OT: Keith, WU and I Talk Econ, Finance, Hayek and Bullshit
by colintj on Aug 6, 2009 5:06 PM CDT
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PrintNERDS!!! Anyway, the discussion in question began here, but I think we should move it for logistical reasons. Besides, the right rail is all pap m i rite, so this won't be out of place. Anyone else who wants to have at it is obvs welcome.
SouthSideSox is a community driven site. As such, users are able to express their thoughts and opinions in a FanPost, such as this one, which represents the views of this particular fan, but not necessarily the entire community or SouthSideSox editors.
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Ferguson
Little late to the party. I’ll at least vouch for his previous book, War of the World, which posits a pretty strong connection between economic turmoil and war/ethnic strife. It’s not as compelling as Judt’s Postwar but he’s able to spin a convincing argument.
where are the fucking selma hayek pictures?
i feel like this fanpost has nothing to do with her. it’s bullshit.
Cashing checks and having sex.
What exactly is your purpose for being here (at SSS)?
trying to learn something? trying to inform others? i ain’t one to comment on other posters and how they act, but all you seem to do is stir the pot, poke and prod.
you're an editor?
read the requirements of fanpost as compared to fanshot. Then flag yourself.
Sox win, cubs lose.....what a wonderful world!
by picktoclick on Aug 6, 2009 9:32 PM CDT up reply actions 1 recs
You're a gem
Did you read the requirements before you posted your racist oeuvre?
The Chicago Bulls.....the more profitable Los Angeles Clippers.
by Ozzie Montana on Aug 6, 2009 9:38 PM CDT up reply actions
it is when you say or imply that cubans are lazy and don't have the intellectual capacity to play shortstop
Whoa, whoa, whoa, whoa, whoa... Time out Greenbay. Tell that fucking bullshit to the tourists
by onlysoxfaninboston on Aug 7, 2009 10:26 AM CDT up reply actions
I said Ramirez didn't have the instincts or intelligence to play ss
and he doesn’t, imo. You and other sheep made the racist leap on your own.
Sox win, cubs lose.....what a wonderful world!
That sounds like the lazy thought process of a Cuban!
The Chicago Bulls.....the more profitable Los Angeles Clippers.
by Ozzie Montana on Aug 8, 2009 12:06 PM CDT up reply actions
SSH actually knew baseball, he was just a sad, sad, person
The Chicago Bulls.....the more profitable Los Angeles Clippers.
by Ozzie Montana on Aug 6, 2009 10:33 PM CDT up reply actions
we at least had some respect for him. he was here for a couple years.
care to call the O/U for the duration of picktoclick’s stay?
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longer than most expected by now
" Do you guys know people like you are the reason I wouldn’t come on for exstended periods of time. You rui the baseball blogging expieriance."
by trademaker on May 30, 2009 10:31 PM PDT
HAHA MM GOT HAXORD
"you should go back to your cowardly practice of offering no opinion of your own."
-picktoclick
by Where Triples Go to Die on Aug 8, 2009 9:29 AM CDT up reply actions
on a more serious note, i'd be interested to partake in any discussion about the above mentioned topics.
personally, practical application has a vast impact on my day-to-day activity, so though i enjoy reading economists thoughts occasionally i take it all with a salt mine.
now crowd psychology, to me that is infinitely more compelling. i find this market to be a prime example of the disparity between perception and reality. take AIG as an example. look at that stock’s trading this week and tell me what it’s saying. or why it’s happening.
Cashing checks and having sex.
you have to beat the market to make a profit or what?
i was wondering exactly how you do what you do, what kind of info you act on, etc. can you even divulge stuff like that? from what i read, it sounds really hard to be consistently good and to tell if you’re any good.
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reminds me of one of the great movie quotes/toasts of all time:
it’s easy to grin
when your ship comes in
and you’ve got the stock market beat
but the man worthwhile
is the man who can smile
when his shorts are too tight in the seat
-judge smails
caddyshack
Cashing checks and having sex.
i'm a trader in perhaps the truest sense of the word.
i trade equity (stocks). and i’ll trade pretty much anything on the NYSE, NASDAQ or AMEX. long/short. seconds/minutes/days/weeks. wherever i think something is happening. it’s all my call (which is what i love) and the profits and losses are almost completely my own. as far as why i buy or sell any stock at any given time, there are more reasons and situations then i could begin to explain. as far as telling if you’re good, we’ve got a better scorecard than any sport in existence. only one stat counts. PnL.
