McConnell Economics, Chapter 1
Posted: Sun Dec 01, 2019 10:54 pm
Discussion of the curriculum McConnell, Brue, Flynn Economics text, chapter 1.
--- The deepest and most resilient rabbit hole of 21st century lifestyle design
This immediately reminded me of the Need/Wants section of the ERE book. According to economic theory, we have few needs and infinite wants. According to ERE, needs and wants are the same, only differing in degree, not kind. And one can i) learn to be effective in ones live vis-a-vis 'want realising' and ii) learn to be content with (much) less.Biologically, humans need only air, water food, clothing and shelter. But in contemporary society we also seek the many goods and services associated with a comfortable or affluent standard of living
Not so much. According to Steve Keen in "Debunking Economics", some of the central theories of economics are not even internally consistent. For instance, it has been shown that the aggregate (market consisting of more than one individual) demand curve can be represented by any continuous polynomial function;it does not have to only slope down. So, there may be more than one imaginary equilibrium point with no means to determine which is more optimal.Quadelupe wrote: economics is similar to harder sciences like mathematics and physics
The "Pitfalls to Objective Thinking" was a nice review and it was interesting that within the "Fallacy of Composition" section, they ended with:Instead, economics ultimately examines problems and decisions from the social, rather than the personal, point of view.
It was also interesting to see the "we use the scientific method" balanced with the "Other-Things-Equal Assumption" needing to assume other things are equal/fixed within a comparison yet in reality they are not (example given was about the cost of a Pepsi -- market data to compare the price of the Pepsi will inherently have the price of those things it is being compared to also change yet for for analysis, it is easier to assume the variables/others are fixed). This was interesting to me because it talked about how much economics relies on data but that data/input is different from other fields where one can hopefully do a reproducible experiment. It basically seemed to set the stage for "we use the scientific method" however "we are not like other sciences due to ..." which leads to "less certain and less precise than those of laboratory science". I ended up appreciating that perhaps economics was more scientific than I had been led to believe in the past (although perhaps we have a biased source ).The fallacy of composition reminds us that generalizations valid at one of these levels of analysis may or may not be valid at the other.
I wonder how much the application of computing power to economics has changed the field?The full scope of economic reality itself is too complex and too bewildering to understand as a whole.
Also the case if you come from the ecology field that has fundamentally different assumptions. Or physics where the habitual instinct is to focus on questioning/changing the assumptions and calculating the logical consequences of breaking them(*). Reading econ books always seem to cause a bit of cognitive dissonance for me, especially if it gets too dogmatic.
These are tough pills for everyone to swallow. Especially, when one has a novice's idea of what Economics is about. It's easier, if you think about what Economics was doing at the time those assumptions were made.I have issues with two central claims in this chapter:
1. We have infinite wants
2. Humans pursue actions only because of their rational self interest.