Who Here Is an Economist?

Off Topic Politics and World Issues
21

[quote]LIFTICVSMAXIMVS wrote:
The Mage wrote:
It has everything to do with psychology.

Economics is not a physical science, it is a social one.

Uhhh…

No, economics has nothing to do with psychology.

If you have a bank account with no money in it the economy does not give a wit how manic or depressed you happen to be. You still cannot spend any money you do not have. If you spend credit over and above what you can pay back anyway there will be consequences. The economy does not care how happy anyone is.

Economic law prevails over psychology.

And I never stated economics wasn’t a social “science”. Though it is not strictly a science. Psychology is neither a science nor social.[/quote]

Isn’t the austrian school also called the psychological school?

22

[quote]LIFTICVSMAXIMVS wrote:

But not to a real economist. A real economist cannot say why a human does certain things beyond “self interest”. He can only say what will happen as a result of many persons acting in “self interest”; however, psychology plays no role in what a real economist does.

Besides, no one can predict human actions – not even a psychologist!

So, maybe you are right if you say psychology affects human action. Though it is a tautological statement. In other words – no shit! but we will never learn anything about economics from it.[/quote]

I’m sorry, but you can in fact predict human actions. Obviously not with 100% accuracy, but you can. Everyone likes to think they are somehow different from everybody else, but people are more alike then they admit. In magic there is a whole field called mentalism that exploits this fact.

It is known that when something becomes more expensive, generally less people buy it. Apples become more expensive, and people are less likely to buy them, while if bananas drop at the same time, sales of bananas will increase.

Interestingly it seems to work the opposite in the investment world.

Just today I listened to an Economist talking about the increase in minimum wage, and offered an estimate (prediction) of the number of people who would lose their job as a result. The number was higher then if the increase occurred in “good” economic times. But there it was, an Economist offering a prediction.

Now there are a lot of Economists making predictions, and most of them don’t know shit. Although too many are not really doing economics, many are salesmen, politicians, or sometimes there just saying things because it gets them on TV.

Let’s say you bought a lemonade stand that sells 100 glasses of lemonade a day at $1 a glass. You decide that instead of grossing $100 a day, you could sell each glass at $10, and gross $1000 a day. Obviously you will lose most, if not all of your customers.

Naturally this is an extreme example, but there are people who actually try this on a smaller scale, and are always surprised when their sales drop.

When you try to predict what one person is going to do, that is guessing. But when you try to predict what thousands of people are going to do, that is statistics.

23

[quote]LIFTICVSMAXIMVS wrote:
The Mage wrote:
The economy wasn’t bad until we were told it was bad.

Nope. It became bad as soon as people started going into debt they could not pay back. It became worse when the lenders of last resort thought more debt would fix the problem of lack of spending. It is terminally bad and it will not change until certain fundamental facts change.

Just because someone might choose to ignore their financial situation does not mean they are economically better off living in ignorance.

Economics has nothing to do with psychology.[/quote]

This is right. Except for the last part. Psychology has a lot to do with economics as it influences spending and consumption. But the Mage is absolutely wrong that things were just fine until people ‘believed’ otherwise. The problem was caused by the lending and borrowing practices in this country. And when the financial institutions collapsed, that was like a nail in the coffin.

24

[quote]jsbrook wrote:
LIFTICVSMAXIMVS wrote:
The Mage wrote:
The economy wasn’t bad until we were told it was bad.

Nope. It became bad as soon as people started going into debt they could not pay back. It became worse when the lenders of last resort thought more debt would fix the problem of lack of spending. It is terminally bad and it will not change until certain fundamental facts change.

Just because someone might choose to ignore their financial situation does not mean they are economically better off living in ignorance.

Economics has nothing to do with psychology.

This is right. Except for the last part. Psychology has a lot to do with economics as it influences spending and consumption. But the Mage is absolutely wrong that things were just fine until people ‘believed’ otherwise. The problem was caused by the lending and borrowing practices in this country. And when the financial institutions collapsed, that was like a nail in the coffin.

