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March 19, 2013

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Leigh Caldwell

Don't the second and third points contradict each other?

(Ok, not exactly. Important to distinguish between incentives to give _the correct answer_ versus incentives to give _a particular answer_.)

FromArseToElbow

The empirical evidence for ego-depletion is based on experiments where a high self-control task is immediately followed by another. I don't think this describes Brian Cox periodically banging the drum for science or Vicky Pryce pursuing a vendetta, and its a big leap to assume that it implies a lump of rationality, as opposed to a temporary glucose deficit.

Some of your examples are also tendentious. People put on weight when they quit smoking (in part) because nicotine is an appetite suppressant. If a women (or man) on a diet puts the money she has saved on food towards a new pair of shoes, that looks like a rational preference, not a weak-willed "sprending spree".

As for why men (or women) often get drunk after work, there is a lot to be said for the self-control depletion model in this case. If you've just spent a day smiling at idiots, or supporting a party-line that is clearly nonsense, then rewarding youreself with a drink should occasion little surprise.

But what drove you to drink was not the depletion of your lump of rationality, rather it was the pyschic damage of spending the day being consciously irrational. In other words, the hump of irrationality.

Luis Enrique

this is a bit reminiscent of Chris Sim's rational inattention ideas.

http://sims.princeton.edu/yftp/Gerzensee/info.pdf

David

There's a theme running through Stuart Sutherland's excellent book "irrationality" about Nobel prize winners and how they talk complete bolox when discussing anything outside of their field.

Graeme

were you not surprised that Cox seems ignorant that pop music probably earns more for the UK than "engineering"?

Anton

Excellent post. Ego, rationality, incentives and motivation, history - all this as it pertains to the recent Cyrpus development - http://microbytes.tumblr.com/

Andrew

Mike Brearley also used to take a hell of a long time to score a few runs. So, same behaviour in his area of expertise...

Andrew

Even more impressively, Tim Worstall manages to be as dumb as the next guy within his own field:

"GDP is the amount of value added in an economy."

Andrew

Anyway, using the principle of charity for a second, Brian may be trying to say that most of the vast increase in wealth of the last few decades and centuries is down to engineering. Including yes in "food".

As a society you can either be good at engineering or you can sell services to those that are good at it.

Perhaps Brian underestimates the latter strategy but he is right about where wealth comes from.

Neil

So engineers ain't worth shit now. Oh, okay - off you trot and do your high-frequency trading without any help from software engineers.

Andrew

The only time it is desirable, and indeed rational, for an individual to be irrational is when limited cognitive resources mandate employment of (irrational) heuristics for some decisions.

Otherwise a rational decision is always better in terms of achieving the goals of the thinker. It is actually impossible to produce a coherent rational argument for irrationality, given a rational alternative, by definition.

Chris you sometimes seems to equivocate what is desirable for an individual with what might be better for society if individuals were irrational.

ChrisWilson85

Am I missing something here? Is not the case that economic growth was essentially flat until about 1800 and then took off exponentially. Was that not due to engineering - eg steam engines, electricity etc. Could we have had the industrial revolution without, well, industry? Could the industrial revolution have been created by, say, trading derivatives?
It may well be the case that pop music earns more than engineering,but no engineering: no recordings, no iplayers, no electric guitars and so no pop music.

Isn't the perfectly reasonable point being made that the economy depends fundamentally on engineers in a way that it doesn't on hedge fund managers or estate agents?

I would welcome enlightenment.

Andrew

Luis, GDP is an estimate of transacton flow, not value add, despite the coincidence of the naming of the GVA measure.

The "value" of the GVA, which is effectively merely the estimated revenue of economic units, is quite clearly not the broader sense of value that Brian Cox is employing.

I don't suppose you think if we all mow each others lawns for money then this would add value to a society in the broad sense? Clearly it would add to GVA and GDP though.

It really shows the crudeness of using sectoral "costs" in an estimate of value on an economy wide basis. Is paying your neighbour to do your lawn an input cost to *your* mowing service?

Is childcare a cost for office-running industries?

Broken window. Wars. Etc etc etc.

Cox (however niavely) talks about real long term value for society and Wostall refers us to an estimate based on estimated economic units output value minus costs.

Like I said, as dumb as the next guy.

Andrew

@Luis - in above comment, not "revenue" - sorry - read "revenue minus costs".

Andrew

@Chris Wilson - Yes, right.

I might suggest though that effective institutions could be a prerequisite for that industrial flowering. So you could argue the toss between engineering and the societal structures (social, legal, dare-I-say clerical?) that allow it to flourish and be well exploited.

The problem is economists aren't particularly interested in the underlying reasons for long term wealth. They just look at magnitude of money flows on a recurring annual(ish) periodicity.

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