More on economic modelling at P3

MT is provoking me into defending economics, which is a fact I'll have to reflect on at some point. Comments over there, but as I seem to be continuing to accidentally write down stuff from the PhD, I'll post some of it here too. Latest:

It's good to read some provoking ideas, MT, but - again - it would be nice to see some evidence to back up your arguments. You're not wrong about a lot of things but I don't think you're right either. I'm not in any great position of expertise, mind, but the bullet points feel a little like watching a jazz band fall down the stairs.

"economics distinguishes itself by a massive and systematic aversion to data." Do you follow Krugman's blog? Have you seen his massive and systematic reference to data? Each time, repeatedly pointing out that it clearly supports well-established macro-economic principles, not actions currently being taken in Washington and Europe? I presume you're making a point about economic modelling methods and how they're used?

"There are simple arguments based on plausible assumptions within economics that purport to show that any regulation is a net cost. If these arguments were correct it would be possible to get places faster if the government didn’t intervene to tell you what side of the road to drive on. This conclusion is obviously false. Consequently the plausible assumptions cannot all be correct."

Who makes these arguments? Largely (though not exclusively) a small set of economists-for-hire, buyable from the same dealers who will provide you with some top-notch, well-oiled climate FUD. There's a small overlap with Krugman's Very Serious People, particularly the ones peddling 'nasty medicine' solutions to our current economic woes.

I think you'd be very, very hard pressed to find many economists who don't understand that some costs need to be internalised and the only way to do that is through institutions. You might then want to go on and criticise the idea of internal costs - fine. I'd then suggest we bring (Nobel-prize-winning economist) Elinor Ostrom in and talk about other institutional structures for resource management. That'd be good for me, because my knowledge of her work is first-few-chapter-skimming only at the moment.

I mean, change your statement to: "There are simple arguments based on plausible assumptions within climatology that purport to show that variation in solar output, not carbon, is responsible for recent warming." You do then go on to say, well, the assumptions can't be correct - correct! But: straw.

"Agent models show promise, but that would require economists to talk to computer scientists, a prospect they loathe".

My PhD used a form of agent-modelling. Plenty of economists are in there with both feet. Start with the 'handbook of computational economics: agent-based computational economics' 2006. I think there are some severe problems with agent modelling as it stands - of the "all fur coat and no knickers" variety. Mainly in how the uses of modelling are understood, and that many really need to stop and take on board that Friedman article I posted. This sort of thing -

“Agent-based models potentially present a way to model the financial economy as a complex system, as Keynes attempted to do, while taking human adaptation and learning into account, as Lucas advocated. Such models allow for the creation of a kind of virtual universe, in which many players can act in complex - and realistic - ways” (Farmer and Foley 2009 p.685-6).

- is, I think, really false-headed. There's this notion that we make better economic models by making them 'more realistic'. What the hell does that mean? To what end? Frank, this relates to your point about the `real wide world', and you're right to say that's vital. One can make a realistic-looking model, so what? You've made sim city. You can also make a realistic model of atoms bouncing around in a container. Sometimes that's useful, but more often you can stick to models using temperature and pressure. "Everything depends on the problem."

"Economic policy is how we control the system / forecasting is the wrong use for economic theory in dealing with sustainability / From an engineer’s perspective, climate is a key part of the system under control, and economics is a key part of the controller."

"Economics" is the study of how people react to cost changes. That doesn't involve putting a dollar sign on every f*cking thing on this planet (though I'm with Bill on marketing, on the whole) any more than modelling evolution does. (Since, to model evolution, you need to have some notion of cost. WOOP WOOP: horrible overlap there with some folk finding too many evolution/market forces parallels. Well, yes, in the same way there are parallels between `lions eating gazelles' and `table tennis'.)

I've posted this before, but here's Marshall's list of questions. Any surprising ones there? A lot's fallen out of favour, but its broad sweep isn't too far wrong. Note also his take on mathematics.

So it's a field of inquiry into human behaviour. MT, you're talking about that in the same breath as economic policy, which is a bit like saying climatology is all nonsense because we don't have an effective global carbon trading system. Think we need to be clear what we're talking about.

The interesting parallel for me (and MT's pointed at it): what's occurred as climatology has got itself tangled in policy and governance? The resulting confusion might, e.g., explain Pielke Jr's take. He seems to have done what I just described: from his perspective, "society is a key part of the system under control, and climatalogy is a key part of the controller." To the extent that policy is created based on climatology, is he wrong? What does that mean for climate science - anything?

A while back he cited Scott's Seeing Like a State in his list of top 5. That's exactly the stuff we're talking about, and it's far from straightforward. When an enquiring science finds itself coming back out into the world through the hugely powerful gaze of state institutions, all sorts of problems can occur. We probably need some sort of political settlement on a par with the establishment of the separation of powers. Perhaps not coincidentally, in the US in particular at the minute, that separation is under sustained attack. Where does physical science fit into that? What about the study of human behaviour?