Krugman: The argument from personal incredulity

[pampango]

I’ve written about this before, it turns out, but doing some of the media rounds I found myself thinking once again about a favorite phrase of Richard Dawkin’s: the “argument from personal incredulity”.

Dawkins uses it to refer to people who say “I just can’t believe that something as intricate as an eye can evolve through random changes.” The point, of course, is that our intuition has a hard time dealing both with the idea of selection and the sheer length of time evolution has to do its work, so your personal feeling that something isn’t plausible is a very bad guide.

In macroeconomics, the equivalent would be people who “just can’t believe” that borrowing more can help the economy, or that a fall in wages would actually reduce employment. What are they missing?

Mainly, I think, the closed-loop nature of macro. Our intuitions about how business-y stuff works come from businesses or households selling their goods or labor to an external market. In such situations spending less is a sure-fire way to reduce debt, cutting your price or your wage demand is a sure-fire way to sell more.

But in the economy as a whole, your spending is my income and vice versa; my wage matters only in comparison to your wage; and so on. This changes everything, which is why we have paradoxes of thrift and flexibility.

Of course, that’s why we do economic modeling: precisely to scope out the areas where personal incredulity is a very bad guide to affairs.

I get a lot of mail from people who are more or less blind with rage at the mere thought that anyone could say the things I do. I’m a witch-doctor, they cry; I must be deliberately lying; nobody could possibly believe the things I say. Actually, though, I’m just an economist who is willing to take it seriously when hard thinking suggests that the usual intuition is wrong under current conditions.

And the past few years have been a triumph for that kind of hard thinking! Lots of people declared that they “just couldn’t believe” that huge budget deficits wouldn’t drive up interest rates, that “printing” lots of money wouldn’t cause runaway inflation, that slashing government spending wouldn’t have a positive effect on confidence. We know how that has turned out.

http://krugman.blogs.nytimes.com/2012/05/05/the-incredulity-problem/

I guess we're all guilty at times of thinking that some policy we don't agree with "can't work" or "doesn't make sense" based on what we know and understand about the way the world works. Most of us (not republicans, of course ) are willing to reconsider what "can't work" when evidence shows that it does.

In Krugman's view the more complicated the issue (like how "something as intricate as an eye can evolve through random changes" or global warming or how deficit spending affects an economy) the more likely we are to discount facts and go with our gut feeling (or just ignore the facts and lie if one is a republican).

[snagglepuss]

1. K & R

[DirkGently]

2. Appeals to simplistic metaphors & "common sense" often signal a problem.

Creationists feel intuitively that the only explanation for the universe that "makes sense" is that a deity "designed" everything. Of course, that doesn't really make sense at all; it just appeals to a child-like view of things. When you're confronted with something hopelessly complicated, "God did it" stands in for reason. After a while it feels like it IS reason.

Same goes for Republicans (and sadly, the occasional Democrat) talking about the economy in terms of everyone "tightening their belts" or analogizing the national or world economy to a family with money in the cookie jar or their favorite fallacy about how if you help someone, they'll be instantly demotivated to ever help themselves. It sounds vaguely like reason, but it isn't.

Things are complicated.

[chervilant]

6. hmm...

I often tell the religionists I encounter that I acknowledge there's a creative force in the universe, because--unarguably--the universe exists. However, I don't perceive said creative force as a bearded, be-robed, jealous, spiteful, judgmental, purposeful old white man, who 'sacrificed' his 'only begotten son' to 'save us from our sins.' I don't think that such a 'get out of jail free' card helps our species at all.

[eomer]

11. Where did the creative force come from?

The universe inarguably exists but that doesn't prove, to me, that a creative force exists. Because the existence of the creative force, by the same logic, would prove the existence of a predecessor creative force. And so on, ad infinitum, (turtles all the way down) an infinite series of creative forces that each proves its own predecessor.

The only way to avoid this infinite series is to conclude that something just is, without us being able to explain where it came from. And if we become convinced of that, then the best candidate for the thing that just is is the universe, since we can see that it is.

The competing theory of one creator that just is (with or without additional intermediary creators that were created by predecessors) solves no problem that's not more simply solved by the theory that the universe just is. So Occam's razor would tell us to prefer the simpler explanation that the universe just is, without needing to have come from some creative force.

[chervilant]

12. Occam's razor...

One of my fave concepts to convey to my math students--although, I do say it differently.

I acknowledge the simplicity of perceiving the universe as something that simply exists. I suppose it's the artist in me--the one who embraced Abraham Maslow's work while all my peers adored Freud--that recognizes our species' need to create. Maslow asserted that our need to create is as essential as our need to eat food, drink water, and seek shelter.

I might assert that a creative force manifested this universe, but I don't assign purpose to such a force. Nor do I feel the need to identify the 'beginning' of the universe, OR the possible 'forces' that brought it into being.

[eomer]

13. Occam's Razor, according to Wikipedia...

Occam's razor (also written as Ockham's razor, Latin lex parsimoniae) is the law of parsimony, economy or succinctness. It is a principle urging one to select among competing hypotheses that which makes the fewest assumptions and thereby offers the simplest explanation of the effect.

http://en.wikipedia.org/wiki/Occam's_razor

That seems like a good definition to me, and it seems the same as the one I used.

Some people explain Occam's Razor as saying that the simpler theory is more likely but that's definitely not the case. There is no way (Occam's or otherwise) to know whether the simpler or a more complex theory is more likely until you can show one of them is false, at which point Occam's isn't needed anymore.

