I’ve been thinking about what economic growth will look like in 2021, partly for work and partly for Good Judgment’s forecasting tournament. One question within that is how much lockdowns affect total consumer spending. Tracktherecovery.org makes it easy to explore this question. That chart shows consumer spending and time spent outside the home for Americans, …
Author Archives: Walter
Innovation and safety nets
Joseph Henrich in The WEIRDest People in the World: Such broader and stronger safety nets would have sharpened the population’s cognitive and social skills on average. These psychological effects, along with the greater independence from families and churches that such insurance gives individuals, help explain why stronger safety nets promote more innovation, both in preindustrial …
The psychology of competition
From anthropologist Joseph Henrich’s recent book The WEIRDest People In the World: How the West Became Psychologically Peculiar and Particularly Prosperous: That differing effects of intergroup vs. within-group competition help us understand why “competition” has both positive and negative connotations. Unregulated and unmonitored, firms facing intense intergroup competition will start violently sabotaging each other while …
Only empirical evidence counts
Michael Stevens, a philosopher, writing at Aeon: Indeed, I conjecture, modern science arose in the 17th century, in the course of the so-called Scientific Revolution, precisely because it stumbled upon the extraordinary motivating power of ‘only empirical evidence counts’ – a story I tell in my book The Knowledge Machine (2020). For thousands of years, …
What “evidence-based” thinking leaves out
A few loosely related items I was reading today… Zeynep Tufekci makes the case against election forecasts, and says this: This is where weather and electoral forecasts start to differ. For weather, we have fundamentals — advanced science on how atmospheric dynamics work — and years of detailed, day-by-day, even hour-by-hour data from a vast …
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Judgment and wisdom
Two definitions of judgment… First, from psychology: The term judgment refers to the cognitive aspects of our decision-making process. Judgment in Managerial Decision Making, Bazerman and Moore And from economics: All human activities can be described by five high-level components: data, prediction, judgment, action, and outcomes. For example, a visit to the doctor in response …
Piketty on models
To summarize: models should be used with parsimony–that is, only when we really need them–and their role should not [be] exaggerated. Models can be useful to organize the data and clarify simple logical relations between basic concepts; but they cannot replace the historical narrative, which in my view must be the real core of the …
The empiricist shock
I’ve been posting a bit lately about data and theory, and the other week I excerpted the Stanford Encyclopedia of Philosophy’s entry on big data and science. I want to return to that topic through the lens of economics. In short, the proliferation of data can be thought of as an economic shock and basic …
From fact to law
Benjamin Peirce (father of Charles Sanders Peirce) on induction, deduction, and the role of math in the scientific process: Observation supplies fact. Induction ascends from fact to law. Deduction, by applying the pure logic of mathematics, reverses the process and descends from law to fact. The facts of observation are liable to the uncertainties and …
More on data and theory
Past posts here and here. First up, “A problem in theory,” an essay from 2019 blaming the replication crisis in psychology research largely on lack of theory: The replication crisis facing the psychological sciences is widely regarded as rooted in methodological or statistical shortcomings. We argue that a large part of the problem is the …
