6 ms·

> incredible track record of dead-wrong predictions The Austrian School economics methodology does not allow for making predictions. See e.g. the note at the

by svv 13y ago

> incredible track record of dead-wrong predictions The Austrian School economics methodology does not allow for making predictions. See e.g. the note at the beginning of http://wiki.mises.org/wiki/Austrian_predictions http://wiki.mises.org/wiki/Austrian_predictions It provides certain tools and models that one can use for explaining events and reasoning about policy options. These reasoning can be used as a basis of predictions (along with the other, non-economics-theoretic assumptions), but the predictions themselves will fall outside of the economics science in the Austrian School sense. Basically, if your analysis manages to reason away uncertainty of the future, you're not following Austrian methodology. And no, the Austrian methodology won't even let you quantify that future uncertainty in probabilistic terms: that would only be possible if it used causal explanations of human action; instead, it relies on teleological, goal-oriented explanations. Now, questioning and disputing the value, coherence and real-world applicability of the Austrian methodology is perfectly OK. (Personally, I find the Austrian economists' disregard for formal notations very unfortunate, as I've mentioned in another discussion: https://news.ycombinator.com/item?id=1647747 https://news.ycombinator.com/item?id=1647747) Your comment, however, seems to be simply misguided, based on a flawed understanding of the issue, and the sarcastic tone is unlikely to facilitate a constructive discussion. (Edited: spelling.)

eli_gottlieb 13y ago
Unfortunately for the Austrian school, prediction is the heart and soul of science. You cannot claim to be doing science in any sense if you do not make predictions based on falsifiable hypotheses. As you imply, this is why teleology is not a science, though large-scale statistical studies in fields like politics and sociology have made plenty of scientific headway by ignoring the core Austrian belief system and conducting empirical studies about human actions and preferences anyway.
n1ghtm4n 13y ago
Austrian School economists don't make predictions, but when they do they're right 100% of the time, except when they're wrong in which case I will remind you that Austrian School economists don't make predictions. If you think I'm exaggerating, check out this unintentionally hilarious excerpt from the Ludwig von Mises Institute wiki. See if you can count how many times they flip-flop on whether they make predictions. Austrian predictions This page attempts to list various predictions made by Austrian economists about important economic and other developments. Important note: Austrian economists, as Austrian economists, or praxeologists, do not predict. They can predict not as formal economists, or praxeologists, but, rather, in their role as thymologists, or economic historians. In praxeology, A causes B, other things remaining the same. But, in the real world, other things cannot be relied upon to always remain constant. Therefore, predictions of the "A will necessarily lead to B" type are strictly prohibited. Instead, praxeologists, but not thymologists, must limit themselves to statements of the if-A then-B variety. With this in mind, it is interesting that Austrian economists have been quite successful at predicting major events.[1] http://wiki.mises.org/wiki/Austrian_predictions http://wiki.mises.org/wiki/Austrian_predictions
vwfwerwetqwerqw 13y ago
You probably know more about economics than me (I'm just a mathematician), so I won't argue against you, but if I understand your two posts correctly, it seems like what you're describing is completely useless. If a model doesn't have predictive power then what is it good for? I understand from your other post that the justification of Austrian "models"/"explanations" comes from their simplicity. Which I guess is some application of Occam's razor? But that makes no sense - the simplicity of a model on it's own is no indication of correctness. You always need some notion of the likelihood of the observed evidence under that given model. Otherwise, you can just say "all people make all decisions completely randomly" and that's the simplest model of all. A completely non-predictive model has no real-world meaning, because it can't be used to effect reality. I suspect that Austrian models do effectively have some small predictive power - there is an implicit causal analysis that comes from the small element of qualitative evaluation of uncertainty, no doubt used instinctively by practitioners to decide whether an argument sounds plausible. Anyway, it all sounds completely ridiculous. How is their method of choosing explanations any better than a witchdoctor deciding that thunder is a sign of the gods being angry?
- deleted 13y ago
  [deleted]
- jacques_chester 13y ago
  Austrians argue that predictions can't, as a matter of epistemology, be made. Of course, humans do that all the time. What's missing from the original Austrian concept in Mises is allowing for imprecision -- making accurate predictions with error bars for variability below the threshold of detection. What von Mises didn't like about this and what Rothbard hated about it is that such predictions are statistical and probablistic in nature. They aren't deontological, they can't be nutted out a priori from first principles. They have a real bee in their bonnet about it. It's a shadow (ha!) of Platonist/Aristotelian bunfights. Out here in that's-nice-but-I-have-shit-to-do land, grownups accept that models are wrong. But even if the map is not the territory, most of the time it's still good to have a map.
  - vwfwerwetqwerqw 13y ago