Cashing checks and having sex.
international business with lots of finance. not that it really prepares you. and that isn't what employers in the industry are looking at for traders.
Cashing checks and having sex.
many firms give IQ tests and do trade simulations.
the degree is a bit of a formality for many trading positions. they wanna see pattern recognition. especially in high stress situations, so they amp up the tension and the pressure and then see who stands out.
Cashing checks and having sex.
sweeeeet.
it’s definitely not my future line of work, but damn. hypercompetition is fun to watch.
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yeah.
i’ve always reserved my thoughts on “clutch”, because it objectively seems to be made up.
but subjectively, i’ve seen a lot of people who can’t pull the trigger when things get crazy. i don’t know why, but pressure really melts some otherwise talented traders. some people can’t think clearly and act decisively when the situation is big. psychology is an interesting study.
Cashing checks and having sex.
have you considered researching sociological studies?
i imagine they’ve got a lot to say about expected actions of people in large groups.
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and i assume you're already somewhat familiar with behavioral econ
i don’t think any of the popular books for the masses that have come out would be much help, but the actual research would have to dovetail with psych and soc.
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sounds like i would dominate the market
"you should go back to your cowardly practice of offering no opinion of your own."
-picktoclick
by Where Triples Go to Die on Aug 8, 2009 9:32 AM CDT up reply actions
if there's any truth at all to the idea that
“the market can stay irrational longer than you can stay solvent” then i’m not sure P&L are a measure of talent.
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that statement is true. i've learned it the hard way. nonetheless, who said anything about talent? you said measuring being good and that's about being right.
how does it show talent to hold positions that are losing money even though the market is acting irrationally? you have to understand, colin, that the market isn’t about idealism. it’s about money. if you’ve got a fault, the market will find it. and you don’t earn any points for good ideas and bad timing. PnL is the trump card. there’s a million ways to make money in the market.
i could write a book about all the brilliant positions i’ve had that could have made me millions of dollars if my timing had been better or i’d been able to hold it for longer. but who would read it? it’s all about the end game.
Cashing checks and having sex.
how does that not drive you crazy?
and could you talk a bit how it went when you first got into the game and the learning curve?
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it does. it totally does. you have to make your peace with it. that stuff is gonna happen. you just try not to overcommit to your ideas so that you're not handcuffed if the timing is off.
i used to beat myself up a lot more. it’s a delicate balance. we’re raised to consider admitting defeat a bad thing. the sooner i throw in the towel after i feel i’m wrong, the better my next trades are.
learning to trade is a test. it takes a lot of patience and discipline. i was really fortunate in that i turned the corner to profitability very quickly by industry standards. that being said, i thought about quitting many times back then. it takes a bit of an ego to survive the learning curve because it’s so relentless. going to work can be pretty brutal when you don’t know what’s going on and you get your ass handed to you everyday. it’s slow going, but it never stops. and there is something special about a job in which each day is unique.
i really enjoyed malcolm gladwell’s outliers and i couldn’t agree more with the 10,000 hours theory. i was just explaining to a newer trader today why i was doing what i was doing in AIG. i’d recognized things from similar previous experiences. it was familiar. nothing takes the place of experience.
Cashing checks and having sex.
I love reading this shit, thanks for sharing.
The title of the post didn’t really interest me, but I’m glad I took a look.
on a related note, i'd love to hear some guesses as to where AIG opens tomorrow morning.
their earnings will be interesting. the option pricing has been peculiar, to say the least. and the stock volume the last 2 days has been reminiscent of september/october of last year. i believe the stock closed pretty near par from it’s reverse stock split. how that thing went to 29 today i have no idea. and how about goldman sachs and AIG? i’m not a jon stewart fan, but i did enjoy his rant about that.
Cashing checks and having sex.
you're not a jon stewart fan?!
dude is probably out of his league in econ matters, but in terms of covering the media and the malaise, nobody does it better.
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his studio audience has gotten absurdly left wing and all too often he panders to that. the comedy can still be good, but it feels like watching a democratic rally at times.
Cashing checks and having sex.
