To the contrary, I think the criticism of post 2 is very on point. But Zvi and I are looking at two different parts: Zvi’s looking at the logic/begging the question part, and I’m looking at the critique. In thought experiments, we can take imagined exogenous changes to be exogenous even though in the real world they’d be endogenous (i.e., we can take them as events rather than outcomes). Later, we can relax that assumption; the endogeneity problem is important for understanding whether the conclusions extend to the real world, but it is not important for understanding what the conclusions are within the thought experiment. So I agree with Zvi that the logic isn’t really an issue here.
However, I do believe this is a bad example (/weak post, Sorry Elizabeth) precisely for the reason AllAmericanBreakfast pointed out- it frames basic economics knowledge as a new insight. Admittedly, the EconLog post that was linked to doesn’t discuss comparative advantage either, but that’s because it’s really just about the “flight to safety” in 2008 where capital has to go somewhere, so it goes to the safest haven- even if that place is on fire, at least it’s not on fire next to a ticking time bomb. But, if you really want to talk about the “benefit not from absolute skill or value at a thing, but by being better at it than anyone else” then you can just consult microeconomics 101 (literally) and read up on absolute vs. comparative advantage. And then a better example of it is what you would find in the textbook (ha, probably Mankiw’s) of English cloth vs. Portuguese wine, which clearly illustrates the concepts.
Or, maybe Elizabeth really wasn’t referring to comparative advantage and more specifically to “when a superlative is applied in a context and the context is later lost.” This might seemingly apply better to the USD (we think of it as a safe haven because we used to think of it as a safe haven), but again the USD is not an apt example here because the context isn’t lost, it just changed (e.g., suppose the USD scores a 10⁄10 at being a currency and things change and now it’s a terrible 3⁄10 but it’s still better than all the rest). The Tallest Pygmy derives its tension from that fact that you think you’ve found someone “tall” but it’s just among the pygmies you’re sampling. The Tallest Pygmy, then, is best understood as getting stuck in a valley at a local, but not global, minimum (gradient descent). Or peaking at a local, but not global, maximum. Sometimes you are fine with local maxima, but if you are optimizing for global maxima, then obviously this creates a problem. May as well go with a classic example instead, which clearly illustrates sampling bias (statistics).
You see this in the academic literature as well where people refer to concepts as “effects.” I think it is a good idea to be skeptical of those findings- not that they are fake, just that more clarity could be gained from understanding the core concept that generates the effect. Elizabeth’s example is not great for comparative advantage, nor for gradient descent/sampling bias. The USD in 2008 is a “lesser of two evils effect,” or really not an effect at all- if you have a choice between 10%, 9%, and 8% returns at equal risk, you choose 10%; if a regime change occurs that makes you choose between 5%, 4.5%, and 4%, you choose 5%. It’s worse than before, but it’s the best around.
LessWrong is a great community to be in, but AllAmericanBreakfast is correct that many posts stumble upon “new” insights that are really just symptomatic of not having done enough research, particularly when it comes to economics. And that’s okay in this forum, we’re all trying to figure this stuff out!
To the contrary, I think the criticism of post 2 is very on point. But Zvi and I are looking at two different parts: Zvi’s looking at the logic/begging the question part, and I’m looking at the critique. In thought experiments, we can take imagined exogenous changes to be exogenous even though in the real world they’d be endogenous (i.e., we can take them as events rather than outcomes). Later, we can relax that assumption; the endogeneity problem is important for understanding whether the conclusions extend to the real world, but it is not important for understanding what the conclusions are within the thought experiment. So I agree with Zvi that the logic isn’t really an issue here.
However, I do believe this is a bad example (/weak post, Sorry Elizabeth) precisely for the reason AllAmericanBreakfast pointed out- it frames basic economics knowledge as a new insight. Admittedly, the EconLog post that was linked to doesn’t discuss comparative advantage either, but that’s because it’s really just about the “flight to safety” in 2008 where capital has to go somewhere, so it goes to the safest haven- even if that place is on fire, at least it’s not on fire next to a ticking time bomb. But, if you really want to talk about the “benefit not from absolute skill or value at a thing, but by being better at it than anyone else” then you can just consult microeconomics 101 (literally) and read up on absolute vs. comparative advantage. And then a better example of it is what you would find in the textbook (ha, probably Mankiw’s) of English cloth vs. Portuguese wine, which clearly illustrates the concepts.
Or, maybe Elizabeth really wasn’t referring to comparative advantage and more specifically to “when a superlative is applied in a context and the context is later lost.” This might seemingly apply better to the USD (we think of it as a safe haven because we used to think of it as a safe haven), but again the USD is not an apt example here because the context isn’t lost, it just changed (e.g., suppose the USD scores a 10⁄10 at being a currency and things change and now it’s a terrible 3⁄10 but it’s still better than all the rest). The Tallest Pygmy derives its tension from that fact that you think you’ve found someone “tall” but it’s just among the pygmies you’re sampling. The Tallest Pygmy, then, is best understood as getting stuck in a valley at a local, but not global, minimum (gradient descent). Or peaking at a local, but not global, maximum. Sometimes you are fine with local maxima, but if you are optimizing for global maxima, then obviously this creates a problem. May as well go with a classic example instead, which clearly illustrates sampling bias (statistics).
You see this in the academic literature as well where people refer to concepts as “effects.” I think it is a good idea to be skeptical of those findings- not that they are fake, just that more clarity could be gained from understanding the core concept that generates the effect. Elizabeth’s example is not great for comparative advantage, nor for gradient descent/sampling bias. The USD in 2008 is a “lesser of two evils effect,” or really not an effect at all- if you have a choice between 10%, 9%, and 8% returns at equal risk, you choose 10%; if a regime change occurs that makes you choose between 5%, 4.5%, and 4%, you choose 5%. It’s worse than before, but it’s the best around.
LessWrong is a great community to be in, but AllAmericanBreakfast is correct that many posts stumble upon “new” insights that are really just symptomatic of not having done enough research, particularly when it comes to economics. And that’s okay in this forum, we’re all trying to figure this stuff out!