isomorphismes

Some people think of postmodernism as the rejection of the existence of objective facts. Another take is that po-mo comprises broader methods of getting one’s point across than didaction. For example: joking, insinuating, or ending sentences with question marks.

For example this sarcastic remark:

A theory is something which nobody literally believes except the person who invented it. An experiment is something which everybody literally believes except the person who invented it.

pokes fun at what a different conversational mode might wax about in general terms such as “human frailty” or “fallibility”—or sound like a stronger attack on the scientific method than it intends to be.

It’s natural to express scepticism when an expert or supposed expert disagrees with something that makes complete sense to you. (I owe ya a post called “The rigid rod of modus tollens & modus ponens”.) ”Says who?” is a sentence anyone can utter. You could view “the scientific method” as one way to respond to that criticism. But is it the only way?

Some (postmodern?) anthropologists and ethnographers begin their essays on people who are foreign to them by discussing their biases and where generally they’re coming from. Which may be a more appropriate response to scepticism with non-experimental data—a different way of addressing the same problem that repeatable double-blind experiments are supposed to, namely errors in judgment by the observer/researcher.

Economists have field-specific ways of addressing problems inherent to what they study. These include models, stylised facts, stating own biases, statistics, and rebuttals against the statistical analysis. But also self-questioning sarcasm. For example

The questions in economics never change. Only the answers do.

or 

When we leave our closet, and engage in the common affairs of life, [reason’s] conclusions seem to vanish, like the phantoms of the night on the appearance of the morning; and ‘tis difficult for us to retain even that conviction, which we had attain’d with difficulty.

or

The Economics Nobel confers upon the laureate an appearance of expertise which in economics no one ought to possess.

I don’t think “a postmodern economics” needs to be “post-autistic” or revolutionary or hip in the ways I’ve seen suggested by heterodoxists. It could simply be the recognition that informal speech like sarcasm can be on the same level of importance as speeches, lectures, claims, statements, and pontifications.

The logic of Marshallian S&D curves are wonderful in several respects:

1. resolves the “diamonds and water paradox” (why does unnecessary jewelry cost more than necessary water?)
2. sounds reasonable across a variety of real-world scenarios (FCOJ futures, corporate bond issuance, grocery stores, machine parts, olive oil exports, Tyler Cowen’s umbrella term “markets in everything”)
3. actually works in experiments! The legend is that Vernon Smith used to say in class that Marshallian S&D was “just a theory” — and then was shocked that prices actually converged to the predicted P*

Here’s a great way to misapply the Marshallian logic and arouse my ire:

• Say “Markets make sure that people who want things more are the ones who get them.”

That’s not what the theory says. We use the jargon willingness to pay or reserve price to talk theoretically about the maximum someone would counterfactually give up for something—and equate this (by rational consistency hypotheses) to how much utility they derive from obtaining it. (The experiments I mentioned above literally created a reserve price—a redeemable coupon for $13 if you get the paper at P*, so we as non-omniscient lab-gods know that you actually assign a personal dollar value on the good—and know what it is. So the fact that those experiments worked doesn’t prove the extra assumptions about the way people’s consent, pleasure, engagement, and desires interface with an opportunity for economic exchange.) Laura’s measured willingness to pay does not say how badly she wants something relative to Gemma. Why? Because maybe Gemma is poor and Laura is rich.

The problem is, I’m not sure the kind of tired I am can be fixed by a vacation.

@EpicureanDeal

In the real world, rich people engage in retail therapy at prices that would pay for a poor person’s housing and food for months.

“[Shopping at] Banana Republic brought me to tears” getrichslowly.org/blog/2010/08/1…

(because people pay high, made-up prices for fewer utils than the people where he volunteered would get with the same money)

@isomorphisms pants as in jeans or dress pants? To answer your question, yes.

August 4, 2012

@isomorphisms Best money to go after many of my retail friends would say.

August 4, 2012

Maybe it makes them feel good, or they do it as a way to socialise (if you don’t consider yourself rich but you’re reading this on a computer: do you socialise at bars or restaurants or just outside on the street? Why?), or maybe they’re bored. Whatever.

Clearly we can’t give Gemma £100 and give Laura £100,000 and conclude that Laura wanted the dress more because she paid more for it. It might be reasonable if both were in the same place with the same financial resources.

The mathematics behind the S&D graph aren’t that complicated. (It does require thought—but not years’ worth of thought—to understand the Marshallian model.) But still, I think because of the transition from English → maths → English, and the jargon words interposed with normal words, the overall rhetorical effect is to cover the obvious fact of inequality whilst redirecting attention to “optimal” (another jargon word budging in on the default namespace!) allocation.

The hypothesis of logarithmic utility per individual has been around since the 1700’s at least. (Implying €1000 means more to a poor person than to a rich person.) And yet people still use this fallacious reasoning that markets allocate goods to those who “want it the most”.

Sorry: willingness to pay is a function of both desire and of ability to pay.