Agreed.
that’s not to say I dislike TDS and Colbert, but the audience becomes way too overbearing at times. Both can still do very good work (I’m not sure I’ll ever see a speech as contextually good as the one Colbert gave at Bush’s media ‘party’ — I’m obviously exaggerating a bit but nonetheless it was fucking awesome) but neither are “can’t miss TV” for me.
i think i watch TDS in particular the most
for his coverage of the media and in so doing, i get the “news” for today. it seems important not to completely abandon pop culture/media/whatever, despite my urge to do so.
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Si. He is beginning to take himself very seriously.
Absolute power…
We’re a pack of a-holes. And my tradition of contributing absolutely nothing to this site... continues.
i do not think he takes himself especially seriously
but he does take journalism seriously, which is more than i can say for most.
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i definitely hate his audience and have for a long time.
bunch of rubes. it works on colbert because it adds to the persona. i don’t think stewart panders so much as he’s just of limited expertise. he and the public share opinions much of the time because he is of the public.
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I think he's a good interviewer
And I like when he has people on the show with opposite viewpoints, because he’s pretty good with layman questions. It would make for great television…
…if it weren’t interrupted by extended, stupid rounds of applause for every point he makes. The home field advantage is overbearing.
EVERYBODY PICK US FOR 3RD OR 4TH SO I DINK WE DOIN POOTY GOO
Sox Machine
that's what i also like about stewart,
we know his politics, but his questions are layman for the most part. i think he would do well in a charlie rose format, jon stewart doesn’t have to rely on his comedic skills as much as he thinks..
Whoa, whoa, whoa, whoa, whoa... Time out Greenbay. Tell that fucking bullshit to the tourists
by onlysoxfaninboston on Aug 8, 2009 10:43 AM CDT up reply actions
he undermines himself excessively with that
“oh this is just some show on comedy central” line.
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agreed all the way.
you see the brian williams interview? that was some excellent sparring.
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JS is a sell out
"you should go back to your cowardly practice of offering no opinion of your own."
-picktoclick
by Where Triples Go to Die on Aug 8, 2009 9:37 AM CDT up reply actions
I have no fucking idea why FNM, FRE, AIG, and C
are all on fucking fire while JPM was down today. You cannot tell me there is not manipulation going on. I worked for a company when it was acquired by MetLife in 1999, when Bob Benmoscher was CEO of Met – he’s the new AIG CEO. He ain’t worth 100% premium over a few days, fer Chrissakes.
Things is awfully frothy.
We’re a pack of a-holes. And my tradition of contributing absolutely nothing to this site... continues.
do you guys expect to be able to explain that stuff?
Felix Salmon today:
This is a very positive development, I think: the NYT’s Jack Healy has happily filed a story saying "stocks moved a lot and we don’t know why".
There’s an invidious fiction underlying most market reports: that stock moves are inherently interesting, that any stock move happens for a reason, that the chances are that reason is based in some kind of news, and that the market reporter has a decent chance of identifying the news event which moved the stock. None of these are true, and reports like Healy’s are an encouraging indication that at least some business pages might be taking tentative steps towards a more realistic approach.
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There was a longitudial 10 year study I remember in the WSJ in the early/mid '90's
attempting to quantify the movement of stocks. Oversimplifying the results a bit, 1/3 of the time movement was related to earnings, 1/3 of the time to economic events, and 1/3 of the time no reason at all could be discerned.
So who the hell knows? I am not classically trained in finance or economics – I have always been a student of psychology (literally, that’s where I earned my degrees). It’s fascinating. It’s only over the last 7-8 years I’ve tried to educate myself in economics, currency moves, risk ,etc., since it’s only since 2000 that things have not gone straight up, basically. (Well, and the designations I’ve earned sort of require some knowledge on those topics.)
We’re a pack of a-holes. And my tradition of contributing absolutely nothing to this site... continues.
Myth of the Rational Market
talks about a lot about such studies. It sounds like you’re talking about a pretty simple regression there, right? they produced a model that explained 2/3 of the data? i’d be interested in the methodology, b/c it seems like it would be difficult to control for those variables.
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not difficult. impossible. how can one ever find a single solitary reason why a stock moves?
you gotta realize, most stock is held in large amounts by a select few. so it’s not what earnings or economic events occur, but rather what those with the big positions interpret that news to mean. if they decide to buy, sell or hold is what makes the movement. attempting to explain why a stock did this or that is a fool’s errand.
