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Economics

08:25 / 13.10.02

So, you have all these economists who analyse the economy according to more-or-less accurate models, data sets, predictors & whatever. Are they all leaving the "black economy" (drugs, etc) out of the picture? And if so, isn't that incredibly weird - that the government sets economic policy on the basis of a model of the economy that is obviously and openly seriously flawed, since the model is circumscribed by laws which do not apply to the reality? Kind of like issuing Ordnance Survey maps which do not contain any roads or place names which contain the letter "V"?

It occurs to me that this is quite a good model for Very Bad Science, actually.

And while I'm on the topic, I'll mention that I have never understood what "the economy" is.

We're The Great Old Ones Now

08:37 / 13.10.02

Some versions of the world seen through economics do indeed include chunks of criminal economics and so on. Some, as you observe, skate over it. Others skate environmental and human costs which have economic relevance. The problem is that many of them do not acknowledge the bits they skip, and just sign off on them with a little paragraph which says these things are not appropriate areas for economic study or whatever.

Gah.

12:39 / 13.10.02

So, you have all these economists who analyse the economy according to more-or-less accurate models, data sets, predictors & whatever.

Do you? It as become almost cliche in some science circles to rubbish mathematical economics. Economics stands as the main example of bad science which encodes the political belief systems of the powerful. I'm no expert and there is some vald knowledge out there, but I think it is fair to say that the mathematical models used are poor.

I'm not saying that economics is all bollocks. Economists who treat it more like history have a lot to say. Neither do I think it could never be a science. However, some would say that the obssession with equations does little more than hide the ignorance of the practitioners from the unwashed.

06:22 / 14.10.02

All economic models overlook something because they are generally designed to plot a few factors. If they are plotting black market supply versus black market demand, they won't overlook the black market, but if they are plotting the price of peaches versus the demand for cheese, the black market will probably be overlooked. Economics does not usually claim to be able to chart the entire global flow of money on two axes.

It also depends how data are gathered. If the black market is a significant influence and all the data is gathered from tax records, the model will be flawed.

Economics seems to be a study whose methods have outpaced its understanding. Many economic techniques are brilliant, but they are often put to poor use because of a lack of fundamental theory. And of course, it can be used to shifty political ends, but so can anything else.

One thing that strikes me about economics is that it is a more obvious science. Physics and biology can leave us thinking that the world really is like that...little spheres knocking into each other and cell walls made of rabbit heads. With economics, it's obvious that what you're doing is making a simplistic model of reality to explain something, rather than searching for "the real ultimate truth."