Episode 42 – 16th July 2010


[Direct MP3 Link]

Gillian McKeith in the shit (1:55) by Tom Morris
Drugs are popular (8:03) by Mark Thompson
ScienceBlogs and Pepsi (16:22) by Drew Rae
Faces and statutes (23:11) by Jourdemayne
Economics, the dismal science (29:52) by Pete Hague
Daily Express (36:04) by Martyn Norris

9 thoughts on “Episode 42 – 16th July 2010

  1. One criteria for evaluating an economist:
    Most economists make special pleading arguments against a number of rules of economics when discussing macroeconomics. If a economist tells you that a rule that applies at a micro level doesn’t apply at the macro level they are most likely full of shit.

    peace,
    tre

  2. tre,

    Is that universally accepted amongst trained economists as being sloppy practice? Or is that your personal yardstick for a good economist?

    Certainly a physicist can ignore many details of the inner workings of atoms when performing calculations in statistical mechanics and still produce credible and useful results.

  3. Pete,

    As a lapsed Economics graduate I think you are looking for the wrong thing from Economics. Economists have long since joked about the poor quality of economic forecasts – the reality is that within something as complex and difficult to conduct scientific experiments on as an economy, an accurate forecast will never be an Economists true strength.

    Economists also fail to say what is happening right now, as this rather prescient piece from Tim Harford details – http://timharford.com/2010/07/predict-the-future-we-can’t-even-say-what’s-happening-now/. There is also an interesting breakdown of why the Office for Budgetary Responsibility really shouldn’t be tasked with forecasting on a rather good left of centre Economics blog – http://timharford.com/2010/07/predict-the-future-we-can’t-even-say-what’s-happening-now/

    For me the real strength of Economics is being able to break down a complex scenario to constituent parts and analyse the impact of change. They key to this process is a whole range of assumptions – the problem is in the real world these don’t hold. This is where the breakdown of art vs science really comes to the fore.

    There are many different views of the world within Economics both traditional Austrian and Chicago schools of thought to the more recent trend in Behavioural Economics. That doesn’t make their insights worthless, it means that they should be treated with caution.

    Furthermore an Economy is really only the sum of interactions between people, as cultures and human nature changes, so to, do the effects within an Economy.

    For me the real strength of Economics is the interesting insight that can be gained from careful analysis and breaking down effects. Take for example the cut in Housing Benefits, the received wisdom is that it hurts the poor – could it not hurt the landlords? http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2010/06/the-incidence-of-housing-benefit.html suggests quite possibly, but to quote Ben Goldacre – it’s a little bit more complicated than that.

    There are a wealth of Economists explaining how and why this recession happened; many are suggesting that a rush to new regulation isn’t a great idea – it was legislation that forced banks to lend to those with poor credit histories which kick started this whole mess, and regulation that limited the market to just two ratings companies. If all of these CDOs hadn’t had AAA ratings, the risk would have been priced into them, curtailing at least one small part of the financial crisis.

  4. I can’t help but think that when we can accurately predict the weather, then maybe we should demand economists accurately predict the economy. That is where I personally felt the piece was slightly naive. Pete, you discussed how scientists come up with results, well not all of them do…..

  5. Mich: Yes, we all know the economy is a complex system – but have you looked into the kinds of things a living cell does recently? In any case, the excuse simply doesn’t work when forecasts do worse than random chance. Explaining only things that have already happened is also not any use. Prophets and psychics can do that trick.

    The fact there are different ‘worldviews’ in economics is part of the problem I was pointing out. The field seems to contain a lot of debating different opinions (basically philosophy) rather than examining data (i.e. science).

    Chutzpah84: Apples and Oranges. Aside from the fact that the actors in an economy are intelligent agents, you must be able to see that there are many orders of magnitude more interactions between air molecules (and other things) that lead to the weather than there are interactions between economic agents.

    And when scientists don’t come up with results, they either say ‘we got no results’ or they get caught somewhere down the line pretending they did. Its seems from my point of view (and yes, I admit when it comes to economics I am a little naive) that when an economist gets no results, they are invited onto TV news programs as pundits.

  6. Based on many subtle interactions between humans in the economy, no I don’t think there are many orders of magnitude more interactions.

    You are also elevating all scientists to some godlike and whiter than white platform. Do you think Baroness Greenfield and Aric Sigman have data for these claims they are making on TV news programmes? http://www.youtube.com/watch?v=Gg8LlUME-IM

    The only apple and oranges thing here is that scientists test something then present their results. However, on TV people ask economists for their views on the future. When scientists are asked what the world will look like in fifty years time they are invariably wrong. So will you be doing a piece on their poor record in that regard?

    Just one article from an extremely quick search of google: http://www.cnet.com/4520-6022_1-102091-1.html

    If you look at economics within a university setting, there is a fair bit of examining data.

  7. In order to have a number of economic interactions roughly equal to the number of atoms in just *one* mole of gas, every person would have to make 1000 deals with every other person on the planet. So yes, weather systems are far, far more complex than economic systems. Like I said, is an apples to oranges comparison.

    And in the clip you posted, Greenfield kicks off saying there isn’t any data backing up what she is saying. So how can this be given as an example of science? She essentially admits its merely her own opinion. I don’t have a rose tinted view of scientists; simply a confidence that science in general will catch them out if they are not honest.

    Where is your evidence that scientists consistently get things wrong, and have worse predictive power than random chance? Science is fairly good at predicting which medicines will work based on trials, and where newly detected objects in the solar system will end up going (despite the Daily Mail then grossly misrepresenting the science in question and running a front page headline about the coming asteroid apocalypse, but never mind).

  8. Pete,
    I fear there may be a bit of a double standard being applied here. You’re essentially comparing the boring peer-reviewed “science” with the glossy mag economics, instead of the boring peer-reviewed economics. Just as with most fields of science, the scope of any unit of real economic research is too narrow to make headlines. You could rephrase your objection as “Pseudo-economics used to justify long range forcasts is bunk!”, but it would have the same “gee, duh!” factor as “Pseudo-science used to justify perpetual motion machines”.

  9. Is this glossy-mag economics?

    http://www2.lse.ac.uk/newsAndMedia/news/archives/2010/07/finance.aspx

    One click into the LSE website I find a group of economic experts being given a platform by a noted academic institution to basically decide how the world of finance ought to be put to rights. Hardly a narrow focus.

    Or:

    http://www2.lse.ac.uk/newsAndMedia/news/archives/2010/06/hospitals.aspx

    Drawing a fairly broad conclusion about the NHS (and healthcare in general) from pretty much a single variable. I appreciate that university press releases can sometimes get a bit too enthusiastic, but I looked at the abstract and in this case its pretty much the same.

    Am I missing something? Is LSE a poor authority on economics? I chose it merely as it was the first place that came to mind when looking for academic economics.

    If, as you claim, the problem is with the scale of claims being made, I would suggest that economics as a discipline makes far bolder and larger claims more often than does science, and that in itself makes my criticism valid as there is obviously no internal mechanism at the moment to reign in such a tendency.

    I’ll repeat the questions from my report: If I am barking up completely the wrong tree in looking for reputable economics, tell me how I am supposed to find reputable economics? When I’ve asked people this question in the past the normal response has been to point me in the direction of their favourite economic worldview and say ‘these guys are always right’.

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