Karl Smith on the importance of maths-free papers

... And simple allegorical stories to help our intuitive understanding of economic concepts. Here is an excerpt:

I posted a link to Bryan Caplan’s paper on Behavioral Economics and the Welfare State. Many of the comments I got from economists were predictable:  

   1. Where is the formal model and existence proofs?

   2. Where is the data analysis?

   3. How is this a paper?

   4. Do you mean to tell me this is publishable? 

I too was shocked initially by these features or lack thereof. However, that’s part of what made the paper compelling.

Some papers get a wonderful data set, perform magnificent identification and get a result that really changes your mind about something you care about. Most don’t.

Most are cases that are of very narrow interest or do a 90% good job at the ID but leave enough doors open that you are not really sure if  the result is meaningful or not.

On the other hand, one could as Bryan and his co-author did, attack an important question, string together some non-obvious points and in my case leave the reader thinking about whether he or she should reexamine an import view.

The profession should rightly celebrate the first kind of paper. However, what about the relative worth of the second and the third?

I submit that bringing up arguments that use the economic way of thinking matter. This is true even if the argument is not definitive, has no mathematical proof behind it and marshals no data.

Now, clearly I've written in support of using maths in economics on this blog before. However, in case anyone missed it, my point was not to say that we have to have put forward a mathematical equation for each and every economic argument or study. Indeed, I took some pains to make it explicit that this wasn't the case... Shoehorning a maths proof into an economics paper does not (cannot) constitute analytical rigour, let alone intellectual honesty.

I wholeheartedly agree with the excerpt above. We should embrace any economic paper and/or argument that aids our conceptual understanding, or forces us to re-examine our views on a particular subject. However, I continue to submit that theory alone is insufficient... 

Smith goes on to describe the baby-sitting coop allegory, which he says did more to make him a "confident Keynesian" than any other analysis. The important caveat here is that - as pointed out in the comments section - we have competing parables such as Bastiat's "Broken Window" that appear to offer completely different policy prescriptions. Again, this reinforces my belief that we ultimately need to seek empirical validation/refutation of our theories, whether they come in the form of a complex mathematical proof or a simple children's story. As I wrote here:

Knowing when to use your tools is just as important as knowing how to use them. Also, the ultimate test for any model - mathematical or otherwise - should always be how well it describes real-life data.

THOUGHT FOR THE DAY: It's always good to have a explanation at hand that everyone can understand.

PS - The Bryan Caplan paper that Smith is making reference to here is well worth a read. There are also some interesting critiques in the comments section of Smith's initial post about it.

To the heart of the Euro crisis!

Well, maybe not the heart... Pancreas perhaps? After seriously hacking to sort out the correct visa (I <3 immigration bureaucracies), I'm off to Portugal!

Having enjoyed great visit home, I'll be packing this final sunburn and heading back to the European winter - a very relative concept after my time in the Nordics - to spend my final semester on exchange in Lisbon as part of this programme (which I'm doing in parallel to my primary Master's). I've heard very good reports from friends that have spent time in Lisbon before and I'm sure the same positive experiences await me. Although, if anyone's wondering, I'm not not complaining that my bursary is denominated in foreign currency...

Snarks about the strength of the country's balance sheet notwithstanding, I'm hoping to soak up some culture, history, language and generally have a good old time..

Bon Voyage Boa Viagem!

o-[-<

Exploitation and Industrialisation

In the comments thread of the Meat and Veg(etarianism) post, I drew a parallel between the ethical treatment of animals and the banning of child labour. That is both involved society making a collective decision about the appropriate regulations rather than simply leaving it up to individuals to decide upon the standards themselves. The exact quote, if you're interested, was: "[L]ike many cases, I actually think that the decent treatment of living creatures is a social good deserving the requisite levels of public discourse and debate. Similarly, we have not outlawed child labour in modernised countries because it is unprofitable to firm owners, but because it is morally repugnant."