“market wizards” are like expert theologians. they know all the information that’s out there. they still can’t explain why things are how they are.
the best of the best are adept at pattern recognition. that’s all you can rely on. and even that doesn’t always hold up.
it reminds me of bill murray in groundhog day when he’s trying to explain why he thinks he might be a god. maybe god isn’t all-knowing, maybe he’s just been around a really long time. my edge is that most things that happen, i’ve seen something similar before. it’s part of the reason why the market gets so out of whack when things that no one has seen before happens. everyone is just guessing at what happens next.
Cashing checks and having sex.
abandoning everything but the trade is what made me a good trader. the stock is telling you what it's gonna do. most people just don't listen.
Cashing checks and having sex.
excuse my lack of knowledge on the subject
but is it mostly disconnected from what’s happening outside of the trading floor? WU’s comment about the study that about 1/3 of stock movement being connected to reports / events happening to or around a company and yours about things mostly happening if big movers and shakers make a play on something imply that to me.
if it’s mostly pattern recognition, what do the seasoned traders bring to the table that a rack of PS3s don’t?
These events have me frightened and on the verge of evacuating my bowels.
by thatshortkid on Aug 9, 2009 11:05 AM CDT up reply actions
it's inexplicable. hence my relative disinterest in attempted explanations.
watch CNBC. they’ll tell you after the fact why everything happened. it’s utter bullshit and any trader worth their salt knows it.
Cashing checks and having sex.
the author also made a dig at CNBC in the post
salmon’s a pretty good commentator, though i just started reading him. i dn if he’s worth reading for a trader.
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it's kinda funny, really. people want explanations for why things happen. i guess people wouldn't watch if CNBC said "we don't know". so i guess it's better to make up reasons.
Cashing checks and having sex.
"what exactly is the point of existence?"
*fixed
Gotta remember who you are asking questions to.
"you should go back to your cowardly practice of offering no opinion of your own."
-picktoclick
by Where Triples Go to Die on Aug 8, 2009 9:40 AM CDT up reply actions 1 recs
obviously that doesn't mean this stuff didn't happen for a reason
but how do you tell noise from signal?
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yep. manipulation is everywhere.
our squawk service today was trying to explain AIG. it came up with short squeeze. hilarious. look at the amount of shares short and the volume over the last 2 days. complete bullshit. i can’t wait to see what AIG did last quarter.
Cashing checks and having sex.
the POS stock split 1 for 20
so basically it’s just gotten over a $1 a share. Why are you trading this crap, it’s a bunch of garbage pickers fighting over a corpse.
"It was like everything was slow motion," Wise said. "I stuck my hand out so slowly and was able to make the catch."
They reverse split AT&T in 2005, I think, and it worked out fine.
But reverse splits are usually cosmetic, and I cannot fucking believe AIG has gone from $13 to $28 in the span of a couple of weeks. I agree – it is a horseshit company.
We’re a pack of a-holes. And my tradition of contributing absolutely nothing to this site... continues.
is that a serious question?
why am i trading a stock that did 100+ million shares each of the last 2 days with consecutive 7 point ranges? that’s your question? you gotta be kidding me.
because i like money and it’s making me money in bunches.
i couldn’t care less if your momma’s pussy went public. if it does big volume with a big range, then you’d better believe i’ll be trading it.
i know it’s worthless. who cares? any equity trader who didn’t trade AIG in the last 2 days can go fuck himself. he’s dogshit and he should get out now. if you can’t see the opportunity there, then you’d better find a new line of work.
Cashing checks and having sex.
no offense, by the way.
this talk just gets me fired up. if AIG moved like that every day of the year, i’d make tens of millions. shit like this is god’s gift to good traders.
Cashing checks and having sex.
No offense taken
I thought you were looking to establish a position instead of just playing the volatility. Certainly not a stock I’d want to take home at the close of trading.
btw I traded futures for 5 years when I got out of college. Crazy shit, seems like a loooooong time ago. You’re right on re the discipline, that’s the only way to survive. I just made myself a promise to get to “x” amount of dollars and get the hell out, which I did. I’m same way in a casino, I get ahead by “x” and say thank you very much, and stay away from the tables. Like Ulysses, tie me to the mast.
