Anti-Capitalist Sentiment (with some morality)

[MadMojoMonkey]

Assumptions are the building blocks of theories. If your assumption is shit, your theory is also likely to be shit.

I fully share your skepticism as to the utility of the postulates of economics.

Yup, we'd have a hard time doing science then. Not sure what else you're getting at though.

This convo

They would prove the assumption [of constancy] false and require the theory to rethink it's assumptions.

Sorry if not fully on topic. I think I am, but not positive.

[Poopadoop]

Well sort of I guess. I mean the point isn't so much whether the assumption of utility is circular given all assumptions are circular (on a philosophical level). It's that there's so much flexibility in it that it's unfalsifiable. This isn't the case with the assumption of constancy, and that's what makes it a good starting point whereas the assumption of maximizing utility isn't.

It's not to say there isn't something to the utility idea, it just isn't described with anywhere near enough precision to be useful in the context of science. Not to mention that it can be adjusted post hoc to explain everything. It has very limited value imo.

[Poopadoop]

Granted, economics is a soft science and maybe it isn't fair to hold it up to the same standards as physics or chemistry. That's one of it's problems though, the system is so chaotic as to be nearly indecipherable.

I'm just trying to understand what economics actually has to offer in a concrete sense.

[wufwugy]

Granted, economics is a soft science and maybe it isn't fair to hold it up to the same standards as physics or chemistry. That's one of it's problems though, the system is so chaotic as to be nearly indecipherable.

I think this fact has gotten lots of economists into trouble. Well, not trouble, but claiming things that don't make sense according to the literature.

Here's an example from this week with my money and banking professor. In a lecture she introduced the concept of "random walk", which is the financial theory that stock prices cannot be predicted. The theory is orthodoxy in finance/economics, and she agrees with it. However, when I spoke with her on this topic, she claimed that bubbles exist, economists are right to look out for bubbles (gave examples of them doing it), and that central banks can deflate bubbles before they start. There's one problem with this, if stock prices are a random walk, economists and central banks can't predict bubbles.

Most economists believe in bubbles and that they can be predicted. Some don't. As far as I can tell, the answer to this question is in the literature, but a bunch of economists are letting their politics and public opinion get in the way of their better judgment. This is pretty common in the field, and it's confusing as fuck.

[Poopadoop]

Reminds me of a funny thing I read once about analysts and the stock market. Basically, because it's a random walk, any predictions are made at chance. From any group of analysts, some will guess right, some will guess wrong, and some will guess right a number of times in a row. Guess who gets a raise and promotion?

[a500lbgorilla]

Reminds me of a funny thing I read once about analysts and the stock market. Basically, because it's a random walk, any predictions are made at chance. From any group of analysts, some will guess right, some will guess wrong, and some will guess right a number of times in a row. Guess who gets a raise and promotion?

Generals who tell their leaders they can't win, don't get the job. Generals that tell their leaders they can however...

[wufwugy]

Well sort of I guess. I mean the point isn't so much whether the assumption of utility is circular given all assumptions are circular (on a philosophical level). It's that there's so much flexibility in it that it's unfalsifiable. This isn't the case with the assumption of constancy, and that's what makes it a good starting point whereas the assumption of maximizing utility isn't.

It's not to say there isn't something to the utility idea, it just isn't described with anywhere near enough precision to be useful in the context of science. Not to mention that it can be adjusted post hoc to explain everything. It has very limited value imo.

It could be that the value is to say that when somebody wants something, they want it, as opposed to not wanting it or randomly wanting or not wanting it. This seems like the sort of assumption economics would need.

[wufwugy]

I fully share your skepticism as to the utility of the postulates of economics.

I do too. I don't really know what goes into deciding assumptions. My best guess is that original economists said "yo we can only say stuff about what people do if we have an assumption behind it all; something like people want more of something they want and less of something they don't want, where want means whatever they decide."