Falsehoods programmers believe about economics (2016)
exple.tive.org
exple.tive.org
Falsehoods about phone numbers was recently on HN [0], and I liked how it came with examples. Then it's possible to have a meaningful discussion about each one, and if it is something we need to handle. For instance Phone numbers are always written in ASCII, gives an example where that isn't true. Then we can discuss if that case is meaningful for us to support or not.
I cannot build a system that will handle all possible names, emails, addresses, timesystems, currencies, locales or whatnot there is a falsehood article about. So when writing an article like this, if you want it to have impact please explain the point of each bullet.
While falsehood lists that cover emails, phone numbers or CSV files are basically just a much better specification than the one you were following initially, this falsehood list works on a different level. You can't simply go through all the items and make sure your code covers each one. You're supposed to read it and come to a conclusion that economics is less similar to mathematics and more similar to sociology. That it's not a set of rational rules but something inherently more complex and chaotic.
It can still have a huge effect on your code - not in the form of additional corner cases you need to cover, but as questions you may ask yourself about the purpose and morality of your work. At least that's how I understand it.
The phone number example they gave works very well for demonstrating misconceptions. Economics doesn't work as well for that, for precisely the reason you stated about it being partly sociological. In fact it's sociopolitical, which complicates matters further.
Because of the higher pay in our field, many programmers/tech people have the luxury of believing in simplistic economic models, which largely fall back on some economic version of the just-world fallacy(https://en.wikipedia.org/wiki/Just-world_hypothesis). Their most salient datapoint (themselves) fits perfectly into their view, so why bother to complicate it?
That having been said, I'd love to hear/read more on how the conversation can be moved forward with people who stubbornly hold the beliefs mentioned here.
There wouldn't be a whole field of well-meaning professionals looking into these matters if it were this simple.
I think this list basically an exhortation to think twice before swaggering into a forum thread citing "basic economics" like you've got everything figured out. It's a reminder that things are more complicated.
1. If I think economics is a simple junk science I won't be inclined to change my mind, because there's no explanation here.
2. If I already think economics is a complex field I'll think this list utterly sucks the nuance out of it.
In economics even something as fundamental as wealth is not conserved (that's the whole wonderment of nonzero-sum games and interactions in general). That means that predictions are very sensitive to the dynamics one presumes to apply, and the practitioner has no amazing bookkeeping sleights-of-hand to resort to to verify that which one is predicting is defensible.
We are thousands of times wealthier than ancient goat herders and yet do we have ten thousand goats each? No. Wealth has many forms. A full course of antibiotics to treat Hansen's disease would be incredibly valueable miracle cure in medieval times and anyone capable of producing them effectively a miracle worker. A smartphone's in the 1940s is effectively alien nanotech to them.
No, it won't. However, my experience has been that programmers, for some reason, are much more likely to engage in such behavior. They wade in to a discussion on something technically complex, yet completely out of their wheelhouse, clutching a few cherry-picked academic or pseudo-academic citations, which they then use to argue definitive conclusions on certain points they believe. Someone on this site once referred to discussions where people trade anecdotes on a contentious subject as "anecdote poker"; I would refer to this similar behavior as "citation poker".
I've heard that phenomenon referred to as the "engineer's disease."
I can't easily find any great sources about the term or concept, but these will do:
https://ask.metafilter.com/297591/Origin-of-the-term-Enginee...
> November 2003 comment on Crooked Timber (by MeFi's own Martin Wisse?): Engineer’s disease: where just because someone is a (self-proclaimed) expert in field, they think this makes them automatic experts on anything else. Usually people intelligent enough to see through “lies-to-children” [explanations], but not intelligent enough to understand there’s more to their new area of expertise than that. For [some] reason, engineers are particularly susceptible to it.
https://www.metafilter.com/160644/Treating-the-world-as-soft...
https://idlewords.com/talks/sase_panel.htm:
> As computer programmers, our formative intellectual experience is working with deterministic systems that have been designed by other human beings. These can be very complex, but the complexity is not the kind we find in the natural world. It is ultimately always tractable. Find the right abstractions, and the puzzle box opens before you.
> The feeling of competence, control and delight in discovering a clever twist that solves a difficult problem is what makes being a computer programmer sometimes enjoyable.
> But as anyone who's worked with tech people knows, this intellectual background can also lead to arrogance. People who excel at software design become convinced that they have a unique ability to understand any kind of system at all, from first principles, without prior training, thanks to their superior powers of analysis. Success in the artificially constructed world of software design promotes a dangerous confidence.
"People are rational actors." should be number 1 and most of the other points are redundant. Much of this is just behavioral economics à la Kahneman and Tversky.
The only economist I've heard of coming close to creating an all encompassing model is Steve Keen. It was through his work on debt cycles that he called the GFC before it occured.
https://hackernoon.com/debunking-economics-and-why-bitcoin-w...
I disagree. The first three points are the most important because they reflect the deepest false assumptions that are most often on display when someone brings up economics around here. To caricature the attitude, imagine someone swaggering in citing "basic supply and demand" to justify some socially harmful action or outcome by saying the laws of physics say a corporation must act that way.
I think the first three points get to the main body of the actual errors many people make in the exact way they make them: overconfidence in their understanding and in their ability to be neutral.
> Information symmetry exists.
> People are rational actors.
Programmers? Aren't they the falsehoods an ideal theoretical economic model believes about the economy?
the posting from back then, for ref: https://news.ycombinator.com/item?id=12556983
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Being "too useful to destroy" can give an oligarchic or priesthood role. It need not be tangible and is in fact better if it is not because killing them will destroy it instead of stealing it. While thugs could kill a drug cook keeping him alive killing him and taking his drugs would get something of value. Killing an ascetic would get nothing of value - which might be an origin of vows of poverty sticking around.
