The Future of Everything

July 17, 2017

On straw men

Filed under: Uncategorized — David @ 2:59 pm

From the preface to Economyths: 11 Ways Economics Gets It Wrong

As anticipated in the 2010 version of Economyths, many economists have argued that the economyths are an unfair caricature of their field – a ‘straw man’ I am setting up to easily defeat. Four things to add. First, this argument is a little over-used. ‘Read any review of a heterodox book by an economist’, noted Cahal Moran in 2011, and ‘you will find the exact same rhetoric’: the author is ‘attacking straw men, he doesn’t understand economics, etc.’ An external investigation into the economics department at the University of Manitoba in 2015 found that ‘the insistence by the mainstreamers that the heterodox are attacking a straw man could be labelled “gaslighting” [i.e. psychologically manipulating someone into doubting their own sanity]. Even as some heterodox are subject to unfriendly discrimination, ridicule, hostility, and censure, some mainstreamers simply deny it and insist the others are making it all up.’ Call me crazy, but I think they have a point.

Secondly, economists have long deflected criticism by claiming that key assumptions such as the rational behaviour of ‘economic man’, as Lionel Robbins put it in 1932, are ‘only an expository device – a first approximation used very cautiously at one stage in the development of arguments’. (As seen in the Appendix, economists repeat the identical argument today.) But that same ‘economic man’ – which as a view of human behaviour is less a first approximation than a severe distortion – reached perhaps its most gloriously exaggerated form in the Arrow-Debreu model (Chapter 5) well after Robbins dismissed it as a ‘bogey’ (the expression ‘straw man’ was not yet in vogue), and remains at the heart of much economic modelling, which is why eight decades later we could name a book after its impending twilight with no fear of redundancy.

Thirdly, there is also a longstanding tradition in which, as Moran and his co-authors Joe Earle and Zach Ward-Perkins put it in The Econocracy: ‘The concerns of critics are said to be addressed when economists find some way of incorporating their critiques into existing frameworks. The result is often a highly stylised version of what the critic had in mind, and may drop the things that are most important while conforming to certain assumptions that the critic may reject.’ When economists consider small departures from something like equilibrium – they would have to, wouldn’t they? – or arrange patches for the more egregious examples of ‘market failure’ – such as the environmental crisis – they are like the ancient astronomers who added extra epicycles to their geocentric models of the cosmos to better fit observations, while still assuming that the universe was based on circles and the sun went around the earth. In fact it is economists who have set up a highly simplified version of the real world – but instead of destroying it, they hold it up as an ideal to which real economies can only aspire. (And if that is a ‘caricature’ or a ‘straw man’, we will stop attacking it when it stops threatening to blow up the world.)

Finally, I take pains in the book to show that the arguments apply not just to this pure textbook version of the theory, but to anything near it, epicycles and all. And as we’ll see, supposedly sophisticated models may deviate from these foundational assumptions, but they can never stray too far without losing internal consistency – which is exactly why the field finds itself in a state of crisis.

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July 16, 2017

Time for critics of economics critics to move on!

Filed under: Uncategorized — David @ 3:28 pm

There is a growing trend for economists to write articles criticising the critics of economics. These articles follow a similar pattern. They start by saying that the criticisms are “both repetitive and increasingly misdirected” as economist Diane Coyle wrote, and might complain that they don’t want to hear one more time Queen Elizabeth’s question, on a 2008 visit to the London School of Economics: “Why did nobody see it coming?”

Economist Noah Smith agrees that “blanket critiques of the economics discipline have been standardized to the point where it’s pretty easy to predict how they’ll proceed.” Unlike the crisis then! “Economists will be castigated for their failure to foresee the Great Recession. Some unrealistic assumptions in mainstream macroeconomic models will be mentioned. Economists will be cast as priests of free-market ideology, whose shortcomings will be vigorously asserted.” And so on.

