "falsif..." is a very specific term that carries a lot of epistemological connotations. Is there really no English word that is less bound to a specific body of philosophical work ?Martinnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-77395097238110145592012-06-29T11:46:22.167-04:002012-06-29T11:46:22.167-04:00Daniel, I am always a bit confused about why, exac...Daniel, I am always a bit confused about why, exactly, Popper's view is always quoted as self-evident and the ultimate truth. I think it's exactly true that Popper was mostly concerned about what may be called "exact" sciences, especially physics. For some time, at least, he called the theory of evolution a metaphysical construct (he later reversed this opinion, but it shows that his knowledge of scientific research was very narrow, even within the natural sciences). I don't see where he actually got into social sciences in the same way and believe that a convincing demonstration that his reasoning applies there is completely lacking.<br /><br />Furthermore, it's not as if his work were undisputed, there have been fierce critics like his initial student and disciple Paul Feyerabend who demonstrated that, even if the question if Popper's reasoning makes sense, it is not in any sense a path scientists are actually following. Though I think this is, strictly speaking, not a problem to Popper's theory - as falsification relates to a demarcation problem, not to a methodology - I don't see how the whole thing can be important if actual scientists ignore it. (One example is this: Feyerabend shows that, historically, Mach had the better arguments when he refused Boltzman's atomistic view and that, at the time, the atomistic view was NOT falsifiable as a theory, but merely served as a model, there were no means to actually show or disprove atoms - that is, that the atomistic worldview was accepted, was due to "propaganda", in Feyerabend's terms, and became a falsifiable theory later. Feyerabend suggests this episode, and lots of others, as evidence for his stance that the validity of theory should not, a priori, be judged by its falsifiability, and that one would lose lots of insights from discounting them on this basis). Also, I still do not understand how one can reconcile Kuhn and Popper (but perhaps that's just me).<br /><br />There are contemporary examples, too: take Noam Chomsky. His "Minimalist Program" is explicitly meant as such: a scientific program - which refers to Imre Lakatos' philosophy. I guess Chomsky is perfectly indifferent to anybody believing that his approach is not scientific...<br /><br />I guess the bottom line is: there is absolutely no reason to think that simply saying "Popper" and "falsifiability" is a basis to judge a theory - neither has Popper covered all of science, nor is he undisputed, nor does everybody care (and why should they?). My hunch is that if you ask people about what exactly they mean when they refer to Popper and/or falsifiability, the answer will be that for a theory to be scientific one has to be able to check it against facts. But, as Feyerabend says, this is not Popper, this is simply common sense.Martinnoreply@blogger.com