Comment by zeteo | Hacker News Reader

Comment by zeteo | Hacker News Reader

>shut the fuck up and write some fucking code [links to argument that simply writing code is the best way to learn programming]

Way to confirm stereotypes that programmers are abrasive and narrow minded. Writing code may be a good way to learn programming; that doesn't mean it's ideal for discussing economics. For one thing, even for an expert the code takes longer to read than a baldly stated list of assumptions. And not everyone is a Python expert.

> if I’m wrong, either Python is computing the wrong answer, I got really unlucky [...] or one of my assumptions is wrong.

Umm no. This is a false alternative. How about a lot of assumptions being left out altogether. E.g. it's pretty clearly assumed that this doesn't affect economic growth, any benefits resulting from changed income inequality [1] are left out, inflationary effects do not exist etc. Any half serious student of economic modeling would have a field day picking out all the details routinely discussed in macroeconomics that this analysis is ignorant of.

And anyway who are these financial results even calculated for? If it's the government, then the expenses are fully incurred, but the "JK Rowling factor" is taxed at less than 100% to compensate. If it's the average person, you need to somehow factor in the benefit of reading Harry Potter!

[1] http://en.wikipedia.org/wiki/Gini_index

How about a lot of assumptions being left out altogether.

Yes, and you didn't even mention some of the biggest assumptions. For example, because Basic Income is something that you get even if you work, you'd be looking at a completely different salary structure. If you earn $2500 now and a Basic Income of $1500 were introduced, then you wouldn't suddenly earn $4000. You'd earn something like $1000 (plus or minus a factor due to the incidental massive changes to the economy from a Basic Income/Basic Job setup) on top of your Basic Income. That also means that taxation would have to work completely differently.

How that turns out is anybody's guess. With an emphasis on "guess". Code cannot magically substitute for the lack of the completeness of the underlying model, or for the research necessary to figure out the model. If you make stuff up from whole cloth and then bake it into code, it still remains stuff that's been made up from whole cloth. Running a program does not validate the underlying model.

>If you earn $2500 now and a Basic Income of $1500 were introduced, then you wouldn't suddenly earn $4000.

Yes, you would. That's what basic income is. If you make $1,000,000 per year and basic income of $10,000 is introduced, you now make $1,010,000 per year (before taxes).

>You'd earn something like $1000 (plus or minus a factor due to the incidental massive changes to the economy from a Basic Income/Basic Job setup) on top of your Basic Income.

This is similar to a completely different proposal called "guaranteed income" [1]. It's not what is being discussed by the OP.

[1] http://en.wikipedia.org/wiki/Basic_income#Difference_between...

Yes, you would. That's what basic income is. If you make $1,000,000 per year and basic income of $10,000 is introduced, you now make $1,010,000 per year (before taxes).

You're misunderstanding me here. I'm saying the exact opposite of what you think I'm saying. My point is that the market for wages would find a new, lower equilibrium to compensate for the new basic income. Since there's only a finite amount of money in the economy, and we can't magically give everybody that much more, it has to come from somewhere. A Basic Income approach would still have to redistribute the existing money, not create additional money (at least not on such a scale). The average total income (basic income + wages) would remain largely unchanged (modulo changes in tax structure, GDP growth or shrinkage, etc.).

You picked an unfortunate example. $2500 - $1500 = $1000, so it seemed like you were talking about a guaranteed income (http://en.wikipedia.org/wiki/Guaranteed_minimum_income).

"there's only a finite amount of money in the economy"

I'm not sure of your definition of money here- the Government prints currency all the time. If you mean goods and services, why can't we produce more? Are you saying that our current economic output is at it's maximum capacity?

I thought it was obvious that I was talking about money at some specific point in time? Especially since I also mentioned the option of creating money?

"I also mentioned the option of creating money"

So, you did. I missed that. So I guess my next question is why can't we just create more? The (increased) amount we would have to create would not be equal to the amount of the basic income, because we could eliminate most welfare programs and their associated overhead. On the surface, I don't see a problem with printing the rest.

I'm guessing what @rbehrends meant to say is that if you earn $2500/month and $1500/month basic income (unconditional) is introduced, the combination of inflationary pressure and downward salary pressure will result in you likely having a lower purchasing power than the assumed sum of the nominal values.

Personally, I don't believe that the impact is going to be quite as zero-sum. As recent stimulus attempts have shown, when you give poor people cash, they happily spend it, contributing to the economy. This in turn helps support greater production of goods and services. If the production capacity were fixed, then prices would jump. Instead, we are likely to see production jump more.

This is my personal belief. Anyone that claims to actually KNOW what will happen is fooling themselves. From my understanding, NO ONE has tried this at the scale being discussed.

Closest I think is Alaska Permanent Fund, but it's very small individual amounts (highest was 2008 in the amount of $2,069 for the year). Source: http://en.wikipedia.org/wiki/Alaska_Permanent_Fund

Compare that with $14,000-$30,000 being discussed and you see that we have no idea what such an infusion will do. It might usher in a new golden age of arts and sciences, or it might make us all lazy and inept. Personally, I'd rather give it a go, than sit and guess forever. Ending poverty forever just sounds too good to pass up.

I am an abrasive and "narrow minded" programmer - I believe in careful thought and analysis rather than mood affiliation and talking points. You might be surprised to discover that www.chrisstucchio.com represents my views and my views alone - I feel like you might have confused it with www.allprogrammerseverywhere.com. <- Snarky comment again represents me, not all programmers everywhere.