I'd be interested in another way of explaining or thinking of it; this stuff is interesting to me.

[chervilant]

14. K.I.S.S.

Keep It Simple, Students! I call it the KISS principle, but I make sure to link it to Occam's Razor, so that I can bring in the history of the concept and its practical applicability in science and math (I'm a cross-curricular kinda gal). I remind my students that most of the algebra we'll be exploring is simple to solve, so if they find themselves struggling, they're likely making it harder than it has to be. In those instances, I am able to say "KISS, please!"

[panopeagenerosa]

3. The implications

of a political economy which uses fiat money either printed by the treasury or borrowed into existence (ours is a bit of both I think) has been deliberately obscured to prevent working people from attempting to participate in setting economic goals. Because that would be 'socialism' and that's real bad, 'mkay?

[bhikkhu]

4. Another example - try applying "common sense" to quantum mechanics

...which more or less determines and describes the underlying properties of the material world. The largest barrier to understanding the world at the smallest level (even more than the math involved) is common sense itself.

[Jim Lane]

8. A clearer example is geocentrism.

Common sense tells us that the Earth is stationary and at the center of the universe. Because that's common sense, it was in fact the dominant belief of humans through most of our history. It continued to be the belief of most people even after it was clearly shown to be wrong. Many years had to elapse before the geocentrists dwindled to being just a lunatic fringe.

For both quantum mechanics and scientific macroeconomics, however, the analogy may fail. I don't know if the public at large will ever accept those beliefs, the way that the Copernican revolution has finally won popular acceptance.

[drm604]

5. I think the biggest part of the problem

is the way so many people analogize the federal government to a household or a business. It is neither. If people could see that and really understand that, their intuition might shift.

In times of depression or recession, Government has to be the spender of last resort.

Sovereign debt is not credit card debt. Government spending is not daddy spending his paycheck on booze.

Dollars are economic tokens used to facilitate the flow of goods and services. When there aren't enough of those tokens in circulation to facilitate that flow, things get all gummed up. There are enough resources. There are enough workers. There aren't enough tokens.

If I'm willing to mow lawns, and my neighbors have lawns that need mowed, but they don't have the tokens necessary to pay me, then the lawns don't get mowed, I can't feed my children or pay the mortgage, etc. People want to engage in transactions, they want to produce, but they're unable to do so.

Some people have the idea that the answer is austerity - decreasing the number of dollars in circulation below the already insufficient amount. To me, that's not intuitive, it's counter- intuitive. Decreasing the number of circulating dollars will necessarily decrease the amount of economic activity, which is exactly the opposite of what needs to be done.

The answer is to increase the number of circulating dollars to an amount that will once again allow sufficient economic activity. The only entities that can do this are banks and the government. Banks won't make loans when they know that there's no money out there to pay them back. Government (actually, central government banks), on the other hand, can actually create money. Obviously, they have to do so intelligently and with restraint, but they can do it and sometimes they should.

[chervilant]

7. A brave man, Mr. Krugman...

The members of the Global Oligarchy are few in number (less the 370), yet they own and control more than 45% of the world's resources, including human resources.

The top 400 richest people are from Australia, Austria, Bahama, Belgium, Bermuda, Brazil, Chile, China, Colombia, Czech Republic, Denmark, England, Egypt, France, Germany, Hong Kong, India, Israel, Japan, Kazakhstan, Korea (South), Kuwait, Lebanon, Malaysia, Mexico, Monaco, Norway, Portugal, Russia, Saudi Arabia, Singapore, Sweden, Spain, Switzerland, Taiwan, Thailand, Turkey, Ukraine, United Arab Emirates, and Venezuela.

Despite the geographic diversity of the uber wealthy, their common socioeconomic status renders each a member of Richistan, whose citizenry enjoy the rarest of comestibles, the finest accommodations, the most expensive trinkets, and richly appointed exclusive residences. Denizens of Richistan travel in private jets, yachts, and limos; and they NEVER discuss their wealth.

Fully one-third of the wealthiest 400 are from the United States. Almost half of the 50 wealthiest people are from the United States. (Bill Gates was toppled from his rarefied status as the richest person on the planet in March of last year; replaced by Mexican mogul Carlos Slim Helu.)

When you contemplate this radical income inequity, fellow DUer, please understand viscerally, that you are NOT a member of this exclusive club, nor are you likely to EVER be. You are an insignificant member of the vast Hoi Polloi. The denizens of Richistan comprise a mere 5.28 X 10^(-6)% of our planet's population (using the current World Population figure of 7,011,411,436). For those of you who are math challenged (please, understand that you are likely to have had a less than optimal experience learning math, for a reason), that number is 0.0000000528 of our planet's population. The likelihood that you will join the ranks of the uber wealthy is in the same stratosphere of highly unlikely as the likelihood that you will win a lottery.

If anyone thinks that the decline of the US as the premier superpower Global Bully will have any real impact on the wealth and power of the uber wealthy, I have to offer you exclusive beach front property in Las Vegas.

[Rittermeister]

9. Growing up

I used to think that I was "rich" and self-identified with the upper class because my parents had been to grad school, we had a good house, new clothes, good food, etc. The distance between upper-middle and upper class is vast indeed.

[Egalitarian Thug]

10. K&R. n/t

[KG]

15. I can't believe I'm DURec'ing this.

[Odin2005]

16. Most people are concrete thinkers who can't underastand...

abstract models and similar things, personal daily experience is what matters to them. These people's conceptualization of what the federal budget should look like is based on them thinking governments are like households, they cannot concieve of it any differently.