Anti-Capitalist Sentiment (with some morality)

[wufwugy]

This doesn't seem wildly different to what I would expect, it only makes it more encompassing than just being about money:



People make bad decisions all the time, economically and otherwise. Look at all the things where people don't even understand what rational behavior is, like the Gambler's Fallacy.

So it's clearly a very caveat-ridden assumption that doesn't belong at the core of a serious theory. No economist has ever come up with a good explanation for these irrational behaviors afaik.

Investopedia can be confusing regarding economics at times. Economists use very confusing language that is different outside of economics. That link does not give the right impression of what rationality in economics is. If it is confusing, don't worry, economists are major dummies at naming things.

In economics, rationality is merely an assumption that people want what they want and that they want more of what they want as opposed to less of what they want. All the examples one can think of "irrational behavior" still fall under this assumption. Economists used a very misleading word to describe this assumption. This is the profession that put the output on the x axis. Believe me, they are the absolute worst messengers.

Do you have any questions on this?

[Poopadoop]

In economics, rationality is merely an assumption that people want what they want and that they want more of what they want as opposed to less of what they want.

How does your definition differ from the one I quoted? 'People want what they want and want more of it' is just a colloquial way of saying they try to maximize their benefit/utility.

[wufwugy]

How does your definition differ from the one I quoted? 'People want what they want and want more of it' is just a colloquial way of saying they try to maximize their benefit/utility.

That's what it is. The tricky part is that maximization of utility is assumed to be inherent to decisions. Utility is 100% subjective, and people are always assumed to be maximizing it when they decide something.

The whole thing is circular, but that's okay since it's a base assumption. Those are circular when rationalized. For example, a base assumption of science is that phenomena are repeatable. If we attempt to rationalize why we use this assumption, the explanation is circular.

A popular way of describing economic rationality was presented by Gary Becker: even when a heroin addict suffers under his addiction and knows it and wants to change, when he decides to shoot up again, even though this is totally irrational in the "higher reasoning" sense, in economics it was the action his body/brain/whatever wanted to select more than any other action. The assumptions are that people always want more of a benefit rather than less of a benefit and that each decision is maximizing of benefit.

Explain how it accounts for the irrational please.

Basically what economists are saying is that when the body/brain/whatever wants something more than something else, it chooses that, which is rational. This is a very prime view of rationality. The way we think of rationality today, through the lens of it meaning higher level reasoning and that irrationality is whenever things like emotions or habits or a misfiring or whatever influence a decision, we see so many of our decisions as irrational. But these irrational decisions still fall under the scope of economic rationality because they are the body/brain/whatever-selection-mechanism deciding one action over another.

[Poopadoop]

That's what it is. The tricky part is that maximization of utility is assumed to be inherent to decisions. Utility is 100% subjective, and people are always assumed to be maximizing it when they decide something.

The whole thing is circular, but that's okay since it's a base assumption.

No, it's a problem because it's meaningless. For any given behavior you, you just say 'that's what they wanted, therefore it was rational' . Doesn't mean you've done a good job of explaining it or that you'll be any better at predicting it in the future, because you still haven't answered why it happened except to say 'it happened because it was meant to happen'.

For example, a base assumption of science is that phenomena are repeatable. If we attempt to rationalize why we use this assumption, the explanation is circular.

That assumption isn't circular, it's just plain true. Gravity is the same today as it was yesterday. 2+2 equals four no matter how many times you test it. Constancy in the laws of nature is a good assumption to have because it holds up to scrutiny. Even more importantly, it allows us to make predictions.

A popular way of describing economic rationality was presented by Gary Becker: even when a heroin addict suffers under his addiction and knows it and wants to change, when he decides to shoot up again, even though this is totally irrational in the "higher reasoning" sense, in economics it was the action his body/brain/whatever wanted to select more than any other action. The assumptions are that people always want more of a benefit rather than less of a benefit and that each decision is maximizing of benefit.

Basically what economists are saying is that when the body/brain/whatever wants something more than something else, it chooses that, which is rational. This is a very prime view of rationality.

I'm happy to go along with all that, but it still leads to the problem of being a truism - people do things because their brain makes them do things. That's not a great insight, or anything to base a discipline on. It really explains nothing.

Ok, so teach me - what does economics do that isn't based on bullshit?

[wufwugy]

No, it's a problem because it's meaningless. For any given behavior you, you just say 'that's what they wanted, therefore it was rational' . Doesn't mean you've done a good job of explaining it or that you'll be any better at predicting it in the future, because you still haven't answered why it happened except to say 'it happened because it was meant to happen'.

This is how assumptions work. They are not explanations of natural phenomena.

That assumption isn't circular, it's just plain true. Gravity is the same today as it was yesterday. 2+2 equals four no matter how many times you test it. Constancy in the laws of nature is a good assumption to have because it holds up to scrutiny. Even more importantly, it allows us to make predictions.

Those examples aren't assumptions. Assumptions aren't about holding up to scrutiny. They're about that which can't be scrutinized in the first place.

It has not and cannot be demonstrated that the laws of physics won't change tomorrow. Scientists assume they won't.

I'm happy to go along with all that, but it still leads to the problem of being a truism - people do things because their brain makes them do things. That's not a great insight, or anything to base a discipline on. It really explains nothing.

It's not supposed to be an insight. Assumptions are what we use when there is no known way to get any deeper. Assumptions provide a framework from which science can be conducted.

Ok, so teach me - what does economics do that isn't based on bullshit?

You're not alone in your distaste for the field. It is a very hard pill to swallow, which helps explain why so many economists believe some incorrect things based on their politics and public opinion for which there is virtually no evidence and are contradicted by the literature.

[Poopadoop]

This is how assumptions work. They are not explanations of natural phenomena.

You're missing the point. If Science argued that gravity exists because it exists, you'd say that was a bad argument. But economists say 'people behave how they behave because their brain makes them do that'. It's meaningless.

Those examples aren't assumptions. Assumptions aren't about holding up to scrutiny. They're about that which can't be scrutinized in the first place.

It has not and cannot be demonstrated that the laws of physics won't change tomorrow. Scientists assume they won't.

They assume this because there's no reason to think otherwise. Saying 'you can't assume what you is true today will still be true tomorrow' is a silly argument like saying 'you can't prove there's no God'. On a philosophical level, you can't prove anything. But you can prove things with a reasonable degree of certainty. So your original argument that science has no basis for assuming constancy in nature is bullshit, especially when you try to use that argument to justify the circularity of economic 'laws'. You're just obfuscating the issue.

It's not supposed to be an insight. Assumptions are what we use when there is no known way to get any deeper. Assumptions provide a framework from which science can be conducted.

It's not an assumption it's a truism.

I don't have a distaste for the field, I just think it's a tricky business to model something so complicated as human behavior. What I have a problem with is the lack of humility that many economists seem to have. A lot of them seem smugly convinced they have it right and the rest have it wrong.

[wufwugy]

especially when you try to use that argument to justify the circularity of economic 'laws'.

I'm going to stop you here. Please reread the things I've said. This topic has nothing to do with economic laws.

Too often these things are two people talking about entirely different things.