Friday, August 4, 2017

Agreeing and Disagreeing with Kling on Method

by Levi Russell
I recently ran across a couple of interesting posts on Arnold Kling's blog. One post I agree with wholeheartedly. In the other, I think Kling misses an important bit of information.

Post #1
Consider two rationales for building models:

(a) Build a model in order to clarify the signal by filtering out the noise in a complex causal system. This is a knowledge-seeking endeavor.

(b) Build a model in order to be able to say, “In setting X, I can show how you get outcome Y.” This is just playing a game.


Some remarks:
1. I am pretty sure that economists are unique in their attachment to model-building as a game. My sense is that in other disciplines, including those that study human behavior and those that use non-mathematical models, researchers are more likely to be building models in order to try to separate the signal from the noise in a complex causal system.
 As always, I recommend reading the rest of the post.

Post #2
From a commenter:
I’d ask why self-interest needs to be manifested in overtly economic terms.
If you define self-interest broadly enough, then the statement “people pursue their self-interest” becomes irrefutable. And if you cannot refute it, then it is just an empty tautology.
I would much prefer to work with refutable claims than with empty tautologies.
So I continue to treat public choice theory as saying that people pursue economic gain in the political process. With that definition, public choice theory is often wrong, but at least it can be usefully right.
Here's my comment on the post:

The important distinction is between a tautology and an empty tautology.
Much of geometry is tautologous. Does that mean geometry is empty of insight? Certainly not.
It may be tautologous to say that “people prefer their own self interest” where “their own self interest” is whatever they subjectively desire, but it is certainly useful. Focusing on the subjectivity of costs and benefits dramatically increases economists’ ability to understand human behavior. Defining self interest narrowly, such that only objective costs and benefits are considered relevant is actually a step backward, even if it is more consistent with, say, the methods of physicists.

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