The articles criticising critics then tell critics it is time to adopt a “more constructive tone” and “focus on what is going right in the economics discipline” (Smith) because “only if today’s critics of economics pay more attention to what economists are actually doing will they be able to make a meaningful contribution to assessing the state of the discipline” (Coyle). If the critics being criticised are not economists, the articles often point out or imply that they don’t know what they are talking about, are attacking a straw man, etc., or even (not these authors) compare them to climate change deniers.

Speaking as an early adopter of the Queen Elizabeth story (in my 2010 book Economyths, recently re-released in extended form), allow me to say that I agree completely with these critic critics. Yes, economists failed to predict the most significant economic event of their lifetimes. Yes, their models couldn’t have predicted it, even in principle, based as they were on the idea that markets are inherently self-stabilising. And yes, economists didn’t just fail to predict the crisis, they helped cause it, through their use of flawed risk models which gave a false sense of security.

But it is time for us critics to move on, and accentuate the positive. Only by doing so can we make a meaningful contribution. And as Smith points out, calls for “humility on the part of economists” are getting old (Tomáš Sedláček, Roman Chlupatý and I wrote Bescheidenheit – für eine neue Ökonomie five years ago). It’s like asking Donald Trump to admit that he once lost at something.

Of course, some people might say that it isn’t up to economists to tell everyone else when they should stop talking about economists’ role in the crisis, or bring up what the former head of the UK Treasury memorably called in 2016 their “monumental collective intellectual error.”

Some stick-in-the-muds note that “No one took any responsibility or blame for a forecasting failure that led to a policy disaster” and have called for a public inquiry into their role in the crisis. Instead of telling everyone else to move on, they argue, it is time for economists to own their mistakes. Well guess what, people – it’s not going to happen! And stop asking for a public apology. Let’s focus on what is going right and hand out some gold stars.

For example, there is the “data revolution” heralded by Smith. As he notes, “econ is paying a lot more attention to data these days.” Sure, economists are literally the last group of researchers on earth to have realised the usefulness of data. In physics the “data revolution” happened back when astronomers like Tycho Brahe pointed their telescopes at the sky and began to question the theories of Aristotle. But better late than never!

Oh, here’s a data point – all the orthodox theories failed during the crisis! But you knew that.

Or there is behavioral economics, which Coyle notes is “one of the most popular areas of the discipline now, among academics and students alike.” Critics again might note that progress in this area has been painfully slow and has had little real impact. Tweaks such as “hyperbolic discounting” are equivalent to ancient astronomers appending epicycles to their models to make them look slightly more realistic. But that rational economic man thing is so over – straw man walking.

Admittedly, there has been less progress on a few things. The equilibrium models used by policy makers, for example, still rely on the concept of equilibrium – and so have nothing to say on the cause or nature of financial crises. Risk models used by banks and other financial institutions still view markets as governed by the independent actions of rational economic man investors, and are more useful for hiding risk than for estimating it, as quant Paul Wilmott and I have argued.

As Paul Krugman noted in 2016, “we really don’t know how to model personal income distribution,” even though social inequality – along with financial instability – is one of the biggest economic issues of our time. Some insiders such as World Bank chief economist Paul Romer – who compared a chain of reasoning in the field of macroeconomics to “blah blah blah” – describe the area as “pseudo-science”. And economics education still concentrates almost solely on the discredited neoclassical approach, complete with rational economic man, according to the student authors of The Econocracy.

But these are details. As Coyle notes, some economists are finally getting to grips with ideas from areas such as “complexity theory, network theory, and agent-based modeling” which of course are exactly those areas that critics have long been suggesting they learn from.

Or the UK’s Economic and Social Research Council recently let it be known that it is setting up a network of experts from different disciplines including “psychology, anthropology, sociology, neuroscience, economic history, political science, biology and physics,” whose task it will be to “revolutionise” the field of economics. Again, that is nice, since Economyths called in its final chapter for just such an intervention by non-economists back in 2010.

So, yes, it is time to celebrate the new dawn of economics! But critics of critics – do try to move on from the same criticisms, we’ve heard it all before, in fact for decades now.