A "shaman" or who people follow because he can treat illnesses better than nothing and/or has enough of an understanding to avoid diseases has real power even if his etiology is wrong or incomplete.
A belief that boiling water drives out evil spirits (bacteria) or that malaria is caused by evil swamp spirits is somewhat accurate but very imprecise as metaphors with some physical truth. The last especially sounds absurd but lacking microscopy and thus germ theory but makes sense thinking about it. Absent microbiology what else describes invisible forces that can make someone sicken and die and hails from the swamp? While clearly inferior practicallyvl to a more in depth scientific framework which allows for things like a very expensive malaria vaccine derived from dissected mosquitoes literal "spirits" as a framework is outdated but gets some fundamentals of survival right - boil water or you'll be sorry and avoid swamps and mosquitoes.
Paperclip maximizers technically qualify - their goal isn't for them to be useful or even self-preservation but to get the paperclip number as high as possible.
Where you get political, subjective, and tend to fall into the next layer of oversimplification is when you use these things as premises... "People are not rational economic actors, therefore..." That's when you get in trouble. (Actually, that's one of my favorites... "People are not rational economic actors, therefore other people's irrational-by-definition choices must be substituted for the original irrational choices." What label you stick on the "other people" doesn't change the fundamental nature of the proposition.)
I'd also add something like "economic jargon does not exist and can be ignored". Both "rational actor" and "efficient market" are often conflated to mean something more like "intelligent and moral actor" and "moral market", neither of which work. What they mean in economics is a more mathematical idea, and is related to the plain English sense of the word, but definitely not strongly enough related that you can substitute the plain English meaning of the word and then proceed to do logic on it, let alone substitute entirely different concepts.
The Efficient Market Hypothesis has consistently held true, especially in the long term and with respect to indexes and mutual funds. Some of the implications and conclusions drawn from the hypothesis are audacious, but the hypothesis itself is sound. https://www.hindawi.com/journals/ecri/2013/238253/ http://www.ccsenet.org/journal/index.php/ijsp/article/view/1...
Price is absolutely a indication of cost and/or value, at the time of exchange.
Rational Choice Theory is empirically sound https://www.annualreviews.org/doi/abs/10.1146/annurev-soc-07... https://journals.sagepub.com/doi/10.1177/0951692899011002001
Although Classical Economics is empirically shakey is some respects, Neoclassical are not
I don't think that's correct. Economic theories make statements about the distribution of resources, which is an intensely moral question. They also tend to be tightly wrapped up with political ideology, which makes them even more moral.
Pointing out that the true father may have implications for a family and society but that doesn't make genetics a moral question.
When programmers talk about economics, they're pretty much always talking about the implications and political ideologies that surround them, not the abstract nuances of some theory for its own sake.
That's an extraordinarily strong claim that requires some extraordinary evidence and exposition. When economics intersects with politics, business, laymen, or reality I think it only has pretensions of objectivity.
[1] Mostly. I could write a whole "falsehoods programmers believe about programming" about the cases where that model doesn't apply.
[2] Again, mostly. Updates take time, old versions persist, etc.
[3] A few, I'm sure, but that doesn't affect the point.
Also, biology and biomedicine is just as bad, so don't act like like the super-smart physical scientists are somehow superior. Rigor in social sciences is difficult because there are no solid axioms as there are in physics or math to guide hypotheses.
Folks with your type of opinions act like there are such axioms, but that is just simply wrong. This kind of thinking is exactly what I was talking about in my above comment.
No, I agree with you that there are no such axioms which is why the value of social "science" is near zero.
"Economics is morally neutral."
Of course they are. Unless the author is implying that they are some sort of moral arbiter or religious I'm not sure how they would judge this anyway.
"Economics is racially- and gender-neutral."
Citation needed.
"The efficient markets hypothesis is true."
By all means try to outsmart the market, then come back to us and report your results.
You do know there's a difference between economics and finance, don't you? You've just illustrated the falsehood of wealth being a measure of worth.
> By all means try to outsmart the market
Even the very strongest forms of EMH allow for arbitrage, and that simplistic fantasy is no longer what most people mean by EMH. More common/reasonable forms of EMH also allow for information delay and asymmetry, so that being able to beat the market has little to do with market "efficiency" as economists use the term.
This is a terrible heuristic for deciding if someone understands economics. Economics is far more nuanced than that, and it's very possible to be able to show something non-constructively.
That this person can't compile a convincing list with evidence just further shows that they aren't worth listening to.
It's perfectly fine to point out its shortcomings, but dismissing it entirely is to throw the proverbial baby out with the bathwater.
The market is generally efficient with pockets of inefficiency due to the cost of information.
From the Wikipedia article on the Grossman-Stiglitz paradox[0], "because information is costly, prices cannot perfectly reflect the information which is available, since if it did, those who spent resources to obtain it would receive no compensation, leading to the conclusion that an informationally efficient market is impossible." (Emphasis mine)
"The rational efficient markets formulation recognizes that investors will not rationally incur the expenses of gathering information unless they expect to be rewarded by higher gross returns compared with the free alternative of accepting the market price. Furthermore, modern theorists recognize that when intrinsic value is difficult to determine, as is the case of common stock, and when trading costs exist, even further room exists for price to diverge from value"
__________
That's a terrible analogy. Gravity works exactly the same way except in some extremely exotic conditions that none of us will ever experience. The "pockets of inefficiency" in watered-down EMH are so pervasive that we should really be talking about "pockets of efficiency" instead. The physics analogy to EMH would be something like magnetism - a phenomenon that is undoubtedly real and useful, but not really all that common.