Asimov on evidence
One of the things that always amazed me about rational economists is that they don’t update their opinions.
In economics there is a very clear way in which all people are supposed to observe new information and based on it update (what is called Bayesian Updating) their understanding of the world. And while Bayesian Updating is a big part of economic theory, economists themselves don’t seem to do any of this Updating based on data about real economic behavior of people.
Of course, no experiment is ever perfect, and there are always more questions and alternative possible interpretations – but that rational economists would not update at all? This is just too odd. Or maybe it is the real proof that we are all somewhat irrational?
Here is what Asimov had to say about believing in data…
“Don’t you believe in flying saucers, they ask me? Don’t you believe in telepathy? – in ancient astronauts? – in the Bermuda triangle? – in life after death?
No, I reply. No, no, no, no, and again no.
One person recently, goaded into desperation by the litany of unrelieved negation, burst out ‘Don’t you believe in anything?’
‘Yes,’ I said. ‘I believe in evidence. I believe in observation, measurement, and reasoning, confirmed by independent observers. I’ll believe anything, no matter how wild and ridiculous, if there is evidence for it. The wilder and more ridiculous something is, however, the firmer and more solid the evidence will have to be.”
Isaac Asimov, The Roving Mind (1997), 43
Great quote… Plenty of evidence around that Asimov was worth listening to, too!
I once ran a motorcycle business but never made any money with it.
I could only sell to other traders.
They took my bikes, paid little, then resold them at a huge profit.
A trader once told me I was too logic to sell to your average customer and that I simply did not have a clue how they processed what I told them.
So I broke it all down into many small pieces, analyzed them one by one and when I “cracked the code”.
I was so horrified by it that I changed trade.
I simply refused to live your average buyer’s logic. I wanted no part in it.
I explain..
Can’t sell that $4000 bike for $3000?
This will work a few times: Advertise it for $2000.
Make sure you place the $2000 tag in your ad heading, sprinkle it throughout the ad body too so it hammers it home.
Then, when their minds are well sold to this amazing deal, at the very end of the ad simply add: no whels.
Place ad to come out on Friday and specify no calls till Sunday so you let them build their dream a little.
This ad will attract 10 times more people, ramming the $2000 well into their minds and the “no whels” at the end has almost no negative effect as they are already sold to it.
When Sunday comes and the phone calls pour in, the first thing they ask (when/if they can get a free line) is “is the price right” and “is the bike really perfect”.
“Yes! $2000 is all I want. Tested and Taxed last week. Come with $2000 and take it home, but make sure you bring a trailer as you aren’t getting the wheels”
“what, no wheels? What happened to the wheels?”
“the wheels are on it for your test drive but I am taking them off it as I was offered $500 each by someone, he’s been on it for a while and eventually I gave in. I understand that they are $1245 each from the shop” (and this is very true)
I guarantee that 8 out of ten will offer you $2000 for the bike and $1000 for the wheels.
Doing that they will also cause “the other” guy NOT to have his wheels so that’s an “extra reason” they have to buy it.
Economists don’t update their theory even when it has nothing to do with human behavior.
If taxes are a drag on the economy, then why did the US economy create 200,000 added jobs a month during the Clinton years after Clinton signed the dreaded tax hike added onto the “read my lip, no new taxes” Bush tax hike, while tax cuts in 2001, 2003, 2006, 2008 produced a mere 1000 added jobs during the Bush administration, leaving the economy in shambles and sinking fast. The Reagan years did have a tax cut followed by a recession, after which tax hikes in late 1982, 83, 84, 85, seemed to result in strong job growth that in Reagan’s second term matched the job creation of Jimmy Carter’s single term.
Added costs due to taxes or other costs result not only in money being paid by the consumers, but income to others, those who the tax collector or the price raiser paid than money to.
But I chalk that refusal to look at the data and rationally think about their opinions and theory, as the predictably irrational thought process of conservatives. They are conservatives because the hold tight to the ideas of the past, rejecting all data that doesn’t agree with their normative views of how things should work.
Dan, perhaps Mr. Asimov never falled in love, perhaps few economists got real opinion, others are followers.
April 6 1992 marked a sad day for human thought. Although Asimov contributed a body of work sufficient for multiple lifetimes, the loss of his on-going commentary was tragic to those of us trying to shed some candle light on our ‘demon haunted world’. I very much appreciate your keeping his spirit alive.
Step back 30 more years…. in 1962 Thomas Kuhn argued that a paradigm shift can only occur in the ‘hard sciences’.
Step forward to the present, perhaps more than 45 years after the publication of ‘The Structure of Scientific Revolutions’ sufficient scientific behavioral data is accumulating to allow the idea of rationality as a pure economic driving force to go the way of miasma and ether.
If this is true, it is in no small part due to careful, thoughtful, scientific work done by those brave enough to continue to question and test the current dogma.
Perhaps the stock market represents the largest social interaction for which we have substantial hard quantitative data. I am glad to see that the flame has been passed on to others brave enough to hold their candle close to the boundaries of the unseen.
I look forward to following your work closely.
This reminds me of something that’s missing in your book, or was edited out. In the chapter discussing increased cheating in the professions, you cite many surveys of, for instance, lawyers who say there’s more cheating in the law today. But that’s not really evidence, is it? Isn’t it possible that more people who respond to surveys give negative answers; that the lawyers who responded negatively did so because it’s currently fashionable to be negative about some of the professions; or that the mere fact that they were being surveyed biased them toward giving a negative evaluation?
Oh–and one more thing. When you discuss the results of these lawyer surveys, you don’t mention whether similar surveys were made before the 1960s, when you say the profession’s ethics began to relax. Nor did you mention the average age of the lawyers surveyed. Based on the anecdotal “evidence” of my lawyer friends, disillusionment with the law is very strong when lawyers are just starting out, as well as in the period just after they’ve made partner.
So, I just heard an interview with Dan on The People’s Pharmacy, and it drove me crazy.
So, every time he began to speak after listening to the interviewers or responding to their question, the first word out of his mouth was “so”.
So, why do you do this? I first noticed this ridiculous use of speech in May, and it is increasing.
So, the problem is that “so”, in speech, means “therefor”, or “it follows that”, “(you/we/I) can conclude that…”.
If someone asked you your name, would you respond, “But, my name is Dan” or “Therefor, my name is Dan”? Of course, you would not.
But, you might respond, “So, my name is Dan.”
So, it is ridiculous speech, incorrect and ignorant use of the language and is completely surprising when it comes out of the mouth of an educated man. It makes you sound as ridiculous as a “Valley Girl” who inserts the word “like” a half dozen times in a single sentence.
So, get my point. It was all I could do to not change the radio channel when Dan spoke like that.
Olen
Mays Landing, NJ