By coincidence then, here is something I happened to read last night in David Landes' masterful The Wealth and Poverty of Nations. Providing some afterthought on the industrialization of Japan and other countries (pp 381-383), Landes writes:

  The traditional account of Japan's successful and rapid industrialization rings with praise[...] It is a good, even edifying story. Yet one aspect of the Japanese achievement has not caught the attention of celebratory historians: the pain and labor that made it possible. The record of early industrialization is invariably one of hard work for low pay, to say nothing of exploitation. I use this last word, not in the Marxist sense of paying labor less than its product (how else would capital receive its reward?), but in the meaningful sense of compelling labor from people who cannot say no; so, from women and children, slaves and quasi-slaves (involuntary indentured labor). The literature of the British Industrial Revolution, for example, is full of tales of abuse[...]

  The most common ailment of these wretchedly unhappy children  [sent to work in the textile mills, coal mines and so on] was a nervous stomach. Small wonder that many fell victim to sexual predators and went on to prostitution. It seemed a promotion. 

  The high social costs of British industrialization reflect the shock of unpreparedness and the strange notion that wages and conditions of labor came from a voluntary agreement between free agents. Not until the British got over these illusions, in regard first to children, then to women, did they intervene in the work place and introduce protected labor legislation. [...]

  The European countries that followed England on the path of modern industry had their own labor problems and scandals, though less serious, largely because they had had warning and were able to introduce protections by anticipation.

Remember, this from arguably the foremost economic historian of recent times and in a book that was, among other things, praised for "unashamedly bang[ing] the drum for the liberal ideals of freedom, hard work and open markets" by the FT and a score of other reviewers. Your dyed-in-red, protectionist, trade-unionist Landes is not. (His snipe at the Marxist conception of "exploitation" direct evidence of this.) Yet his views on the dangers of unfettered industrialism (capitalism?) are laid out quite succinctly above. Like him, I believe that history clearly shows there to be asymmetries of power and information in economic relationships which warrant the protection of certain parts of our society.

"But the one on the left looks happy!"

As an afterthought on the paragraph highlighted above ("the strange notion that wages and the conditions of labor came from a voluntary agreement between free agents"), this is surely analogous to cases of domestic violence. We don't stand idly by while women (or men) suffer abuse at the hands of their partners on the flimsy defense that they are engaged in a relationship of their own accord. Instead, we actively support them through protective structures (legal and police enforcement) that are decided upon and borne by society as a whole because that is the only morally just course of action.

2010 ties for hottest year on record

There or thereabouts.

Just saying.

PS - As for the floods in Australia, Brazil and elsewhere... I believe that those are the result of La Niña. I find it as frustrating as the next man to see any and every environmental - or even social - problem simply shoehorned into a climate change  "angle". (E.g. See towards the end of this post.) However, extreme weather events are among the most worrisome aspects of the big CC and, if anything, these tragic events show up our limitations in adapting or coping with irregular (violent and nonviolent) natural phenomena.

Chirp of the Day - Australia

A Norwegian friend of mine was telling me about the first time he ever traveled outside of Europe, which happened to be a gap-year stint in Australia after finishing high school. Not being completely sure of his English at that stage, he was feeling pretty nervous about the prospects of spending such an extended period of time in a remote foreign country. All this wasn't helped by the fact that he had, for some reason, decided to try and sneak some Norwegian meats inside his luggage. (If you haven't been to that part of the world before, I can promise you that no-one is more strict when it comes bringing agricultural produce into their territory and monitoring their borders in general.)

Anyway, he was fairly bricking himself while lining up to face the fierce-looking border official in the NOTHING TO DECLARE queue. Fortunately for him, fate had deemed to place a "pissed Kiwi" (his words) in front of him, which ultimately took all the pressure off. After going through the normal inquiries (purpose of visit, accommodation, etc), the officer got to the money question:

AUSSIE BORDER OFFICIAL: "Do you have a criminal record?"

