Comments on: Economics without mathematics http://blogs.reuters.com/felix-salmon/2010/04/01/economics-without-mathematics/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Stuartt http://blogs.reuters.com/felix-salmon/2010/04/01/economics-without-mathematics/comment-page-1/#comment-15394 Thu, 03 Jun 2010 14:53:45 +0000 http://blogs.reuters.com/felix-salmon/?p=3178#comment-15394 Enjoy a light take on econ gurus:-

Post: Hayek vs Keynes rap

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By: Danny_Black http://blogs.reuters.com/felix-salmon/2010/04/01/economics-without-mathematics/comment-page-1/#comment-15283 Sun, 30 May 2010 11:53:16 +0000 http://blogs.reuters.com/felix-salmon/?p=3178#comment-15283 I think you misunderstand what maths is for:

Maths says if I assume this and this is true then these following things must be true too. It says nothing about your assumptions validity except to say that if some of the derivations are shown to be false then at least one of your assumptions is false.

Maths in important because it makes your assumptions precise, it makes the logical path to your deductions precise and it makes the results precise. Without the maths you get lost in the subtle differences of meaning of common day usuage and if nothing else the recent crisis should show that the devil is in the subtle differences and assumptions.

As for the comment from Adam Curtis, I think this reductio ad absurdum of what happens when people who are clueless about maths start attacking a field. Why should economists have predicted THIS crisis? What constitutes a prediction? The day and hour? The amount lost? The products that lost money? That there would be a crisis? I hereby predict at sometime in the future large amounts of money wil be lost on products that previously had been considered perfectly safe. Can I collect my Nobel prize? The whole point of the EMH which Mr Curtis is attacking is that you CAN’T predict the future. What you can predict is population level behaviour. I can’t predict exactly when a fair coin will come up with 4 heads, does that mean we should throw out probability theory?

As for journalists understanding the maths, the key bit is not the symbology but the assumptions being expressed and their mapping to the real world.

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By: ARJTurgot http://blogs.reuters.com/felix-salmon/2010/04/01/economics-without-mathematics/comment-page-1/#comment-14779 Thu, 13 May 2010 17:39:22 +0000 http://blogs.reuters.com/felix-salmon/?p=3178#comment-14779 Late hit here, but it seems that comments keep coming, so…

You need to go back even further, as this is really an epistemological problem. How do we know what we think we know?

Many of the posters here have a bias towards Thomistic Rationalism, which was all the rage a couple of centuries ago, and still dominates much of our thinking. They appeal to authority first (Jesus, the Gospels, Hayek, Smith, et al), then reason (it *seems only rational*), and only in the end, empirical data. Sadly, much of Economics is based on flawed rationalism with some math thrown in. They then lay claim to some [pretty dodgy] empiricism. Causal links may be weak, but that doesn’t stop economists from trying on the cloak.

You can understand all of that without the semesters of calculus plus some diff-eq, but you probably ought to go back and brush up on your algebra anyway. None of it reliably predicts the future, and little of it allows you to pick a profitable stock. Business is seat of the pants. All the time.

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By: IanFraser http://blogs.reuters.com/felix-salmon/2010/04/01/economics-without-mathematics/comment-page-1/#comment-14380 Tue, 04 May 2010 14:14:20 +0000 http://blogs.reuters.com/felix-salmon/?p=3178#comment-14380 I have not read all the previous comments but I’m with Felix on this one.

A broader point is that 95% of economists are basically clueless (monetarist or Keynseian,they’re all the same). Much of their output is glorified speculation and quackery.

Having either misinterpreted or failed to read their Adam Smith, members of the laissez-faire, Chicago school that has predominated since the late 1970s swallowed hollow Randist doctrine and must bear alot of responsibility for the mess that we are currently in.

