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January 28, 2009


This is an excellent discussion, bringing up many points relevant to our studies here on Overcoming Bias.

yes, it was quite good--your point about being a bit of two minds, sort of the inside and outside view of yourself perhaps (phrases i think i've heard used here and hopefully am using correctly) was particularly interesting. it seems like a tough psychological approach to maintain though!

Boy, that was really long! If anyone else listens to it, I'd suggest that most of the first 28 minutes, the monologue, can be skipped. It boils down to the fact that economists disagree and their disagreements often line up with their ideological preferences.

Robin offers a couple of different possibilities for what these disagreements mean. One is that there are large areas of agreement in economics, but researchers focus on areas that are still unsettled, and this is where we find arguments. Hence economic disagreements are a sign of an area which is still in flux, and economic opinions should be largely disregarded when this happens. The alternative explanation is that actually there is not so much disagreement as it seems, but rather that institutional incentives in the media and other information conduits are such as to amplify apparent disagreement. Particularly in areas where many people have strong, differing preferences and opinions, there is a market for economists who support each side, ensuring that a wide variety of seemingly expert opinions are aired. But actually there may be an underlying consensus which favors one side or another.

It would have been nice if the conversation had focused a little more on which of these is true. One remedy in the second case is prediction markets - they can reveal the hidden consensus. But if the first case applies, such markets might not be so helpful. And it seems to me from my informal observations that there are indeed deep and long-standing differences in the economic community, and in fact the monologue cited several cases. For centuries there have been liberal and conservative economists, with their own world views and prescriptions. Disagreement is more than a mere illusion generated by institutional mechanisms.

Hal, yes I tried to hint to skip the first 28 minutes. Yes there are deep and long-standing differences of opinion, but this fact doesn't by itself show that such disagreements don't result from institutional incentives. It does show though that they aren't only induced by incentives in the "last mile" before stepping in front of the TV cameras, or into the court testimony box.

Great discussion on: how do we know that 'we know'? I congratulate Russell and Robin for such an honest exposition of their own doubts and theories. The bottom line for me: it is good to be skeptical as a drive to always seek for truth, Though, I am humble too to recognize that as humans, the closest we are to truth is only in the process of seeking it. Just sometimes a path-breaking discovery comes along.
The limits and fallibility of the human reason was emphasized by both of you. Russ with a more pronounced hayekian 'bias'.
I agree with Robin regarding that the 'conservative' rigor of the academic process is necessary for newcomers or young scholars. On the other hand, that very same process might be not rewarding 'marginal' innovation from within. To give an example: Picasso's first paintings fall into the classical category very realist. He mastered that technique. But then he departed from it to offer us cubism and the like. That kind of innovation should also happen in science.
Speaking of bias, our methods to collect data, to falsify a theory/model. to build a model/theory might also be responsible for some disagreement in topics such as the current financial mess.
Now, it is interesting that it was also the events of the Great Depression, and the Stagflation, that ignited a re-examination by economists of our own methods and theories. This has happened in a period of less than a 100 years. So, maybe 100 or 200 years from now some economists might finally provide a better theoretical understanding of all these events. And I would not be surprised if that discovery comes at a cost of giving up some of the 'approaches' we 'conservatively' follow and spread these days.

I liked the podcast but I think that I would have liked it more had you talked more.

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