I’ve become increasingly disillusioned with people’s capacity for abstract thought. Here are two points on my journey.
The public discussion of using wind turbines for carbon-free electricity generation seems to implicitly assume that electricity output goes as something like the square-root of windspeed. If the wind is only blowing half speed you still get something like 70% output. You won’t see people saying this directly, but the general attitude is that you only need back up for the occasional calm day when the wind doesn’t blow at all.
In fact output goes as the cube of windspeed. The energy in the windstream is one half m v squared, where m, the mass passing your turbine is proportional to the windspeed. If the wind is at half strength, you only get 1⁄8 output.
Well, that is physics. Ofcourse people suck at physics. Trouble is, the more I look at people’s capacity for abstract thought the more problems I see. When people do a cost/benefit analysis they are terribly vague on whether they are suposed to add the costs and benefits or whether the costs get subtracted from the benefits. Even if they realise that they have to subtract they are still at risk of using an inverted scale for the costs and ending up effectively adding.
The probabiltiy bump I give to an idea just because some people believe it is zero. Equivantly my odds ratio is one. However you describe it, my posterior is just the same as my prior.
When people do a cost/benefit analysis they are terribly vague on whether they are suposed to add the costs and benefits or whether the costs get subtracted from the benefits.
Revised: I do not think that link provides evidence for the quoted sentence. Nor I do see other evidence that people are that bad at cost-benefit analysis. I agree that the example presented there is interesting and that one should keep in mind that disagreements about values can be hidden, sometimes maliciously.
I’ve got a better link. David Henderson catches a professor of economics getting costs and benefits confused in a published book. Henderson’s review is on on page 54 of Regulation, and my viewer puts it on the ninth page of the pdf that Henderson links to
That is a good example. Talk of creating jobs as a benefit, rather than a cost is quite common. But is it confusion or malice? It is hard for me to imagine that economists would publish such a book without having it pointed out to them. The audience certainly is confused. Henderson says “Almost no one spending his own money makes this mistake” and would not generalize to people’s capacity for abstract thought.
The original question was how much information to extract from the conventional wisdom. I do not take this as a reason to doubt the conventional wisdom about personal decisions. Partly, this is public choice, and partly because people do not address externalities in their personal decisions. Maybe any commonly accepted argument involving economics should be suspect, though the existence of the very well-established applause-line of “creating jobs” suggests that there are limits to how to fool people. But your claim was not that people are bad at physics and economics, but at the abstract thought of decision theory.
I’ve become increasingly disillusioned with people’s capacity for abstract thought. Here are two points on my journey.
The public discussion of using wind turbines for carbon-free electricity generation seems to implicitly assume that electricity output goes as something like the square-root of windspeed. If the wind is only blowing half speed you still get something like 70% output. You won’t see people saying this directly, but the general attitude is that you only need back up for the occasional calm day when the wind doesn’t blow at all.
In fact output goes as the cube of windspeed. The energy in the windstream is one half m v squared, where m, the mass passing your turbine is proportional to the windspeed. If the wind is at half strength, you only get 1⁄8 output.
Well, that is physics. Ofcourse people suck at physics. Trouble is, the more I look at people’s capacity for abstract thought the more problems I see. When people do a cost/benefit analysis they are terribly vague on whether they are suposed to add the costs and benefits or whether the costs get subtracted from the benefits. Even if they realise that they have to subtract they are still at risk of using an inverted scale for the costs and ending up effectively adding.
The probabiltiy bump I give to an idea just because some people believe it is zero. Equivantly my odds ratio is one. However you describe it, my posterior is just the same as my prior.
Revised: I do not think that link provides evidence for the quoted sentence. Nor I do see other evidence that people are that bad at cost-benefit analysis. I agree that the example presented there is interesting and that one should keep in mind that disagreements about values can be hidden, sometimes maliciously.
I’ve got a better link. David Henderson catches a professor of economics getting costs and benefits confused in a published book. Henderson’s review is on on page 54 of Regulation, and my viewer puts it on the ninth page of the pdf that Henderson links to
That is a good example. Talk of creating jobs as a benefit, rather than a cost is quite common. But is it confusion or malice? It is hard for me to imagine that economists would publish such a book without having it pointed out to them. The audience certainly is confused. Henderson says “Almost no one spending his own money makes this mistake” and would not generalize to people’s capacity for abstract thought.
The original question was how much information to extract from the conventional wisdom. I do not take this as a reason to doubt the conventional wisdom about personal decisions. Partly, this is public choice, and partly because people do not address externalities in their personal decisions. Maybe any commonly accepted argument involving economics should be suspect, though the existence of the very well-established applause-line of “creating jobs” suggests that there are limits to how to fool people. But your claim was not that people are bad at physics and economics, but at the abstract thought of decision theory.