Inferring causality from a time-series of various economic variables is incoherent. There first needs to be a deductive understanding of what the causal relationships are between economic variables. That is what is meant by “first principles” here—perhaps the disagreement is semantic.
Data about effects of economic policy tells us nothing if one has not already pre-supposed causal relationships between certain variables (ie, which variable is affecting which). If one had not done so, how does one know which variables to link with which other one? The causality which is being claimed to be derived is actually assumed or it is a result of the data-mining effect.
Thus, the first principles analysis: What is an economy?
I will read the Moldbug article, although I have to say I’m not optimistic, given my past experience with his writing. But I do want to disagree on this:
Inferring causality from a time-series of various economic variables is incoherent… Data about effects of economic policy tells us nothing if one has not already pre-supposed causal relationships between certain variables (ie, which variable is affecting which). If one had not done so, how does one know which variables to link with which other one?
I think you are either underestimating the tools at our disposal for causal discovery, or you have an evidential standard for causality that is way too high. Are you familiar with Judea Pearl’s work on inferring causation from probabilities? Check out this sweet post by Eliezer if you’re not.
ETA: I’m only a few paragraphs into the Moldbug piece and my hackles are already rising. He has already declared that a conscious being must be rational “by definition” and that other peoples’ desires are unknowable, also “by definition”. I don’t think either of these claims are true (assuming the words have their usual meanings), let alone true by definition. This doesn’t bode well, but I’ll keep reading.
Thanks. I have read that post by Eliezer before. The issue with monetary economics is the number of variables. Money is one half of every single transaction, in a sophisticated economy.
Re definitions, the meaning of rational there is that the person acts based on his internal map of the world (this is how Mises used the word way back when and it is part of parlance in Misesian economics). It does not mean what LW thinks it means.
Re unknowable desires, it is a way of saying that economically relevant desires are revealed by economic actions. Demand means being willing and able to pay.
Semantic issue in both cases :)
I mean that in a monetary economy, one always buys goods and services with money. One side of the transaction is money, whatever it is. Sophisticated here means an economy that has progressed beyond barter and developed a medium of exchange and a store of value, ie, Money.
Inferring causality from a time-series of various economic variables is incoherent. There first needs to be a deductive understanding of what the causal relationships are between economic variables. That is what is meant by “first principles” here—perhaps the disagreement is semantic.
If I replace “economic variables” with “astronomy” what part of this sentence changes in implication? Why is this incoherent for some fields? The level of rigor cannot be the only difference: Physics and astronomy have become more rigorous over time, not by discussing first principles, even when moving from Aristotle to Medieval physics to Newtonian physics, but rather by adopting principles based on the empirical data. The same goes for the switch from Ptolemaic systems to Copernicus and then Kepler. It is the empirical data that matters, the apparent time-series of planetary and stellar motion.
Thus, the first principles analysis: What is an economy?
So that’s true, but until the late 1700s (essentially post Newton) no one had any capacity to do so (because no ideas anyone had connected the two at all in a useful way). Would this sort of claim then been valid in 1650?
Re the Q about rent-paying: Yes. You should rightly be skeptical now, but please read the Economics sub-section at Moldbuggery with an open mind. Or if you prefer, start with Rothbard’s ‘Man Economy and State’.
Economics—of all subjects—pays rent.
This doesn’t answer the question. Note that no one is arguing that economics doesn’t pay rent. The question was whether arguing over ’”what is an economy” pays rent or not.
I misunderstood the Q. In my opinion, yes. It is, I think, the intuitive way to get a sound (ie, based on sheer deductive coherence) grasp of the subject.
Well, in a sense every definition carries an implicit assertion that the described object corresponds to a cluster in thing space. See also 37 ways that words can be wrong.
Re Physics, please correct me as required but in the way I use the phrase “first principles” here, Physics does not have any first principles.
Yes it does. They’re just so implicit in our intuition about how the world works that we don’t notice them. For example, consider all the implicit assumptions necessary for statements like “these two sticks have the same length” to be meaningful.
I will read the Moldbug article, although I have to say I’m not optimistic, given my past experience with his writing. But I do want to disagree on this:
I think you are either underestimating the tools at our disposal for causal discovery, or you have an evidential standard for causality that is way too high. Are you familiar with Judea Pearl’s work on inferring causation from probabilities? Check out this sweet post by Eliezer if you’re not.
ETA: I’m only a few paragraphs into the Moldbug piece and my hackles are already rising. He has already declared that a conscious being must be rational “by definition” and that other peoples’ desires are unknowable, also “by definition”. I don’t think either of these claims are true (assuming the words have their usual meanings), let alone true by definition. This doesn’t bode well, but I’ll keep reading.
Economies that have multiple currencies are unsophisticated...?
If I replace “economic variables” with “astronomy” what part of this sentence changes in implication? Why is this incoherent for some fields? The level of rigor cannot be the only difference: Physics and astronomy have become more rigorous over time, not by discussing first principles, even when moving from Aristotle to Medieval physics to Newtonian physics, but rather by adopting principles based on the empirical data. The same goes for the switch from Ptolemaic systems to Copernicus and then Kepler. It is the empirical data that matters, the apparent time-series of planetary and stellar motion.
Does arguing over this definition pay any rent?
One can do controlled experiments in physics here on Earth and apply the results to astronomy.
So that’s true, but until the late 1700s (essentially post Newton) no one had any capacity to do so (because no ideas anyone had connected the two at all in a useful way). Would this sort of claim then been valid in 1650?
This doesn’t answer the question. Note that no one is arguing that economics doesn’t pay rent. The question was whether arguing over ’”what is an economy” pays rent or not.
So, can you explain how arguing over the definition of a word can ever pay rent?
Well, in a sense every definition carries an implicit assertion that the described object corresponds to a cluster in thing space. See also 37 ways that words can be wrong.
Yes it does. They’re just so implicit in our intuition about how the world works that we don’t notice them. For example, consider all the implicit assumptions necessary for statements like “these two sticks have the same length” to be meaningful.
So, why does physics have no such first principles but economics does?