"It was like everything was slow motion," Wise said. "I stuck my hand out so slowly and was able to make the catch."
After AIG's 100% rise in 2 weeks,
the banks’ earnings bullshit “earned” on the backs of taxpayers, and the fucking manipulated/spun employment/wage numbers of today I think I prefer a benign dictatorship. I’m moving to fucking Peru.
And yes, I have my wine on. Fucking bastards manipulating the markets. Fuckers. Fucking fucks. (Being in cash sucks when the market is roaring ahead. Thank Allah I am not short.) I believe I am going to purchase a gun soon.
Allah be praised. AAAAAAAAAIIIIIIIIIIIEEEEEEEEEEEEEEEEE!!!!!!!!!!!!!!
We’re a pack of a-holes. And my tradition of contributing absolutely nothing to this site... continues.
you should have seen that thing trading today. just sick. they're playing some gangster games with AIG.
gave a ton of my day away near the close when it suddenly went from 29 (highs) to 26 in perhaps 2 minutes. just a crazy move considering the volume. it bounced back to 27.50, but i stuck my dick in there a little bit too early. nonetheless, that thing is worth keeping an eye on.
Cashing checks and having sex.
The banks have suddenly 'earned'
money because of the SEC deciding to allow assets to not be valued at market if the the company deems the market to be ‘irrational’ . . . get out of jail free card on housing values. These earnings are some of the most misleading results you will ever see. It is close to a joke.
"I can picture in my mind a world without war, a world without hate. And I can picture us attacking that world, because they'd never expect it."
So that was the big accounting change that happened several months back?
Essentially going away from mark-to-market, right? Hurray arbitrary valuations!
Got it
http://www.reuters.com/article/GlobalFinancialRegulation09/idUSTRE54067420090501
Early in April, U.S. accounting rulemakers made changes to allow companies more flexibility in their use of the mark-to-market accounting rule, which has been blamed for forcing banks to record billions of dollars in asset write-downs.
The way that my ACCO professor described it is that the government (Senate?) basically forced the PCAOB’s (or is it FASB who’s in charge? We had a chapter on the hierarchy and it confused the hell out of me) hand, saying that if you don’t implement the change we’ll step in (gotta ‘love’ politicians without the slightest clue on a particular topic stepping in just so they can say they “did something”).
considering the freedom it allowed the banks
i’m guessing it was lobbying to Congress that got that forced through. i remember reading about it, but i didn’t really have the significance explained to me. i’m still not really clear on what mark-to-market means.
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Mark-to-market was confusing to me, too -- it took several explanations before I finally got it
in hindsight, I’m not sure why it took me so long to understand its meaning (slow learner, i guess). Mark-to-market is exactly what it says it is — you’re “marking” your assets on your balance sheet to market value (as opposed to, say, holding them on your balance sheet at original cost). This mainly (exclusively?) relates to securities and investments that companies hold which can sometimes be a pretty non-insignificant portion of a company’s balance sheet. It’s also important (not sure if I need to say this) because these securities are (constantly?) changing in value, so every so often their values need to be ‘recalculated’.
You can see how this is rather important with regards to home mortgages. If a company has a bunch of them and is forced to have them on their books at market value, that’s a huge fucking drag. But hey — just increase spending for your lobbying unit and you can get those assets a bit more “properly” (hah) valued.
This is also the most thorogh application of my accounting knolwedge to date
and so for that…
//fist pump
lol
good stuff all around, keith. here’s one for you: thoughts on an SSS futures market starting with White Sox wins?
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Futures? Projections? That's more your cup-o'-tea than mine, mang.
I’m just here for the poo, ass and dick jokes.
i'm wondering how accurate they'd be compared to the projection systems
more, presumably, since the projection systems would be incorporated into the price.
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Could go either way
I would imagine they’d be overly sensitive to Sox-specific information and less responsive to information coming out from the rest of the division and league.
by KarkoviceIsHawt on Aug 11, 2009 10:53 AM CDT up reply actions
You got it . . . and from a banking perspective, it is obviously huge.
