Economic arguments as stalking horses

On Twitter, Russ Roberts said something I tend to agree with:

Just a curious coincidence that economists who like stimulus want bigger government and those who oppose it prefer smaller. 

In fact, he said something very similar back in 2011:

The evidence for the Keynesian worldview is very mixed. Most economists come down in favor or against it because of their prior ideological beliefs. Krugman is a Keynesian because he wants bigger government. I’m an anti-Keynesian because I want smaller government. Both of us can find evidence for our worldviews[.]

Now, Roberts doesn't actually know Krugman's motives - he's necessarily making a guess. But he definitely does know his own! Basically, he's saying that he adopts an anti-Keynesian stance not because be thinks stimulus actually fails to fight recessions, but because he wants to shrink the size of the government in the long term. 

Furthermore, he strongly implies that he will selectively display evidence against the effectiveness of stimulus as a stabilizer, in order to ward off the long-term expansion of government. That's motivated reasoning.

I have long believed that stuff like this happens in economics arguments all the time. It's probably not (usually) an intentional subterfuge, but more of an unconscious bias. An economist is presented with the proposition that countercyclical fiscal policy (stimulus in recessions, austerity in booms) increases overall efficiency. He is generally against increasing the size of the government. So when he sees that countercyclical fiscal policy will (temporarily) increase the size of the government in a boom, it triggers warning sirens in his subconscious. "What? Increase the size of government? Never!", says his subconscious. And so that motivates him to argue against the proposition that countercyclical policy is effective at stabilizing booms and recessions. 

So Russ Roberts is being honest and introspective, which is good. Introspection is difficult and often unflattering, so not enough people engage in it.

In fact, this is similar to the first part of Paul Romer's "mathiness" argument. Romer argues that some economists make their modeling choices for reasons related to academic politics - for example, he says that researchers who want to believe in a world without market power will construct growth theories that make silly assumptions just to avoid putting market power in the equation. 

This effect is a lot stronger if there's no skin in the game. As Matt Yglesias pointed out back in 2011, you see Republican politicians - who probably want to shrink the government - doing Keynesian policies fairly often. Bush enacted stimulus in 2008, and probably Reagan in the early 80s. 

Another example would be the fact that nearly everyone on Wall Street was eager to tell you back in 2012 that QE would cause a big rise in inflation. But when you looked at TIPS spreads, it was clear that the marginal investor wasn't putting his money where his mouth was.

This is consistent with the finding that partisan belief gaps go away when you pay people to get things right. A bet really is a tax on bullshit (although not the optimal tax). Or, as Nassim Taleb so memorably put it, macrobullshitting is reduced by having skin in the game. The cynical side of me says that Romer's "mathiness" manifests mainly in fields where the data is not good enough to exert discipline on theory.

So when you read econ arguments, always be a little wary of the motivations of the arguers.

P.S. - This is unrelated to the main point of my blog post, but an alternative, non-Keynesian theory of stimulus is that it boosts output because it expands the government, in the ways that need expanding (public investment).


Updates

Paul Krugman responds to Russ Roberts.

Adam Ozimek responds to Roberts, defending Paul Krugman, and the econ profession, from Roberts' cynical allegations. The two have an interesting (but brief) twitter debate about how evidence should interact with ideology.

Roberts writes an additional tweet that I like:

Conceding the reality of self-deception isn't cynical. It's realistic. Leads to humility and caution.

I agree, but just because some nonzero degree of self-deception is inevitable doesn't mean it's benign. Instead of just accepting it, I say people should try to fight against it. And if you realize that you yourself engage in a considerable degree of self-deception, I say you should focus on reducing it, rather than focusing on demonstrating that your rhetorical opponents are equally self-deceptive.

Fun with formality

The Paul Romer "mathiness" debate isn't about mathematical formalism in econ. Romer says:

T/F: Romer thinks that economists should not try to use the mathematics of Debreu/Bourbaki and should instead use math in the less formal way that physicists and engineers use it... 

[False.] 

[H]and-waving and verbal evasion...is the exact opposite of the precision in reasoning and communication exemplified by Debreu/Bourbaki, and I’m for precision and clarity.

But that comment got me thinking about formalism in econ math, and I thought I'd share some thoughts.

I've never actually read any Bourbaki papers, but Bourbaki was a club of mostly French mathematicians who got together in the 1930s and insisted that mathematicians be very formal. They got their wish, and the result is the rigorous, formalistic style of modern math papers. But physicists and engineers never followed this convention, preferring to derive essential results and let mathematicians pick up after them by putting in the formality.

There are economists who follow both conventions. You see some papers that use a very formal, terse, axiom-theorem-proof style similar to what you'd see in a mathematics journal. And you see some papers that use a more informal, "here's an equation that I think describes something" methodology that you might see in an engineering journal. 

An example of the formal style would be "The Simple Theory of Temptation and Self-Control," by Farak Gul and Wolfgang Pesendorfer. This paper introduces a wrinkle to the standard classical theory of intertemporal consumer decision-making - they allow people to have preferences over the sets of choices they are given, such as when people on a diet might not want to see the dessert menu. This wrinkle is inserted in the form of a new "axiom", called the Axiom of Set Betweenness. The presentation in the paper tends to look like this:

An example of the informal style would be "Golden Eggs and Hyperbolic Discounting," by David Laibson. This paper also introduces a wrinkle to the classical theory of intertemporal consumer decision-making. The wrinkle is a new functional form for the consumer's discount function. The presentation in the paper tends to look like this:

In fact, both of these papers are motivated by some of the same empirical phenomena. But they go about it in very different ways. Gul and Pesendorfer introduce an entirely new framework, while Laibson tweaks a functional form. In other words, Gul and Pesendorfer rewrite all of the rules for how decision-making is thought to operate, while Laibson sticks in something that works. As a result, it's natural for Gul and Pesendorfer to use a very formal framework, since formal things are more general and can build a foundation for many other theorists to work with. Laibson doesn't have any need to be so formal.