by svv 13y ago

eli_gottlieb 13y ago

Unfortunately for the Austrian school, prediction is the heart and soul of science. You cannot claim to be doing science in any sense if you do not make predictions based on falsifiable hypotheses. As you imply, this is why teleology is not a science, though large-scale statistical studies in fields like politics and sociology have made plenty of scientific headway by ignoring the core Austrian belief system and conducting empirical studies about human actions and preferences anyway.

n1ghtm4n 13y ago

Austrian School economists don't make predictions, but when they do they're right 100% of the time, except when they're wrong in which case I will remind you that Austrian School economists don't make predictions. If you think I'm exaggerating, check out this unintentionally hilarious excerpt from the Ludwig von Mises Institute wiki. See if you can count how many times they flip-flop on whether they make predictions. Austrian predictions This page attempts to list various predictions made by Austrian economists about important economic and other developments. Important note: Austrian economists, as Austrian economists, or praxeologists, do not predict. They can predict not as formal economists, or praxeologists, but, rather, in their role as thymologists, or economic historians. In praxeology, A causes B, other things remaining the same. But, in the real world, other things cannot be relied upon to always remain constant. Therefore, predictions of the "A will necessarily lead to B" type are strictly prohibited. Instead, praxeologists, but not thymologists, must limit themselves to statements of the if-A then-B variety. With this in mind, it is interesting that Austrian economists have been quite successful at predicting major events.[1] http://wiki.mises.org/wiki/Austrian_predictions http://wiki.mises.org/wiki/Austrian_predictions

vwfwerwetqwerqw 13y ago

You probably know more about economics than me (I'm just a mathematician), so I won't argue against you, but if I understand your two posts correctly, it seems like what you're describing is completely useless. If a model doesn't have predictive power then what is it good for? I understand from your other post that the justification of Austrian "models"/"explanations" comes from their simplicity. Which I guess is some application of Occam's razor? But that makes no sense - the simplicity of a model on it's own is no indication of correctness. You always need some notion of the likelihood of the observed evidence under that given model. Otherwise, you can just say "all people make all decisions completely randomly" and that's the simplest model of all. A completely non-predictive model has no real-world meaning, because it can't be used to effect reality. I suspect that Austrian models do effectively have some small predictive power - there is an implicit causal analysis that comes from the small element of qualitative evaluation of uncertainty, no doubt used instinctively by practitioners to decide whether an argument sounds plausible. Anyway, it all sounds completely ridiculous. How is their method of choosing explanations any better than a witchdoctor deciding that thunder is a sign of the gods being angry?

deleted 13y ago
[deleted]
jacques_chester 13y ago
Austrians argue that predictions can't, as a matter of epistemology, be made. Of course, humans do that all the time. What's missing from the original Austrian concept in Mises is allowing for imprecision -- making accurate predictions with error bars for variability below the threshold of detection. What von Mises didn't like about this and what Rothbard hated about it is that such predictions are statistical and probablistic in nature. They aren't deontological, they can't be nutted out a priori from first principles. They have a real bee in their bonnet about it. It's a shadow (ha!) of Platonist/Aristotelian bunfights. Out here in that's-nice-but-I-have-shit-to-do land, grownups accept that models are wrong. But even if the map is not the territory, most of the time it's still good to have a map.
- vwfwerwetqwerqw 13y ago