From the banks side, their argument is that these asset values have declined so sharply across everyone’s portfolios that in order to restore their (the banks) asset to loan ratios (due to these asset markdowns) that there is no ‘rational’ market to move these liabilties. Very few can buy and everyone is trying to sell . . . therefore, the ‘irrational’ market argument. Meanwhile, banks are just taking government $ and not really lending as the government wanted because they need to maintain these asset to loan ratios and they know how risky the valuations are on many of the assets. So, they (SEC and gov) are essentially saying ok keep them at more of a ‘historical’ value and lets hope like hell everything stabilizes and housing values recover and everyone can hold hands and skip down the yellow brick road together at the end of all this. Good luck with that. It is really a very dangerous house of cards and you can understand why some prognosticate such doom and gloom because a worst case scenario would be disasterous.
"I can picture in my mind a world without war, a world without hate. And I can picture us attacking that world, because they'd never expect it."
True
But the majority of investors are not fools. Seeing large one-time gains from re-valuation of assets on the income statement are usually red flags to anyone who knows what they are looking for. Most likely the recovery of stock value is not related to the change in accounting methodology. Everyone has already seen the true valuation of most of the mortgage-backed securities on their books, changing the values now would not instill investor confidence if they have any expertise whatsoever. Of course, there is the contingent of people who believe that fair-value accounting(mark-to-market) is wrong and misleading, but to sum up, they are not really the brightest of folk. Historical cost is the most arbitrary of crap and provides very little value with how accounting is accomplished today, which focuses on the balance sheet and less on the income statement.
Many investors are fools.
Is there a rational market? I think not.
We’re a pack of a-holes. And my tradition of contributing absolutely nothing to this site... continues.
Unfortunately, probably true.
I am sometimes too optimistic regarding the average intelligence of those who have large influence on the direction of capital in the market. However, one would hope that people investing millions of dollars can read the most basic of investment information and interpret it in a meaningful way. Again, probably too much to ask for.
Hmmm . . .
most investors are not fools . . . and then you go on about one time gains from re-evaluation of assets on income statements. That in itself is proves the point. It isn’t about one time gains in income. It is about the balance sheet and its inaccurate representation of the actual standing of the company. The ‘earnings’ were just the topic, but not necessarily the reason investors might be fooled. Many investors never make it past the income statement which is sort of sad since that is by far the most easily manipulated statement of the 3.
"I can picture in my mind a world without war, a world without hate. And I can picture us attacking that world, because they'd never expect it."
I dunno
I’m not sure if I totally understand what you are trying to get at. I was simply pointing out that these one time gains should not (but possibly do) fool investors. The balance sheet is the same way. Investors saw the fair market value of these mortgage-backed-securities, and when their valuation suddenly increases greatly after a fairly scrutinized methodology change, they should understand the ramifications. Investors have overwhelmingly stated that fair value is the best valuation tool available in these situations (see the SEC report on fair value and mortgage-backed-securities), and for congress to force this methodology change will not suddenly make investors have more confidence in these companies.
WTF
I’ve been lurking on this site forever, and was finally convinced to sign up so I could get my nerd on and talk about Hayek and econ, and all y’all talk about is securities and Jon Stewart. Boo.
by KarkoviceIsHawt on Aug 9, 2009 12:19 AM CDT reply actions
so bring it son.
quote something and respond. or just go off on a tangent. whatever works for you.
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Hayek
Well I actually meant to complain about the one-day waiting period to post (although I’m sure that’s actually a really good thing—-I wanted to jump in earlier).
I’m not as familiar as I should be with Hayek/Austrian school, so I was hoping someone would enlighten me some more. My understanding is that the major contribution there is about price signals and how markets provide better information on the economy than any other system/institution ever devised. But again, not as familiar as I should be (not an econ major and I find that school particularly difficult to understand).
I actually read Myth of the Rational Market last week, which I thought was excellent, although I was expecting more theory. I guess it would be impossible to cover all of those topics and go into any sort of depth, but I’m interested in that. Particularly, I was hoping to see more of a challenge to the idea of the rational actor (I probably should have been tipped off by the title). I think that the unquestioning faith placed in rational actor theory is the single biggest problem with mainstream econ (behavioral aside, of course).
by KarkoviceIsHawt on Aug 9, 2009 4:21 PM CDT up reply actions
i actually came away thinking that the rational actor model is pretty robust.
