Three-Toed Sloth

Books to Read While the Algae Grow in Your Fur, September 2009

Alexander Rosenberg, Economics: Mathematical Politics or Science of Diminishing Returns?

Rosenberg is a philosopher of science focused on biology and neo-classical economics. This is his second attempt at assessing the latter. (I haven't read his first go-round and it doesn't seem to be necessary.) Ordinarily, he says, the goal of science is to make increasing accurate and precise predictions about the world. (This includes the historical sciences like geology and paleontology, which predict new evidence rather than new events at definite future times. [Different branches of astronomy actually make both kinds of predictions.]) Economics, however, is incredibly bad at prediction — certainly at the improving-precision part. Rosenberg does not argue this point very strongly, taking it to be more or less obvious to anyone familiar with the state of economics, and I'm inclined to agree. This picture might be complicated by a detailed consideration of applied econometric models, but even when those work, they are very poorly grounded in economic theory*. (Incidentally, one of the pleasures of reading this was seeing Rosenberg assault Friedman's "Methodology of Positive Economics" essay, whose influence has been profound and utterly malign.) Rosenberg then has two questions: (1) if economics does share the usual goal of science, what are its prospects for achieving it? (2) if it does not have that goal, what is it trying to achieve — or, perhaps, better, what is the kind of thing economists do and want to keep doing fitted to achieve?

As to (1) he is intensely skeptical, because he sees microeconomic explanations as grounded in intentional explanations, a not-too-compelling formalization of folk psychology (desires mapping to utility functions and beliefs to subject probability distributions). He is extremely skeptical, on strictly philosophical grounds, about intentional explanations being made much better in the future than they have been through recorded history. He is also skeptical that we could ever have something like a cognitive-scientific or neuro-scientific theory which explains behavior and recovers folk psychology as a useful approximation in certain domains; I completely fail to follow his argument here. What I seem to understand would imply that he thinks thermostats and self-guided missiles are impossible, so if I am right he should really listen to Uncle Norbert, especially before the inevitable robot uprising (I can just see his last words being, a la pp. 142--143, "this robot can't really be trying to kill me, because if that intention were represented in one part of its computational system, \( l_1 \) , who is the interpreter who treats the configuration of memory registers in \( l_1 \) as expressing this goal? Surely it must be some other sub-system, call it \( l_2 \) , which reads \( l_1 \) , but then we face the same question all over again for \( l_2 \) — urk!"); but no doubt I am wrong and he has some more reasonable idea which he does not, however, convey. The resounding experimental failure of maximizing-subjectively-expected-utility theory is not addressed. (Perhaps this was less clear in 1994 than it is now, but I doubt it.) I suspect that he would feel any of the models of choice proposed in behavioral economics are subject to much the same critique as the one he makes of conventional microeconomics, because they're basically intentional.

As to (2), Rosenberg argues as follows. There is a three-way relationship between a discipline's goals, its theories, and its methods: given the goals (say, maximizing predictive accuracy), the theories tell us something about how well different methods will meet the goals. Likewise if you fix the goals and methods, only certain kinds of theories will be acceptable or reachable. And if you fix the theories and methods, you constrain the goals you can attain. (Rosenberg's argument here is very close to that of Larry Laudan in his great book Science and Values, and I think it's correct.) If we take neo-classical methods and theories as given, what might economics be successfully aiming at? Clearly not, by the previous argument, scientific prediction. Rather, Rosenberg offers two possibilities, not mutually exclusive. On the one hand, maybe it's really a species of hyper-formalized social-contract theory from political philosophy, with (as he says) the Walrasian auctioneer in the role of Hobbes's sovereign. Or: maybe it's a species of applied mathematics, interested in the implications of interacting transitive preference orderings. As he says, applied mathematicians are rarely interested in whether their math can, in fact, be applied to the real world — that's not their department.

Excusing economics's poor track-record as an empirical science by saying it's really political philosophy and/or applied math may be a defense worse than the original accusation. As Rosenberg notes, it makes the idea of attending to what economists have to say about policy matters rather odd; at best one should listen to them as much as to any other sect of political philosophers. I would suspect that Rosenberg was proposing this maliciously, but he seems to be sincere and not just good at writing with a straight face. I don't think economics is in quite such a plight as he does, but having just put the book down I admit I'm hard-pressed to articulate why.

*: For instance, when real business cycle theorists and their kin fit dynamic stochastic "general equilibrium"** models to empirical time-series of macro-economic quantities, these time series are first de-trended, i.e., made stationary. This has no justification in the representative-agent story underlying the models, but seems, at present, to be essential to actually getting estimates. Typically the de-trending is done through the "Hodrick-Prescott" filter***, again with no theoretical justification, and the business cycle is operationally defined as "the residuals of the filter". I suspect that most of the predictive ability of DSGEs comes from the filter, plus implicitly doing a moving-average smoothing of the residuals. It would be interesting to pit them against economically-naive nonparametric forecasting (along say these lines).