April 5, 2015

Profile at Catalysta.org

Filed under: Uncategorized — Tags: — David @ 9:23 pm

David Orrell profile

Profile at Catalysta.org

September 26, 2014

Podcast review of Truth or Beauty

Filed under: Uncategorized — David @ 3:54 pm

Listen to the podcast review of Truth or Beauty: Science and the Quest For Order from Burning Books.

Also available for download on iTunes.

 

May 19, 2014

World Finance: Unconditional basic income

Filed under: Uncategorized — Tags: — David @ 7:05 pm

Discussing basic income with Green Party’s Natalie Bennett

June 24, 2013

Canada house prices – has the market peaked?

Filed under: Uncategorized — David @ 2:37 pm

It is always hard to call the top of the market. But let’s try anyway.

Toronto house prices reached a record high in May.

At the same time, as the figure below shows, mortgage applications took a huge tumble.

This was before mortgage rates started to creep up. In April you could get a 5-year mortgage for an amazingly cheap 2.89%. That has since increased by 0.5% to 3.39%. In other words, the cost of borrowing money just increased by 17%.

Thousands of unsold condominiums will also come onto the market over the next couple of years.

Of course, this doesn’t mean a crash. Perhaps Canada will follow the path of the UK – a hefty devaluation and static house prices which slowly lose value in real terms. But over several years, it amounts to pretty much the same thing.

New mortgage applications

May 28, 2013

Reviews of Truth or Beauty by David Orrell

Filed under: Reviews, Uncategorized — Tags: — David @ 6:13 pm

Here is a compilation of reviews of Truth or Beauty

Sources: The Sunday Times, Nature, V&A Magazine, Quill & Quire, Burning Books (podcast)

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Critchley, Ian. “Truth or Beauty: Science and the Quest for Order by David Orrell. How scientists’ search for unity and symmetry may be leading them astray.” The Sunday Times, 20 January 2013.

For centuries, scientists have believed the universe to be rational and ordered, and that the laws governing it must therefore be straightforward. In this fascinating book, the mathematician David Orrell argues that this wish to find cosmic order has been motivated as much by an aesthetic impulse as by a quest for truth. Scientists and mathematicians want the universe to display qualities such as harmony, unity and symmetry. Above all, they desire it to be beautiful. James Watson, one of the biologists who discovered the structure of DNA, was convinced that ‘“the truth, once found, would be simple as well as pretty”.

But the universe has turned out to be much more complex and much less harmonious than scientists hoped. The double helix structure of DNA might be deemed elegant, but it is the “flaws”, or mutations, in DNA that drive evolution. Quantum theory has turned classical notions of the atom on their head. Artists such as the surrealists were quick to embrace the new science, incorporating ideas of uncertainty and spatial distortion into their work. But scientists have long struggled to accept the “unaesthetic” complexity their work has revealed. The search goes on for a single “Theory of Everything”, and Orrell shows that contemporary ideas such as string theory and supersymmetry are the latest in a long line of attempts to uncover universal unity.

This failure of scientists accurately to describe reality might not matter so much if confined to the theoretical, but Orrell shows it has real-life implications that affect us all. Traditional economic models, for example, are based on the assumption that the economy yearns to be stable. The inability of the models to predict and accommodate instabi1ity, he writes, was partly responsible for the current financial crisis. He is scathing about the search for beauty at the expense of practicality and substance: “It is much easier to claim that a theory is beautiful, than to show that it actually works or makes sense.”

Orrell is an engaging and witty writer, adept at explaining often complicated theories in clear language, and never allowing the detail to overwhelm his narrative. If there is one criticism of the book, it is that, surrealists aside, it is frustratingly light on how non-scientists define and interpret aesthetics. Orrell writes in passing about the Zen Buddhist aesthetic of wabi-sabi, which believes beauty to be impermanent and imperfect, and it would have been interesting to have more of such contrasting viewpoints. Nevertheless, he argues persuasively that scientists need to let go of outmoded aesthetic notions and embrace complexity — in other words, they must reflect reality rather than imposing ideas on reality. If they don’t, he says, “we risk seeing the model of the sunset rather than the sunset itself.”

