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description= 15 posts published by Lars Syll during August 2015;
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anation of a surprising fact is true this missing premise is i suggest true after all the epistemic modifier there is reason to suspect that weakens the claims considerably in particular there is reason to suspect that a is true can be true even though a is false if the missing premise is true then instances of the abductive scheme may be both deductively valid and sound ibe can be rescued in a similar way i even suggest a stronger epistemic modifier not there is reason to suspect that but rather there is reason to believe tentatively that or equivalently it is reasonable to believe tentatively that what results with the missing premise spelled out is it is reasonable to believe that the best available explanation of any fact is true f is a fact hypothesis h explains f no available competing hypothesis explains f as well as h does therefore it is reasonable to believe that h is true this scheme is valid and instances of it might well be sound inferences of this kind are employed in the common affairs of life in detective stories and in the sciences of course to establish that any such inference is sound the explanationist owes us an account of when a hypothesis explains a fact and of when one hypothesis explains a fact better than another hypothesis does if one hypothesis yields only a circular explanation and another does not the latter is better than the former if one hypothesis has been tested and refuted and another has not the latter is better than the former these are controversial issues to which i shall return but they are not the most controversial issue that concerns the major premise most philosophers think that the scheme is unsound because this major premise is false whatever account we can give of explanation and of when one explanation is better than another so let me assume that the explanationist can deliver on the promises just mentioned and focus on this major objection people object that the best available explanation might be false quite so and so what it goes without saying that any explanation might be false in the sense that it is not necessarily true it is absurd to suppose that the only things we can reasonably believe are necessary truths what if the best explanation not only might be false but actually is false can it ever be reasonable to believe a falsehood of course it can suppose van fraassen s mouse explanation is false that a mouse is not responsible for the scratching the patter of little feet and the disappearing cheese still it is reasonable to believe it given that it is our best explanation of those phenomena of course if we find out that the mouse explanation is false it is no longer reasonable to believe it but what we find out is that what we believed was wrong not that it was wrong or unreasonable for us to have believed it people object that being the best available explanation of a fact does not prove something to be true or even probable quite so and again so what the explanationist principle it is reasonable to believe that the best available explanation of any fact is true means that it is reasonable to believe or think true things that have not been shown to be true or probable more likely true than not i do appreciate when mainstream economists like brad make an effort at doing some methodological ontological epistemological reflection on this issue unfortunately although it s always interesting and thought provoking to read what brad has to say his arguments are too weak to warrant the negative stance on scientific realism and inference to the best explanation share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky unbiased econometric estimates forget it 30 aug 2015 at 20 42 posted in statistics econometrics comments off on unbiased econometric estimates forget it following our recent post on econometricians traditional privileging of unbiased estimates there were a bunch of comments echoing the challenge of teaching this topic as students as well as practitioners often seem to want the comfort of an absolute standard such as best linear unbiased estimate or whatever commenters also discussed the tradeoff between bias and variance and the idea that unbiased estimates can overfit the data i agree with all these things but i just wanted to raise one more point in realistic settings unbiased estimates simply don t exist in the real world we have nonrandom samples measurement error nonadditivity nonlinearity etc etc etc so forget about it we re living in the real world it s my impression that many practitioners in applied econometrics and statistics think of their estimation choice kinda like this 1 the unbiased estimate it s the safe choice maybe a bit boring and maybe not the most efficient use of the data but you can trust it and it gets the job done 2 a biased estimate something flashy maybe bayesian maybe not it might do better but it s risky in using the biased estimate you re stepping off base the more the bias the larger your lead and you might well get picked off if you take the choice above and combine it with the unofficial rule that statistical significance is taken as proof of correctness in econ this would also require demonstrating that the result holds under some alternative model specifications but p less than 05 is still key then you get the following decision rule a go with the safe unbiased estimate if it s statistically significant run some robustness checks and if the result doesn t go away stop b if you don t succeed with a you can try something fancier but if you do that everyone will know that you tried plan a and it didn t work so people won t trust your finding so in a sort of gresham s law all that remains is the unbiased estimate but hey it s safe conservative etc right and that s where the present post comes in my point is that the unbiased estimate does not exist there is no safe harbor just as we can never get our personal risks in life down to zero there is no such thing as unbiasedness and it s a good thing too recognition of this point frees us to do better things with our data right away andrew gelman share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky new keynesian models are not too simple they are just wrong 30 aug 2015 at 11 30 posted in economics 4 comments simon wren lewis has a nice post discussing paul romer s critique of macro in simon s words it is hard to get academic macroeconomists trained since the 1980s to address large scale keynesian models because they have been taught that these models and techniques are fatally flawed because of the lucas critique and identification problems but dsge models as a guide for policy are also fatally flawed because they are too simple the unique property that dsge models have is internal consistency take a dsge model and alter a few equations so that they fit the data much better and you have what could be called a structural econometric model it is internally inconsistent but because it fits the data better it may be a better guide for policy nope not too simple just wrong i disagree with simon nk models are not too simple they are simply wrong there are no frictions there is no calvo fairy there are simply persistent nominal beliefs period roger farmer yes indeed there really is something about the