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November 21, 2007

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dearieme

And the scientists will behave less and less like scientists, and more and more like just another bunch of spivs.

james c

'If this is true of investment decisions, isn't it more likely to be true of political beliefs? '

I would have thought not, because it is a consequence of market efficiency.

reason

But investors returns depend on predicting what OTHER investors will predict. Investors who gather more information may be right, but if everybody is wrong, they are wrong.

reason

In other words, groupthink surely is one of the defining features of investment markets.

reason

For these reasons, Mick Hume is right to complain about politicians' reliance upon scientists. The danger is that, as politicians get evidence from scientists, their confidence in their policies will increase by more than the evidence actually warrants.

So instead they should rely on Astrologers or political advisors? Scientists, I know (my father was one), are always cautious with their prognostications (except when they are trying to extend their funding). If politicians, don't allow enough for uncertainty then surely that is a problem with politicians, not scientists.

chris

James C - the question is: why doesn't the experience of investors with poor Sharpe ratios lead them to conclude that markets are (mostly) efficient? If people can miss this truth in investing, how much more likely are they to miss important facts in their political thinking?
Reason - you're right, the problem is with politicians, not (generally) scientists. For example, how many politicians have a basic grasp of statistical concepts such as confidence intervals?

Matt Munro

But the market isn't scientific, it's irrational, science predicts and the market isn't predictable. If it was then I wouln't be sitting here I'd be lying on a caribbean beach with Kylie Minogue.
In what way are politicians reliant upon scientists ? No disrespect but economics isn't a science, political science isn't a science, social science isn't a science. Politicians problems are rooted in the fact that they attempt to enact legislation based on principles which have no emiprical basis. Science says there is no emiprical evidence that equality is a natural, acheivable or desirable state and yet politicians formulate policies which attempted to acheive it. The problem with modern politics is that it's based on emotion, not reason.

reason

Science says there is no emiprical evidence that equality is a natural, acheivable or desirable state and yet politicians formulate policies which attempted to acheive it.
Ha, ha, ha. When?
If that was so, they would set their own salaries to be equal to average wages!

reason

Matt Munro..
your last comment is self confirming (assuming that your comment is political).

reason

MM
Maybe I'm doing you a disservice. Maybe you mean to be a comedy act.

reason

And science doesn't deal with "desireable". That belongs to ethics and aesthetics.

Matt Munro

Reason - you appear to be having a dialogue with yourself ? I on the other hand am condemned to ridicule for speaking modernism in the post modern age !

My point is

Nature is an unstable system in perpetual conflict with itself, from the sub atomic level upwards. From this instability, equilibrium (not equality) arises. Your own brain, believe it or not is in perpetual conflict with itself, constantly selecting which inputs to attend to and which responses to make from a competing range of alternatives. All elements and all organisms compete, pecking orders are established and weaknesses are filtered out, as part of a continual process of survival and self improvement.
Throw some bread to a crowd of pidgeons, do they sit down, discuss it and then share it out equally, or does the biggest/most agressive one take the lions share and leave the rest to fight over the scraps ? Where in nature is there equality ?

It's easy to say "We should share things more equally" - as politicians do - it's a meaningless "I desire the desirable" statement that plays well with the electorate. Social justice, social mobility, no selection, equality of opportunity/outcome and all those good cries are attempts to impose an unnatural construct on society. The reason they don't work is nothing to do with their desirability, but with their unnaturalness.

reason

I don't listen to what people, I look at what they do. I see no evidence what so ever that modern politicians regard equality as a high priority.

reason

Burning straw men is a popular sport.

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