DRUNK KIWI: "Ahh mate, I didn't know you still needed one to get in here!"

Very good. 

Reminds me of a great Barmy Army chant [sung to the tune of "She'll Be Coming 'Round The Mountain"] I heard while watching the England cricket team take on Australia* in Australia: "If Your Granddad Was Deported Clap Your Hands!" 

"Meh"

* I had actually meant to post this little story immediately in the wake of England's Ashes victory over Australia - just to rub it in - but got a little sidetracked and then felt bad having another go at our friends Down Under, because of the tragic floods in Queensland. Now, with the water starting to recede and the recovery operation having kicked into gear, perhaps my timing is not too crass. If you feel otherwise, remember: It's just a bit of humour!

Meat and Veg(etarianism)

UPDATE: I stumbled upon this George Monbiot post today (Jan 24) from a few months back, discussing what seems to be a very interesting book by one Simon Fairlie: "Meat - A benign Extravagance". Fairlie apparently skewers a number of "green" myths concerning the environmental damage wrought by meat production; although he advocates a much different farming system than the one we currently have to prevent the environmental degradation and suffering that does occur from livestock farming. To his credit, Monbiot (an already admirable environmentalist and journalist in many ways) recants his previous views in light of Fairlie's evidence and research. Read the post; there's much food for thought (he he sorry) therein.

===

Something's been cropping up quite often in conversations that I've been having lately.

Vegetarianism.

Me? I eat lots of meat. Too much, I fear, and have recently endeavored to cut back on red meat in particular. Now, "Stickman" isn't a particularly ironic moniker so I guess you could say I'm doing okay in the weightiness department. However, there is good evidence to suggest that large portions of Western society consume more meat than is strictly healthy. Part of the problem is that we humans are outgrowing our biology, as we now consume certain foodstuffs in much greater quantities than the natural settings of our ancestors ever allowed. (More on that below.) I thus find myself sympathizing with a several pro-vegetarian arguments, although I don't think I'll be going full veggie any time soon myself. Still, a number of my friends have embraced the non-meat path and my discussions with them, as well as fellow carnivores like myself, seem worth jotting down.

Naughty.

To start, it seems biologically obvious to me that we are "meant" to eat meat. Humans are essentially the perfect omnivore. Our teeth are a nice mix of flat molars, premolars, incisors, etc that allow us to easily process both plant and animal material. Similarly, our digestive tract (intestines and all) is adapted to process and absorb the nutrients from all ends of the spectrum. Not only have our bodies evolved to deal happily with everything from rump steak to salad leaves, we actually require certain vitamins and nutrients that are only available in one food group or the other. In other words, we have to source some food from animals (e.g. certain B-vitamin complexes) and some from plant matter.

Can't we just talk about this?!

Of course, that last sentence only holds true in completely natural surroundings and, as I said earlier, I see the vegetarian debate is an example of us "outgrowing" our biology. The irony is that the consumption of meat played a pivotal role in the development of the human brain and broader civilization. The higher protein and calorific content of a partly carnivorous diet provides sustenance over longer periods, which among many other things allowed us time to plan and engage in other activities besides living literally hand-to-mouth. Perhaps most importantly, it fostered coordinated group action and communication between individuals, which were critical to tackling your average woolly mammoth.[*] And, indeed, doing pretty anything of substance ever since.

Getting back to what is "natural", I guess you could say that this is now a largely redundant concept. We don't live very naturally at all anymore... And, of course, this is part of the problem as we now have instant access to quantities of meat (and sugar and fat) that we would never have come across in such abundance in nature. Witness the rising trend in developed nations where more people are dying from diseases of lifestyle opulence and excess (e.g. heart attacks and obesity) than infectious diseases. The flip-side to this is that we are having to consciously curb our intake of certain foodstuffs that our bodies crave; something that I don't imagine has precedent for most of human history. The other aspect of having "overcome" nature in this way is that we now have all manner of supplements and products to make fully-fledged vegetarianism a viable and healthy lifestyle alternative. Or so I'm told.