I imagine that some people complain about the formalism in Gul and Pesendorfer because it's hard for them to read. But after you learn to speak that language, it's actually easy to read - in many ways, easier than English. Formal math language forces you to read like a computer, which means you don't miss anything, while English tempts you (heh) to gloss over important parts as you scan through paragraphs.

In general, I think formal math style is no worse or better than informal engineering style. It's just a matter of personal preference.

Another thing that might annoy people about Gul and Pesendorfer's formalism is the clunkiness of doing economics this way. Do we really want to have to re-axiomatize all of consumer decision-making every time we see people doing something weird? Isn't the overhead of formalism a big waste of time and effort?

Well, maybe. If we take the Laibson paper seriously, all we have to do is to introduce a hyperbolic discounting function whenever we suspect it might make a difference in a model. That's equivalent to just setting the parameters of the hyperbolic discounting function to approximate a classic, non-hyperbolic discount function whenever we don't think it's interesting. But if we take the Gul and Pesendorfer paper seriously, we might have to reformulate all our theories. It's just not clear when the Axiom of Set Betweenness might apply. An axiom is just a lot more general than a parametrization. It seems to me that that's what you can lose from formalism - a clear sense of when the new stuff might make a difference. 

But in the end, I bet that people use the Gul & Pesendorfer stuff in the exact same way they use the Laibson stuff - they apply it when they think it might make a difference, and forget about it at all other times. So formalism vs. informalism again just comes down to a matter of personal preference.

Feminist Mad Max is real, y'all

At the website Return of Kings, econ blogger Aaron Clarey reviles Mad Max: Fury Road as a trojan horse for feminist ideas:

This [movie] is the vehicle by which they are guaranteed to force a lecture on feminism down your throat. This is the Trojan Horse feminists and Hollywood leftists will use to (vainly) insist on the trope women are equal to men in all things, including physique, strength, and logic.

Clarey is talking about the fact that a number of the female characters in the movie - including Charlize Theron's female lead - are tough warrior types who spend a lot of time shooting and otherwise killing big tough male baddies. He thinks that's unrealistic - in the real world, he seems to be saying, war is a man's job.

But actually, I can think of at least one good real-life analogue of the badass women of Mad Max (and of much of modern pop culture). It's the war in Syria and Iraq. The Kurdish militias who have been beating the crap out of ISIS in the north of Syria have substantial numbers of women in their ranks. Here, via War Nerd, are pictures of a couple of the women killed in combat with ISIS:



Normally, women are kept in noncombatant roles in Kurdish militias. But the pressure of the ISIS assault forced women to join the fight directly, and they have apparently been quite effective in battles like the one in Kobane. In fact, a woman is the commander of the Kurdish militias in Syria:

Meet Nassrin Abdallah. With her diminutive height and broad smile, it doesn't seem like she should strike fear into the hearts of hardened Islamic State jihadists. But this 36-year-old Syrian Kurd woman has been at the tip of the spear of the Kurdish forces that last month liberated the symbolic city of Kobane from IS militants... 

As the head of the armed wing of the Kurdish PYD, "commander" Nassrin has led both men and women into battle against Islamic State fighters who have overrun large areas of Iraq and Syria... 

According to Nassrin, around 40 percent of the Kurdish fighters battling over the town on the Syrian-Turkish border were women.. 

Some, like her, are hardened warriors but also joining their ranks were mothers who sent their children over the border to the safety of Turkey, then rushed off to join their sisters in arms...Fighting alongside Nassrin are other powerful female commanders who have achieved legendary status on the battlefield. 

Women like Narine Afrin, who played a key role in the defence of Kobane. Or Arin Mirkan, who blew herself up on October 5, killing dozens of IS fighters encircling the town, according to Kurdish sources. 

In total, there are 4,000 women fighting in the armed wing of the PYD [militia], say Kurdish officials, who refuse for strategic reasons to disclose the total number of people who have taken up arms. 

Over and beyond the military aspect of the victory over IS in Kobane, it has been seen as a triumph for women, who are repressed in areas under IS control, obliged to wear the veil and, in the case of the Yazidi minority, forced into slavery.

In fact, this pretty closely parallels the plot of Mad Max: Fury Road! Nassrin Abdallah is the real-life Imperator Furiosa, while ISIS is the real-life version of Immortan Joe and the Warboys.

And it's important to note that the women of the Kurdish militias haven't just been fighting, they've been winning. ISIS massively outnumbered and outgunned the Kurdish militias in a number of battles in northern Syria, but were soundly defeated.

So if men's natural physical advantages are not decisive (at least in the age of guns and explosives), why have most armies throughout history been mostly or exclusively male?

One reason is that men can't bear children. Over time, a warlike society's success depends on the number of soldiers it can throw at the enemy. If a male soldier gets killed, the loss of his sperm will not adversely impact the overall fertility of the tribe. But if a female soldier gets killed, the fertility of the tribe will go down, reducing the number of future soldiers. You really need to think of things in terms of expected discounted total soldiers. The math of protracted warfare favors sending men to die on the front lines, and keeping women in the rear to pump out new soldiers. (Yes, it sucks to live in a warlike society.)

Another reason is preference. Men, on average, are far more violent and aggressive than women. This means that more men will want to go to war, or at least hate it less.

So Aaron Clarey is wrong. Mad Max: Fury Road is not a piece of unrealistic feminist propaganda (though the Tumblr site Feminist Max Max is funny). What it actually is is a movie about - to use a Clarey phrase - "one man with principles, standing against many with none."