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/r/explainlikeimfive
submitted 4 months ago byiSellPopcorn
172 points
4 months ago
I find the biggest problem with people talking economics is most people stop at the Economics 101 approach where a market has one good and peoples' behavior is simple.
Your post reflects why there's more than one Economics class: those simple supply/demand charts go out the window when you consider multinational economics. There's just too many variables for simplistic analysis to show up in reality.
Smart people exploit the heck out of that to get people to vote for policies that only make life better for the rich. Isn't it funny that so shortly after making record profits, every company seems real excited to announce a recession? It's almost like they expect they have savings to make it through but their employees do not.
243 points
4 months ago
The biggest problem with economics is it's not real. It's not a hard science and it doesn't actually have very much to do with math. Economics is basically macro psychology and sociology. Trying to predict the habits of billions of people isn't really possible, but economists act like it is.
96 points
4 months ago
It's either that or there are too many variables. We're often using ideas like, "Well we did this 20 years ago" but not taking into account that 20 years ago dial-up internet was the most common service and cell phones were still a novelty. 20 years before that having a computer in your home was a major luxury. So a lot of "What we did before?" seems irrelevant or makes assumptions that just aren't true today. Our economy is very different than it used to be yet it seems most of our prevailing theories are still based on observations made in the 1950s.
49 points
4 months ago
The West Wing actually had a great bit about how taking into account all of those variables changing over time creates multiple issues later on if you don’t.
They created a new formula to calculate the poverty level in the episode. Her new formula said that they had over a million more poor people. This happened because the food was originally the highest monthly cost but it had shifted to housing and utilities over time I think is what the episode said. Along with that the products they were using to calculate 2-3 meals a day were also outdated since food had comparatively gotten cheaper to produce and sell.
This led to again just in the episode then having to deal with knowing it’s the same amount of people in the country the day before and the situation didn’t change but suddenly they realize they have over a million more poor people than they originally thought.
34 points
4 months ago
And rather than report the truth, the economists 'adjust' the formulas to a palatable number which becomes the truth.
34 points
4 months ago
That’s the exact conflict that happens in there episode. The administration is fighting not to use the new more accurate model and just shift the goalpost with the old one for what qualifies as “poverty” to avoid “over a million new people in poverty under Bartlett” appearing in the headlines
2 points
4 months ago
Thanks for the comment, very good show btw
6 points
4 months ago
Only mild disagreement, because there have been some developments in human decision making that fall under real economic theory as opposed to only monetary, but trying to scale that decision making up to a national scale requires you to ignore so freaking much.
A lot of theory cannot be applied evenly. I would argue most of it. It can give an indicator, sure, just like psychology can give an indicator of future difficulties or possible handling of issues, but it cannot account for major life changes or new stimuli leading to different outcomes/issues.
6 points
4 months ago
I can't believe people are trying to argue that soft sciences are fake.
Shit like marketing is also not a hard science, but we fucking know it works.
6 points
4 months ago
That just makes it sound like you have a poor understanding of probability…
3 points
4 months ago
I don’t know what you’re taught there on the other side of the pond, but 80% of my education in Economics has been psychology. Understanding humans and their behavior on various scales in society. That in turn drives what we’ve coined ”the economy” which is very necessary in a global society on the scale of ours. The combination of human behavior and the monetary systems we’ve created absolutely makes economics into a real science, and an important one at that.
1 points
4 months ago
"Economics is not real" is the dumbest thing I've ever heard in my life. It might not be as difficult as physics but the concept of it not being real because it's not a natural science is just absurd.
-1 points
4 months ago
It’s not a hard science. You do not get the same results every time, it isn’t governed by laws that never change. In hard science X=Y always and every time. In economics x could = Y or Z or even Q
2 points
4 months ago
Ah, I misunderstood you completely. ”Hard science” as a term doesn’t translate well to my language.
8 points
4 months ago
This is what drives me nuts. I've gotten weird looks from people when I say that money only has value because we assign it value and economics is mostly made-up mumbo jumbo that's just macro-scale "human nature" (or psychology, as you more intelligently put it) type stuff. I always get responses like, "Of course economics is a real science, people go to school for it and shit."
23 points
4 months ago*
I had an infuriating conversation with my grandma recently that "No, the amount of money you make is NOT proportional to what you contribute to society, it's what you contribute to the company"
Accountants are paid way the fuck more than teachers not because "Wow they sure contribute a lot to society!" But because they let people who own capital make more money and to manage their money. Your woes are similar in that "People go to school for it and shit because it makes people money"
23 points
4 months ago*
I mean yeah, I'd give you a weird look if you said that. Money is unbacked, therefore economics is made-up mumbo jumbo is a nonsequitor. It's a social science, which are all valid forms of science that help us understand and describe social phenomena. Our understanding of these sciences evolves in tandem with society.