and i think most economists would probably agree, including the more behavioral or lefty sorts. i think the Newton—→Einstein transition makes sense as an analogy. for the layperson understanding economics, we should come away with the idea that people are more rational than we might have thought, particularly when there’s lots on the line. the greater the scale of incentive, the more rational we become. as i suggested to WU, consider reading The Myth of the Rational Voter. it’s an interesting test case for the economic understanding of humans, and it’s written by Bryan Caplan, who’s part of the econ department at GMU along with Tyler Cowen, Alex Tabbarok (the two guys who write Marginal Revolution) and Robin Hanson (writes Overcoming Bias). the author, iirc, ultimately submits that the project should move toward uniting the social sciences around a common theory of man which i believe makes sense. in a very true, if somewhat reductionist sense, this all goes back to the brain and hence neurology. i think that’s the banner of unification in this case.
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Interesting
I agree with the notion that people become more rational the more that they understand rationality/economics. Coming from a sociology/psych background, I’m often skeptical of the ability of economics to understand the full picture—and more skeptical of the ability of economists to recognize this.
So I wonder if the researchers that you discuss would be willing to acknowledge that creating any sort of grand unified theory of human behavior will require giving up some pretty important ideas of economics in the process.
I don’t want to assume anything based on stereotypes, but it’s interesting that a GMU professor would suggest such a thing. Isn’t GMU pretty much an east coast version of Chicago, in terms of holding a rationalist/libertarian dogma?
by KarkoviceIsHawt on Aug 9, 2009 5:11 PM CDT up reply actions
I would suggest reading their blogs
along with Brad DeLong, Paul Krugman and Scott Sumner. it’s been pretty neat to watch the discussion.
as for my assessment, i suppose they are libertarian-leaning, but the fundamental thing i’ve noticed is a lack of ideological conviction. they come off like scientists to me, which is all i’m asking for. skepticism, empiricism, an eye for making predictions and questioning your own assumptions are all a part of their regular dialogue blog-wise. Cowen in particular i really like because of his faith and sympathy in humanity.
for example, Greg Mankiw (Harvard, former CEA chair under Bush, author of the current definitive intro macro text and blogger) has more or less the same set of beliefs, but he doesn’t write with the same passion for people, nor does he really seem to “get” blogging in the same way.
also, according to the US News Report, the GMU econ department isn’t anything special whereas Harvard is Harvard. but if i had to pick where to go on the basis of what i’ve read from the two, i’d pick GMU every time. i’d learn far more.
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I've just read an entry or two at Cowen's Marginal Revolution
some real interesting conversation — is he the econ prof at GMU? Might have to add that one to the blog roll…
he's an econ prof at GMU.
along with Caplan, Tabbarok, Hanson and presumably others who don’t have blogs.
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Myth of the Rational Voter
That is actually already on my Amazon queue. It was an optional reading in a class I took in college, and I wish I read it then.
This was in a game theory class I took, and that’s really where my disagreements with rational actor theory stems from. To me, there’s so much tautology in the ideas of rational actors. Ie, there tends to be a lot of formulations like ‘we can’t know enough to say what is rational for an individual, so we have to assume that each individual acted rationally as they defined it’.
At least that’s just in game theory applied to non-economic topics.
I don’t want to beat a dead horse here, and I really should say that I respect a lot of economists and the field of economics. I just have a problem with accepting that the tenets of econ can explain other human behavior, or that we should unquestioningly apply them to other settings.
I’m guessing that the book does a good job of speaking to these points. Is that correct?
by KarkoviceIsHawt on Aug 10, 2009 10:48 AM CDT up reply actions
"I actually read Myth of the Rational Market last week, which I thought was excellent, although I was expecting more theory."
?
Anyway, it should be noted that the rational actor is a discardable assumption. It makes sense when we’re talking about sophisticated quants who work the market. And it makes sense when we’re talking about families making financial decisions about their own well being. And, I’d say, it makes sense to use in macro, where the miracle of aggregation ought to be in play. We need models and we need assumptions to build those models. If the definition is meaningless, then the model likely is. But my guess is there is some interesting fallout from the rational actor assumption in game theory, just as there is for financial markets.
I would say that MotRM does cover those points.
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Myth of the Rational Market != Myth of the Rational Voter
Is that what the ? was about?
Sorry if it wasn’t, all of this is getting a little confusing.