For an insight into the cluelessness and herd-like ignorance of most economists, take a look at this excellent blog post by Adam Curtis and the film that follows it.

http://www.bbc.co.uk/blogs/adamcurtis/20 10/02/the_economists_new_clothes.html

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By: Ghandiolfini http://blogs.reuters.com/felix-salmon/2010/04/01/economics-without-mathematics/comment-page-1/#comment-13128 Mon, 05 Apr 2010 08:27:54 +0000 http://blogs.reuters.com/felix-salmon/?p=3178#comment-13128 …or Timothy Leary, at least you know what your are dealing with…

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By: Ghandiolfini http://blogs.reuters.com/felix-salmon/2010/04/01/economics-without-mathematics/comment-page-1/#comment-13127 Mon, 05 Apr 2010 08:23:29 +0000 http://blogs.reuters.com/felix-salmon/?p=3178#comment-13127 Well, did Buffet advisors not warn us about the derivative time-bomb, and possibly securitized mortgage books ? We make it so complex, and when we are not quite so sure about our gambling outcomes, we hedge them.

Benny is quite right, it is all about supply and demand, interest, but add dividends and all around capital growth or losses, after taxes. When credit demand exceeds credit supply, paper money has to be ‘printed’, or created. When consumption exceeds supply, you have to import it.

By the same token, we don’t even know what ‘earnings’ means anymore, that’s a sorry state of affairs.

Galtgulch, that sound more like science fiction man, in fact, like the names of the Space Shuttle crew taking off at 3am, EST ? Ayn Rand being shot into space. Rather give me an actuary, or conversely, the Mafia anytime.

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By: AlanFurth http://blogs.reuters.com/felix-salmon/2010/04/01/economics-without-mathematics/comment-page-1/#comment-13122 Mon, 05 Apr 2010 00:08:06 +0000 http://blogs.reuters.com/felix-salmon/?p=3178#comment-13122 I agree with EmilianoZ above, you should check out Yves Smith’s book on how economists have used contrived mathematical arguments to market as science what in the end is not more than an fundamentalist, free market ideology.

I remember you disagreeing with her on a TV interview not too long ago about whether economists played an important in the current financial meltdown, but she didn’t quite address the math issue as she does in the book, which would have clarified matters in the discussion.

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By: johnpaulperic http://blogs.reuters.com/felix-salmon/2010/04/01/economics-without-mathematics/comment-page-1/#comment-13121 Sun, 04 Apr 2010 23:52:30 +0000 http://blogs.reuters.com/felix-salmon/?p=3178#comment-13121 The advanced mathematical models used to explain simple every day human behaviours in the market place often distort the facts of the matter.

“DanHess – But with elaborate models, very smart people at very big banks convinced themselves that everything would be alright”.

The point? there is no issue with todays journalists not being able to interpret the fine details of the formula. However, the ability to understand the depictions of the formula and the way it fits into the model is critical.

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By: Ghandiolfini http://blogs.reuters.com/felix-salmon/2010/04/01/economics-without-mathematics/comment-page-1/#comment-13119 Sun, 04 Apr 2010 19:14:13 +0000 http://blogs.reuters.com/felix-salmon/?p=3178#comment-13119 Dungeon, there is no model that can predict world economics, as no one can predict wars or have stats on illicit trades, or for that matter, the weather.

196 countries, at least 10 major religions, 10 superpowers, 10 useless ‘New World Order’ regulatory bodies (shiver), you are buggered before you start.

Felix is correct, ‘Alchemy Wine Economics without mathematics.’

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By: DanHess http://blogs.reuters.com/felix-salmon/2010/04/01/economics-without-mathematics/comment-page-1/#comment-13118 Sun, 04 Apr 2010 19:13:44 +0000 http://blogs.reuters.com/felix-salmon/?p=3178#comment-13118 The real problem with advanced math and fancy models is that it lets people deceive themselves into believing that they know much more than they do.

We saw this in abundance in the recent crisis. Any eighth grader could have done better lending than the banks did in the years leading to the crisis, just going on the common sense that you don’t lend to someone who doesn’t have a way to pay back the loan. But with elaborate models, very smart people at very big banks convinced themselves that everything would be alright.

The elaborate models and advanced math actually tend to lead people to turn off common sense and this can be disasterous.

Slow learners that we are, folks are handing the climate debate over to some computer models and the models’ handlers rather than
using common sense and actual temperature readings.

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