The article addresses what results are being calculated, and why other things you might wish to model are not included: "I’m going to focus on one specific aspect of it - a Cost/Benefit analysis studying the effects on the government budget, and [minus] the value of the work produced by people benefitting from the program. There are other aspects to consider, but I’m more interested in Monte Carlo than in politics, so I’m going to ignore those for the time being."

The ideology I'm pushing hard here is that you should carefully think and model things, rather than just reflexively saying "ooh complex, here are liberal/conservative talking points." I just picked on Basic Income specifically since I see a lot of discussions about it here (e.g. yesterday), and those discussions are just a mix of vapid and innumerate political talking points by people who clearly don't even have a mental model of the world.

If you want to build a better model, please do it. It will be vastly more useful than the normal discussion we see here on the topic of BI (and on many other such topics).

The only assumption that is missing is how much is a years worth od disability vs a years worth of BI. The reason I ask is that there is defintiely a population of unknown sized that is on disability that maybe should not be on it (NPR/Planet Money covered this)

http://apps.npr.org/unfit-for-work/

without knowing how many would switch from disability to BI and/or BJ - hard to say (I would say based on the disabilities described, like severe back pain so no more construction, more would be inclined to switch to BI and not BJ)

but you are not thinking hard, you are running silly worthless simulations and puffing up your own ego.

>you should carefully think and model things

I agree and that's basically my criticism of the article. The underlying economic model can be expressed in 2-3 arithmetic equations. It competes in a field where people routinely spend years to research very sophisticated models that nonetheless often prove inaccurate in the field [1].

To give an analogy, how would this sound as an argument to develop a business: "I assume that we can borrow 10M at 5% interest and pay it back over 5 years and that sales will increase 50% over that period. Here, I wrote some code and it turns out positive. I'm not interested in discussing the reasons for my sales forecast; if you have a different opinion, just write your own code." And we're not even talking about a business here, but the whole economy.

[1] http://en.wikipedia.org/wiki/Econometrics#Limitations_and_cr...

I didn't attempt to claim that my proposal was the economic state of the art. I claimed it was a jumping off point to illustrate how to do monte carlo modelling in the third paragraph.

If you showed me your business forecast, I would indeed tweak the model until I felt the probability distributions governing the assumptions covered all the plausible values. The net result would likely just be a very fat distribution that said nothing. And if so, that's useful information to have.

That's very nearly the result we get here - note that the Basic Job estimates range from $300B to $1.5T. See Scarmig's excellent comment which cuts to the heart of this matter.

> And if so, that's useful information to have.

> That's very nearly the result we get here - note that the Basic Job estimates range from $300B to $1.5T.

The problem I have with this post is this. It is NOT useful information to have.

What is that range based on? Nothing. Your guesses. There is no known probability of the real-life result lying between those values, therefore the values are meaningless.

I'm all for models, models are great, but they need data. There's no point in a model based on assumptions, it's basically just a smokescreen for making your opinion look like fact.

> I would indeed tweak the model until I felt the probability distributions governing the assumptions covered all the plausible values.

Basically you would tweak the model until the result matched your opinion. If you had data of 100 similar startups and you calculated the distributions of their loans and sales growths, THEN AND ONLY THEN is your model useful

edit: I'm giving up on this thread now because I feel like this - http://xkcd.com/386/

To put it bluntly: the assumption that you could model something with such complex (and poorly understood) socioeconomic effects using a mathematical model is ludicrous. The onus is on you to show that you could even possibly account for enough of the important effects, the sufficient variation in their outcomes, unknown and unintended effects, and social reaction/adaption/exploitation. Some of these can't even be measured.

So your call for programming as a response says more about how well you understand the problem space, than anything about an alternative to current political discourse. Not only will people never use mathematical models to express their opinions, even if they did they would still talk past each other and hold tightly only to the answers which confirm their own biases. You misunderstand why and how people exhibit this behavior if you think a numerical mode of expression is the solution.

Everybody has a model. It might be specified in code, it might be a set of equations, or it might be a poorly-specified and half-unconscious set of assumptions and biases in your own head.

I'm having a hard time thinking of a topic involving economics where the latter would be preferable.

The mistake is to think that your set of equations do not merely encapsulate your half-unconscious, poorly-specified assumptions and biases.

They do and that's fine. Now that they're written down, they're conscious and specified, so we can examine both the assumptions and their implications.

Right, there are several people arguing here against the entire project of naive modeling. The author's response is that you can criticise, but only in the form of providing a competing naive model.

From the post:

> If you disagree with these numbers or this distribution, there is no need for you to stop reading. Just download the code and change the numbers. Your change in these assumptions might completely invalidate my conclusions, or they might not matter at all. The best way to find out is to actually run the model.

Varying parameters and producing different predictions would not invalidate the model. What validates or invalidates a model is whether or not it actually predicts the behavior you're trying to model. Without a validity test, modeling is pure sophistry.

So instead of suggesting another naive model, let me suggest a way to augment the whole project: construct a model that successfully predicts actual, ongoing, real world behavior. Test your model against actual, real world policy changes. If it has verified predictive power, then you have some base to claim that it can predict novel policy changes.

Any given person's opinion may condense decades of personal experience. I disagree with the author's claim that (even naive) mathematical modeling is better than personal opinion. Given any rigorous definition of better, that is frankly an empirical claim that the author has left unsupported.

Current GDP calculates the benefit of reading books by including their sales. It doesn't do anything to capture consumer surplus.

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