Or if what you’re saying is that MotRM does have a lot of theory, I suppose you’re correct, but it was more of an intellectual history than a discussion of theory, IMO.
by KarkoviceIsHawt on Aug 10, 2009 11:57 AM CDT up reply actions
oops. you got it right in the header.
also, how can you have an intellectual history without a discussion of theory? i mean CAPM, the Black-Scholes model, the French-Fama stuff, etc. are all theory, no?
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made the same mistake at first
I read that first comment and thought “why the hell would he suggest that I read a book that I just said I read?”
Anyway, there definitely was a good discussion of theory in the book, but it didn’t seem to be the central focus. Maybe I’m just such a nerd that I’m not really interested in the narrative elements in it. Then again, I don’t know how it could have been written in any other way.
I guess I should look at it as a good intro to the theory, and should dive into the original sources Fox discusses.
by KarkoviceIsHawt on Aug 10, 2009 3:05 PM CDT up reply actions
as for Hayek, hope Keith and WU read this.
since what I know comes from wikipedia. and i think the limited capacity of central gov’t to perform on behalf of its people is a good point. and in observation, efficient outcomes are somewhat lacking. efficiency is its own good (as in a consumable, not The Good, platonically speaking or something), though. it’s something i’m willing to trade off in certain instances.
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Agreed
That’s a big problem I have with (some) economists. Too often, there’s a failure to recognize that efficiency might not be the only goal that society should attempt.
by KarkoviceIsHawt on Aug 9, 2009 5:08 PM CDT up reply actions
That's something I've (also?) had trouble coming to terms with (the underlying assumption of a people acting "rationally")
as such, I’ve come to view the word “rationally” not in the truest sense of the word (i.e. people weighing all their options and coming to what is logically the best conclusion/decision). Rather, I see the “rational actor” to be a person who — no matter how they came to this conclusion — knows better than anybody else what is best for them. As far as free markets go, the obvious appeal is that it allows people to use their resources however they damn well please. This might not be efficient, as people won’t make rational decisions and as such mistakes will be made. But I don’t necessarily view these “mistakes” as a problem*.
And you seem to have the general points down re: Hayek. Unfortunately I’m not as well versed in von Mises/Hayek as I ought to be — I’m making my way through The Road to Serfdom right now, which so far looks to be a general primer, although nothing on prices yet (which is one of the big pillars of the Austrian school) — so I’m not sure how much input I can provide. The conversation is certainly captivating, though.
*I hope I’m making even a little bit of sense — my prose tends to get clunky at times, especially with a topic like this that I’m still rather shaky on.
Economist Roundtable w/ DeLong, Thoma, Barro and Cowen
Thanks
Something to read tomorrow at work. Wish I could digest that all now.
by KarkoviceIsHawt on Aug 9, 2009 8:45 PM CDT up reply actions
Niall Ferguson in today's FT:
Felix the Cat, the wonderful, wonderful cat! Whenever he gets in a fix, he reaches into his bag of tricks!
President Barack Obama reminds me of Felix the Cat. One of the best-loved cartoon characters of the 1920s, Felix was not only black. He was also very, very lucky. And that pretty much sums up the 44th president of the US as he takes a well-earned summer break after just over six months in the world’s biggest and toughest job.
http://www.ft.com/cms/s/0/c24385ce-85ef-11de-98de-00144feabdc0.html
We’re a pack of a-holes. And my tradition of contributing absolutely nothing to this site... continues.
Good to see
that Ferguson has moved away from trumpeting The White Man’s Burden Redux so he can focus on saying things designed to mildly annoy people who are overly sensitive of criticism of the president.
Seriously though, my Felix the Cat is white.
by KarkoviceIsHawt on Aug 11, 2009 3:58 PM CDT up reply actions
Those Danes are not immune to a little "racy" humour.
Ask Cheat. He’ll don a hood with the best of ’em.
We’re a pack of a-holes. And my tradition of contributing absolutely nothing to this site... continues.
Colin...
I gotta thank you for pointing out Marginal Revolution — that website is right up my ally. He seems to dabble in not only economics but also poly sci and a little political philosophy. There’s also some other neat things that he’s linked to (like today, for example, the list of kids’ most popular google searches).
And it helps, of course, that I tend to lean the same way he does.
ditto
the linked article to health care economics yesterday was staggeringly awesome.
"I can picture in my mind a world without war, a world without hate. And I can picture us attacking that world, because they'd never expect it."
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