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“Books in brief.” Nature 491, 525, 22 November 2012.

The philosopher Bertrand Russell averred that mathematics has a beauty “sublimely pure, and capable of a stern perfection”. But is science inextricably allied to aesthetic beauty? In applied mathematician David Orrell’s exploration of the Pythagorean quest to realise the cosmos mathematically, the cracks in that paradigm show. Orrell swings from the ancient preoccupation with musical harmony and numerical ratios to Renaissance nature studies, the mechanistic approach and the physical sciences of today. Imperfect as it is, ‘messy’ science, he argues, has a novel beauty of its own.

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Benjamin Eastham. “Review of Truth or Beauty: Science and the Quest for Order by David Orrell.” V&A Magazine, Spring 2013.

The proliferation of popular science programmes on television has accustomed us to bespectacled men talking breathlessly about the beauty of mathematical formulae. Realising that their audience will be overwhelmed by shameful feelings of inadequacy if asked to follow them through any algebraic proof of Einstein’s theory of relativity, these unnervingly jaunty ‘ scientists instead invoke the formula’s epigrammatic elegance as proof of its truth. The implication is that, as Keats said in a letter that echoes the famous line upon which the title of this book plays, “What the imagination seizes as Beauty must be truth”. If you have to take the science behind E=MC2 on trust, you can none the less grasp its beauty.

The mathematician David Orrell here puts forward a compelling argument that this tendency to conflate truth with beauty is as much a hindrance as a help to scientific progress. He presents as an illuminating historical example the tortuous amendments made to early models of the solar system in order to describe its operations in terms of perfect circles. It was a source of disappointment to even Johannes Kepler that the planetary orbits should be discovered to trace less pleasing ellipses.

We assume that such delusions of flawless celestial order are confined to a past in which scientific endeavour was geared towards revealing the workings of a rational god. Yet Orrell contends that many physicists continue to allow a faith in the intrinsic orderliness of underlying principles to blind them to empirical evidence to the contrary (a contention contested by the smattering of engineers and scientists I consulted). The ultimate expression of this tendency is the search for a single rule that will rationalise every action of the universe, a Grand Unified Theory that could “fit on the front of a T-shirt”. It is remarkable that, in a society sceptical of grand narratives, the hypothetical ability of physics to formulate a pithy Theory of Everything is tantamount to received wisdom. I found myself worrying, as Orrell took me at walking pace through the paradox of Schrodinger’s cat, at how hubristic we might seem to future generations.

The three properties of beauty which “apply to mathematical formulae and scientific theory as well as they apply to art or architecture” are identified by Orrell as “elegance, unity and symmetry”. It struck me on reading this that the aesthetic principles to which scientists are so devoted would see them banished to the naughty step at any self- respecting art school. This conception of beauty, wedded to principles pre-dating Socrates, might to anyone even loosely familiar with a century’s progress in art, poetry and music seem at best archaic and at worst reactionary.

It is ironic, too, that the artistic insurrections of the last century were in large part conceived to keep step with science. Picasso, Braque, Schoenberg, Dali and Kandinsky are among those to have pioneered revolutionary aesthetics that drew on new ideas of time and space. Writing about that period, Orrell acknowledges that “relativity and quantum physics together were pointing the Way to an alternative conception of beauty … which artists were more willing to take seriously than most scientists”.

Instead, he argues, science continues to play down evidence that contradicts its predilection towards unity and harmony. Among the speculative frameworks to reassert the primacy of those principles is the exceptionally elegant theory of supersymmetry, which posits that every elementary particle possesses an equal and opposite twin, a dark matter doppelganger. The neatness of the idea is seductive, but experimental evidence remains elusive.