way macroeconomists construct their models nowadays that obviously doesn t sit right empirical evidence only plays a minor role in neoclassical mainstream economic theory where models largely function as a substitute for empirical evidence one might have hoped that humbled by the manifest failure of its theoretical pretences during the latest economic financial crisis the one sided almost religious insistence on axiomatic deductivist modeling as the only scientific activity worthy of pursuing in economics would give way to methodological pluralism based on ontological considerations rather than formalistic tractability that has so far not happened fortunately when you ve got tired of the kind of macroeconomic apologetics produced by new keynesian macroeconomists and other dsge modellers there still are some real keynesian macroeconomists to read one of them axel leijonhufvud writes for many years now the main alternative to real business cycle theory has been a somewhat loose cluster of models given the label of new keynesian theory new keynesians adhere on the whole to the same dsge modeling technology as rbc macroeconomists but differ in the extent to which they emphasise inflexibilities of prices or other contract terms as sources of shortterm adjustment problems in the economy the new keynesian label refers back to the rigid wages brand of keynesian theory of 40 or 50 years ago except for this stress on inflexibilities this brand of contemporary macroeconomic theory has basically nothing keynesian about it i conclude that dynamic stochastic general equilibrium theory has shown itself an intellectually bankrupt enterprise but this does not mean that we should revert to the old keynesian theory that preceded it or adopt the new keynesian theory that has tried to compete with it what we need to learn from keynes are about how to view our responsibilities and how to approach our subject if macroeconomic models no matter of what ilk build on microfoundational assumptions of representative actors rational expectations market clearing and equilibrium and we know that real people and markets cannot be expected to obey these assumptions the warrants for supposing that conclusions or hypothesis of causally relevant mechanisms or regularities can be bridged are obviously non justifiable incompatibility between actual behaviour and the behaviour in macroeconomic models building on representative actors and rational expectations microfoundations is not a symptom of irrationality it rather shows the futility of trying to represent real world target systems with models flagrantly at odds with reality a gadget is just a gadget and no matter how brilliantly silly dsge models you come up with they do not help us working with the fundamental issues of modern economies using dsge models only confirms robert gordon s dictum that today rigor competes with relevance in macroeconomic and monetary theory and in some lines of development macro and monetary theorists like many of their colleagues in micro theory seem to consider relevance to be more or less irrelevant share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky funeral ikos 30 aug 2015 at 09 31 posted in varia comments off on funeral ikos if thou hast shown mercy unto man o man that same mercy shall be shown thee there and if on an orphan thou hast shown compassion that same shall there deliver thee from want if in this life the naked thou hast clothed the same shall give thee shelter there and sing the psalm alleluia a life without the music of people like john tavener and arvo pärt would be unimaginable has macroeconomics really progressed 25 aug 2015 at 09 32 posted in economics 3 comments a typical dsge model has a key property that from my work seems wrong a good example is the model in galí and gertler 2007 in this model a positive price shock a cost push shock is explosive unless the fed raises the nominal interest rate more than the increase in the inflation rate in other words positive price shocks with the nominal interest rate held constant are expansionary because the real interest rate falls in my work however they are contractionary if there is a positive price shock like an oil price increase nominal wages lag output prices and so the real wage initially falls this has a negative effect on consumption in addition household real wealth falls because nominal asset prices don t initially rise as much as the price level this has a negative effect on consumption through a wealth effect there is little if any offset from lower real interest rates because households appear to respond more to nominal rates than to real rates positive price shocks are thus contractionary even if the fed keeps the nominal interest rate unchanged this property is important for a monetary authority in deciding how to respond to a positive price shock if the authority used the galí and gertler 2007 model it would likely raise the nominal interest rate too much thinking that the price shock is otherwise expansionary typical dsge models are thus likely to be misleading for guiding monetary policy if this key property of the models is wrong ray c fair share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky top universities preserves of bad economics 19 aug 2015 at 09 56 posted in economics comments off on top universities preserves of bad economics there are certainly some things that the top institutions offer which lower ranked once simply can t great buildings and history for starters to walk around cambridge to see its grand architecture and to feel drenched in its history is an amazing experience but the quality of the education you get at university depends very much on the individual people you are taught by and here university rankings are far from a perfect guide extremely gifted teachers and researchers can be at lower ranked universities for a multitude of reasons from personal preferences to sheer lock in a capable person can start in a lower ranked institution and find that the old boys network locks them out of the higher ranked ones in my own field of economics there is also a paradox at play in many ways the top universities have become preserves of bad economics both in content and in teaching quality while the best education in economics often comes from the lower ranked universities in fact there s a case to be made that the better the university is ranked the worse the education in economics will be and before you think i m just flogging my own wares here consider what the american economics association had to say about the way that economics education appeared to be headed in the usa back in 1991 the commission s fear is that graduate programs may be turning out a generation with too many idiots savants skilled in technique but innocent of real economic issues report of the commission on graduate education in economics american economic association 1991 the graduates of 1991 have become the university lecturers of today and thanks to them the trend the report identified at the graduate level has trickled down to undergraduate education at the so called leading universities steve keen forbes share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky things economists could learn from kids 18 aug 2015 at 19 26 posted in economics comments off on things economists could learn from kids kids somehow seem to...
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