**: I use the scare-quotes because I don't agree that representative agent models are general equilibrium models.

***: Known in statistics decades before Hodrick and Prescott as a "smoothing spline". (The word "spline" does not appear in their paper, and they are entirely innocent of the vast literature on how much smoothing to do.)

Sarah Graves, Wreck the Halls

More cozy comfort-reading about sordid multiple homicide. (But whatever happened to Sam's girlfriend from the previous book?) — Sequels.

John Billheimer, Highway Robbery

Well-written, amusing and absorbing mystery novel about a family of highway engineers in West Virginia. The only thing keeping it from being perfect-for-me mind-candy is that part of the plot turns on making fun of environmentalists; but you can't have everything. This is the second book in a series; I've not read the others but will look them up. — Book 1.

Bent Jesper Christensen and Nicholas M. Kiefer, Economic Modeling and Inference

Review: An Optimal Path to a Dead End.

Joe Hill and Gabriel Rodriguez, Locke and Key, vol. 2: Head Games

High-grade comic book mind-candy. Definitely needs the earlier book.

Chelsea Cain, Evil at Heart

Great, if somewhat stomach-turning, mind-candy. (Probably needs the earlier books.) I actually wish Cain did more with the media-frenzy angle, however.

Possible continuity error: Isn't Susan awfully unconcerned about leaving her car alone in really dodgy neighborhoods, after she broke out one of its windows?

Thomas Levenson, Newton and the Counterfeiter: The Unknown Detective Career of the World's Greatest Scientist

Or: Newton demands the noose. — A wonderfully readable little biography of Newton, with the hook of looking at how he tackled his second career as Warden of the Mint, in charge of actually producing the English currency, and of catching and punishing counterfeiters. In particular, Levenson focuses on Newton's pursuit of a counterfeiter of particular skill and temerity, one William Chaloner, providing a great opportunity to explain the criminal underworld in which such figures lived, and the vast opportunities opening up for them as a result of the social transformations of which Newton was at once symbol, beneficiary and further driver. (Any idiot understands stealing a hunk of metal, and almost any idiot can grasp substituting pewter for silver, but the higher reaches of monetary crime require numeracy and comfort with sophisticated abstractions.) This is, in short, a portrait of the foundations of our world being laid, from the intellectual system of rational scientific explanation, to states powerful enough to enforce written laws on millions and raise the funds needed to wage war across the world, to through global commerce and flows of money, and stock-market Ponzi schemes in which geniuses lose fortunes. Enthusiastically recommended if any of this sounds the least bit appealing.

Kat Richardson, Vanished

Mind-candy: An American shaman in London. Ends in media res, though not with a cliff-hanger.

Halbert White, Estimation, Inference, and Specification Analysis

Review: How to Tell That Your Model Is Wrong; and, What Happens Afterwards.

House of Mystery: Love Stories for Dead People

More tales from the bar, plus a really unfortunate basement.

Tiziano Scalvi et al., The Dylan Dog Case Files

No purchase link because I actually dis-recommend it: predictable, tedious, implausible, not scary, excruciating when it tries to be funny, ultimately tiresome. (The drawing is I admit pretty good, but nowhere near the covers Mignola provides for the translated edition.) Is this really that popular in Italy? If so, does the original have virtues which did not survive translation, or does the old country simply have no taste at all in comics?

Phil and Kaja Foglio, Agatha Heterodyne and the Circus of Dreams and Agatha Heterodyne and the Clockwork Princess

Volumes 4 and 5 of Girl Genius. Go read.

I. J. Parker, The Convict's Sword

Converging murder cases in Heian-era Japan. Stands alone, but I enjoyed it more for knowing the back-story. (Previous volumes in the series: 1 and 2, 3, 4, 5.)

Madeleine E. Robins, Point of Honour

Your basic hard-boiled female private-eye detective novel, which also happens to be a historical mystery and a Regency romance; the charming love-child of Jane Austen, or perhaps Georgette Heyer, and Dashiell Hammett. I read it in one sitting from the beginning — "It is a truth universally acknowledged that a Fallen Woman of good family must, soon or late, descend to whoredom" — to the end, and really want the sequel.

(Read following up on an old review by Kate Nepveu.)

Update: The sequel is as good.

Books to Read While the Algae Grow in Your Fur; Enigmas of Chance; The Dismal Science; Pleasures of Detection, Portraits of Crime; Scientifiction and Fantastica; Philosophy; Writing for Antiquity; The Great Transformation