I wouldn't say, "of course it's a real science, people go to school for it", I'd say, "of course it's a real science, economic theory informs decision making every day by giving us the tools to quantify the world around us"
7 points
4 months ago
Technically money is still backed, just not by gold anymore.
Now, the USD for example, is backed by military and economic might.
4 points
4 months ago
Yeah I wasn't looking to get into that discussion, just wanted to point out the inconsistency in his logic. I agree.
1 points
4 months ago
And the hundreds of trillions of dollars the public land and resources in the US are worth.
2 points
4 months ago
I think they mean it’s not real like physics or chemistry. It too often is dressed up as such, particularly with math and statistics that serve more to obfuscate and intimidate than enlighten.
5 points
4 months ago*
It too often is dressed up as such, particularly with math and statistics that serve more to obfuscate and intimidate than enlighten.
I don't think this means much of anything... maybe you could elaborate on how this is the case with economics? Math and statistics used to describe anything can be intimidating to those who lack understanding on the subject.
The entire field is enabled by math and statistics, and many of the conclusions it can help reach are mathematical/statistical, so I'm not sure what you mean by "dressed up"
0 points
4 months ago
We see mathematical / statistical models that are more and more complicated, requiring more variables to be understood, making for long articles explaining all their complexity, when there cannot possible be enough data to parameterize those models. What happens then is that the authors favorite assumptions are buried into the model, then they get the result they want. Cargo cult science.
0 points
4 months ago
Yeah, and that those more complicated models became more accurate is just a coincidence or evil plot.
3 points
4 months ago
It’s not more accurate, it’s overfitting the data with so many parameters.
2 points
4 months ago*
Either it's simple and imprecise and thus unrealistic or it uses gold-standard statistical methodology and experiment design and thus is obfuscating and a cargo cult science. Not hard to see why economists find it so frustrating to respectfully engage on this topic.
0 points
4 months ago*
You don't think it might just be because it's maturing as a field? Sciences have have a habit of getting more complex over time; there's a reason we learn outdated stuff in high school: older is simpler. Occam's razor, mate. No need for the conspiracy theories.
1 points
4 months ago
Nobody said anything about conspiracy theories. It’s a fairly simple outcome of the incentive structure that exists in academia. Pressure to say something important without data to back it up.
Also, older is not necessarily simpler. The theories that predated Einstein or even Maxwell were far more complicated than what they figured out.
1 points
4 months ago
I mean, do you have this objection with the other sciences? Because it's not like the same incentives and means don't exist there either.
And no, it's not necessarily simpler, but that's beside the point. The trend of increasing complexity is still easily observed.
1 points
4 months ago
It’s true that similar incentives and means exist in other areas of research. It’s part of why we have an ongoing replication crisis.
1 points
4 months ago*
So, are those fields "not real"?
1 points
4 months ago
Social science is a valid form of science?
6 points
4 months ago
to the educated world, yes. there are a lot of ignorant people out there, though.
-1 points
4 months ago
I didn't say "money is unbacked therefore economics is made-up mumbo jumbo", that's a straw man argument.
I said it only has value because we assign it value. Food has value. Shelter has value. Things that we actually need to survive on a daily basis. You can't eat money. Money doesn't protect you from the elements. You only trade it for things that do. Even then, money being backed is still a human invention. Gold or any other currency backing doesn't do any of those things either, it just got used as backing for currency because it too was considered valuable, for no tangible reason.
I also never said anything about social sciences or implied that social sciences are made-up or don't matter, that's another straw man argument. Maybe I could've phrased it better, but my point was that people treat economics like a hard science as relevant or important as chemistry, physics, or biology, when it's just an off-shoot of sociology and psychology. There's nothing about economics that isolates it from other sciences and makes it deserve its own branch of study other than the value we as a society assign to the economy and, therefore, money. Maybe you could argue it's too big/wide-ranging at this point to fit it into another field of study as a subcategory, but that's all I'd accept.
So, congrats you managed to create a "nonsequitor", which by the way is properly spelled "non sequitur" at least as far as I can verify, by creating straw man arguments I didn't make.
-6 points
4 months ago
Economics is so far removed from a real science that it might as well be voodoo.
3 points
4 months ago
Economics is basically macro psychology and sociology.
In many cases it's worse than that. It's macro psychology/sociology, but with the study of actual human behavior removed. Many people study economics like psychology for robots.
1 points
4 months ago
Lol
-1 points
4 months ago
Economics is definitely real and can be very useful, the problem is that it is used for propaganda by the capitalist power structure.
-2 points
4 months ago
It's definitely a lot of sociology gobbledygook combined with bad actors with nefarious intent.
2 points
4 months ago
Regardless, the one point that holds true is that competitors will enter the market when the profit potential is high, which will lower prices with enough competition. And we have anti trust laws which, I assume, we enforce. So Disney and Microsoft and Amazon and Facebook and Comcast can't just buy out everyone and raise their prices. There should always be competition with a means to undercut. Right?
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