And then you have to unpack the more tricky component of our evolved biological selves: Ethics.[**] While our physiology and human history provide very good reasons to dismiss the notion that we should be herbivores, there's no denying the strong moral compulsion that many people feel when it comes to killing animals. While it's hard to defend someone's distaste for hunting when they eat meat that comes all conveniently packaged from the supermarket, I do think that decent people can agree the suffering endured by many farm animals is abominable. (Watch Food Inc or the even more disturbing Earthlings - which you can see in its entirety online - if you're feeling up to it. On a quasi-related subject I plan to write something on GM crops sometime soon... I'm actually generally pro them for reasons that I shall explain.) It's not too much of stretch going from anti-cruelty to believing that we should not kill animals at all, although I do make this jump myself. Visiting my family in England (including my aunt who has been a vegetarian for decades), my cousin had an interesting thought. She mentioned how she'd been discussing vegetarianism with a friend and they'd pondered whether eating meat might suddenly become totally unacceptable in much the same way that slavery did. I think that this idea has more to it than face value, because it shows how dramatically  we can shift away from a norm that has been socially acceptable for the majority all of human history.

Another twist in the ethical tale is related to matters of resource use, loss of biodiversity to farming and (dum dum daaaa) climate change. I have several friends that have completely or to a large extent cut back on meat, because of such reasons. I admire the strength of their convictions, but can only see the general trend in meat consumption moving one way... particularly with the increased wealth and rising demand for higher protein, Western-style diets coming out of developing nations.

I'm about done here, but I thought I'd leave you with a final, macare thought. I'm not sure where this thought first came to me -- likely some low budget sci-fi film -- but I sometimes have this vision of aliens feasting around a dinner table in much the same way that we do in polite society. Except, rather than roast pork or skewered beef, the meal on display is a grisly composition of human parts. The fleeting image of an exposed human rib-cage ready for the offing might not be enough to permanently put me off my food, but it does cause me to take a depressing second thought about that rack of lamb I love so much.

Right, that's it for now. I'm off to lunch.

o-[O< 

(fat full Stickman)

[*] This is a major theme in Jacob Bronowksi's The Ascent of Man, which although dated in some minor aspects, is still a fantastic read. The other great book detailing the role of diet in driving civilization is, of course, Guns, Germs and Steel by Jared Diamond.

[**] I know many would contend that morality stems directly from a higher power. I would encourage you to view this post if you're interested in that debate.

New Year's Resolutions and Literary snobs

New Year's resolutions? 

Not a fan.

Well, I say that but I'll probably try and harden my resolve in finishing up some things I've been putting off for a while. Speaking of which...

Literary snobs.

I'm probably one.

Okay, okay... Definitely one. I cannot help but snigger loudly into my embroidered handkerchief whenever someone mentions the words "Code" and "Da Vinci" (not necessarily in that order) in any positive context. Similarly, other books will invoke a feeling of disdain even though I've never actually read them and they might even be rather good. (E.g. For some reason or another, Shantaram falls into this category.) It's not something I'm necessarily proud of - or perhaps even justified in feeling - but it's a hard trait to shake nonetheless.

Anyway, I have a competition going with a  friend, Bloomsboy - who I mentioned here and who's quite possibly more snobbish than me - whereby we are meant to read six epic novels. I can't remember exactly where we hit upon the idea, but it was some time while we were traveling through Africa together (which I might write more about later) and comparing the size of our literary dongs. Figuratively speaking, of course. 