This prompts Orrell to question whether cultural factors are responsible for science’s aesthetic conservatism. Such hierarchical, ordered notions of metaphysical beauty might be “a projection of a particular gendered worldview” in a discipline dominated by men, and also bear traces of the military’s close links to research institutions. It is thrilling to question the high-minded objectivity of scientific discourse, and Orrell makes a convincing case for the adoption of new aesthetic principles that acknowledge the self-creative and unpredictable nature of “complex systems” — such as the weather and collective economic behaviour — which stubbornly refuse to adhere to predictions based on rational assumptions.

This rallying call for a new approach — “we need to change our aesthetic, from seeing the world as a machine to seeing it as a lived system” — brought to mind the sculptures of Eva Hesse, the performances of Joseph Beuys and John Dewey’s Art as Experience, which argued (in 1932!) that the “formal conditions of artistic form” are “rooted deep in the world itself”. This engrossing book begins by questioning the assumption that truth and beauty are coextensive, but ends with the more exciting proposal that we must formulate new ideals of beauty if we are to advance in our search for the truths that both scientists and artists pursue.

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Alex Good. “Truth or Beauty: Science and the Quest for Order.” Quill & Quire, January/February 2013.

Due to the nature of science itself, scientific truth is always provisional. And beauty, so the saying goes, is in the eye of the beholder. Given these shifting sands, physicist David Orrell has taken on a tricky subject in his treatise on how aesthetic paradigms have influenced the history and development of science.

In Orrell’s conception, aesthetics describe not just the philosophy of beauty, but any mode of perception motivated by a set of values. He illustrates how one particular aesthetic – characterized by “masculine,” “right-handed” properties such as elegance, harmony, symmetry, integrity, unity, and order – has dominated scientific thinking since the days of Pythagoras, leading to a misconception of the essential nature of the universe. In opposition to this reductionist view, Orrell proposes a “complexity approach,” which involves shifting from a mechanical paradigm to a natural, organic one that values the whole over the parts, context over abstraction, possibility over predictability.

Orrell casts a wide net, both in terms of historical scope and the range of disciplines covered, moving from math and physics to economics and sociology. While such a broad approach may appeal to the general reader, it has the effect of blurring the book’s focus somewhat. Orrell provides a general history of major developments in science that aren’t always strictly on topic. It is only in the book’s final sections that the author addresses his main point, which is that the historically dominant mechanical aesthetic in science is showing itself to be less reliable, and indeed less grounded in the reality of our modern age (his major targets in this respect are string theory and deterministic economic modelling).

Orrell presents a fascinating and mostly coherent account of recent developments in science, though the paradigm shift he proposes may be less radical than it seems. A complexity aesthetic may just be the next step in the natural evolution in scientific thinking, a course adjustment made in order to deal with new fields of scientific inquiry and new evidence provided by emerging technologies. Furthermore, whether a delight in disorder, impermanence, and imperfection will provide us with concepts as productive and “true” as the mechanical models of the past is a question that has yet to be answered.

If it does, we may look back upon Truth or Beauty as an important manifesto for our age. But even if it doesn’t, Orrell has provided an intriguing way of thinking about how we got here.

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Burning Books, 26 September 2014.

 

Listen to the podcast review from Burning Books.

Also available for download on iTunes.

 

April 10, 2013

Truth or Beauty shortlisted for book award

Filed under: Uncategorized — Tags: — David @ 2:09 pm

Truth or Beauty has been shortlisted for the Canadian Science Writers’ Association book award! Other finalists are Bébé Illimités by Dominique Forget, Devils Curve by Arno Kopecky, Fatal Flaws, by Jay Ingram, and Seeking Sickness by Alan Cassels.

 

March 22, 2013

Truth or Beauty in The Globe and Mail

Filed under: Uncategorized — Tags: — David @ 3:10 pm

“Inside the elegant universe, perhaps, is something messy, struggling to make itself understood.” Robert Everett-Green on Truth or Beauty in The Globe and Mail.

March 13, 2013

V&A reviews Truth or Beauty

Filed under: Uncategorized — Tags: — David @ 12:07 am

“The aesthetic principles scientists are devoted to would see them banished to the naughty step at a self-respecting art school.” From a review of Truth or Beauty by Benjamin Eastham in V&A Magazine.

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