The criteria are simple. The chosen books shall be a) Very long, and b) Widely considered as "classics". Our challenge thus involves the following:

1) Anna Karenina - Leo Tolstoy

2) War and Peace - ibid

3) Don Quixote - Cervantes

4) Ulysses - James Joyce

5) Moby-Dick - Herman Melville

6) In Search of Lost Time - Marcel Proust (This was a somewhat late addition to the party and I don't think we've quite decided on how many volumes we're supposed to cover. I'm hoping it's not the whole bloody thing...)

Ingeniously enough, the winner will be decided the old navy way: First guy to die, loses! is simply the person who completes all six first. So far the score is tied at one-one. I'm down War and Peace, while Bloomsboy has got Ulysses under the belt. To be honest, I read W&P some time before our actual bet started. Still, I certainly regard it as one of the best books I've ever read and, as such, I'm looking forward to Anna K. It doesn't hurt that I've yet to hear a bad review of it... Much the same for Don Quixote. I'm less enthusiastic about numbers 4 through 6. Apparently Moby-Dick contains 90-page descriptions of whaling ships... Zzzzzzzzz. 

The aim had been to get them done before I hit the big three zero, but at, uh, current rates that might be a bit on the tight side. (The seven volumes of ISOLT alone come to a million and half words!)

I was wounded to learn that the GF is backing Bloomsboy for this title. True, he is an English major and I'm a lowly economics grad. However, you underestimate my fear of losing!

May the best snob win.

o-[-<

PS - Oh, happy 2011 everyone :)

Quote of the Day - Idiots

"Never argue with an idiot. He'll drag you down to his level and beat you with experience."

Not sure of the original source, but spotted this pithy little piece of advice on a friend's facebook status...

Leaving Europe in a few hours

The taxi arrives in three and a half hours to be precise... And it's just gone midnight now, so you can guess how I'm going to be feeling after the 16-odd hours travelling time. Still, really looking forward to getting to SA and seeing everyone.

I plan to write some musings on my experiences here once I get settled in at home and soak up some southern hemisphere sun (and reasonably priced drinks). While that will have to wait, here's something I rather enjoyed from my time here in the Nordics. Great vocalist and really enjoy this live version...

See you soon.
o-[-<

 

UPDATE: Getting home turned out to be an absolute disaster. Flights cancelled and then rerouted. End result: Total travel time increased to 36 hours via four cities. To top it all off, our luggage was lost. Managed to get it back a few days later, but hardly the ideal start!

Merry Engerland

Exams all done and dusted :)

Went reasonably well. Some time issues for two of them, but that's nothing uncommon for me to be honest...

Anyway, just a quick update as I'm currently in England for a 10 day holiday visiting F&Fs before heading down south for the summer. I thought I might have left the cold behind in the Nordics, but fook me it's chilly over here. Seriously, "this" [-] cold. Snow everywhere and apparently all the airports have been shut. Luckily still have a few days before we're scheduled to  fly back...

In Hampshire right now with my aunt and uncle, but going up to Cambridge tomorrow to "partner" a friend for his College's Christmas Dinner. Got a couple mates studying there at the moment that I'm keen to catch up with and should be a good night. I also can't wait to try on my heels show off my 'tache. (Yes, I eventually ha-ha-hardened the hell up and partook in Movember. We actually got a nice little group at school so I wasn't stuck on a Han Solo mission this time... Anyway, I ended up grooming a real steamer. Think Errol Flynn or Zorro.)

En garde!

After Cambridge, I'm back to London to meet up with some other friends. Not too many of my old crew left standing after the great financial cull, but I have some great memories of my time in the city. Much of which was associated with music; for instance this one:

A little cheesy (read: obvious), I'll freely admit. Still. I personally think this Radio 1 'Live Lounge' version of "Fans" blows the album version out the water.

On the subject of Kings of Leon... WTF was happening with their new album? Perhaps it requires more time, but I thought it was pretty much rubbish upon first listen. Or, as friend told me he saw tweeted the other day: 

"KOL - grow back your beards and divorce your last two albums. You're stealing fans from 30 seconds to mars" 

The painful truth...