[/quote]

Wait a second, you’re saying it’s not “All” and its’ not “none”? This is PWI, we’re binary around here.

25

You guys…

Fine the economy is psychology. There.

You still won’t have any understanding of it. But fine.

26

[quote]belligerent wrote:
LIFTICVSMAXIMVS wrote:
The Mage wrote:
It has everything to do with psychology.

Economics is not a physical science, it is a social one.

Uhhh…

No, economics has nothing to do with psychology.

If you have a bank account with no money in it the economy does not give a wit how manic or depressed you happen to be. You still cannot spend any money you do not have. If you spend credit over and above what you can pay back anyway there will be consequences. The economy does not care how happy anyone is.

Economic law prevails over psychology.

And I never stated economics wasn’t a social “science”. Though it is not strictly a science. Psychology is neither a science nor social.

Isn’t the austrian school also called the psychological school?
[/quote]

No.

27

[quote]Gambit_Lost wrote:
jsbrook wrote:
LIFTICVSMAXIMVS wrote:
The Mage wrote:
The economy wasn’t bad until we were told it was bad.

Nope. It became bad as soon as people started going into debt they could not pay back. It became worse when the lenders of last resort thought more debt would fix the problem of lack of spending. It is terminally bad and it will not change until certain fundamental facts change.

Just because someone might choose to ignore their financial situation does not mean they are economically better off living in ignorance.

Economics has nothing to do with psychology.

This is right. Except for the last part. Psychology has a lot to do with economics as it influences spending and consumption. But the Mage is absolutely wrong that things were just fine until people ‘believed’ otherwise. The problem was caused by the lending and borrowing practices in this country. And when the financial institutions collapsed, that was like a nail in the coffin.

Wait a second, you’re saying it’s not “All” and its’ not “none”? This is PWI, we’re binary around here. [/quote]

I know. What was I thinking?! I apologize.

28

[quote]LIFTICVSMAXIMVS wrote:
You guys…

Fine the economy is psychology. There.

You still won’t have any understanding of it. But fine.[/quote]

Clearly you don’t…it is inconceivable that you don’t grasp that consumer confidence affects spending and consumption which are an integral part of the economy as surely as production is.

Sounds like maybe you are actually admitting this though from your other post.

29

[quote]jsbrook wrote:
LIFTICVSMAXIMVS wrote:
You guys…

Fine the economy is psychology. There.

You still won’t have any understanding of it. But fine.

Clearly you don’t…it is inconceivable that you don’t grasp that consumer confidence affects spending and consumption which are an integral part of the economy as surely as production is.

Sounds like maybe you are actually admitting this though from your other post. [/quote]

And it is amazing that you don’t understand that spending money one doesn’t have (regardless of how happy you are while doing it) doesn’t mean the economy is better off for it.

It is not spending that affects the economy it is production. You cannot consume something that does not exist.

Besides, what effects one’s psychology? Is it my bank account, is it my health, it is…?

…do you not see the circles one is forced to go in to figure out what affects people’s psychology?

Is it the economy that effects psychology or vice-versa? It is circular logic and it does nothing to help understanding of reality.

30

[quote]belligerent wrote:

Isn’t the austrian school also called the psychological school?[/quote]

Yes.

31

I’m not an economist, but one of my favorite economists wrote:

-Thomas Sowell, Basic Economics A Citizen’s guide to the economy

http://www.hoover.org/bios/sowell.html

This is very broad and leaves room for various research from how individuals choose to allocate their limited resources and why, to the unintended consequences of govt policies.

For example, as a Ph.D. candidate at George Mason University (where Walter Williams teaches), you can study:

-Austrian economics
-Constitutional economics
-Economic history
-Economics and religion
-Experimental economics
-Industrial organization
-Law and economics
-Monetary theory
-Public choice
-Public finance

http://chss.gmu.edu/programs/requirements/LA-PHD-ECON

32

[quote]LIFTICVSMAXIMVS wrote:
jsbrook wrote:
LIFTICVSMAXIMVS wrote:
You guys…

Fine the economy is psychology. There.

You still won’t have any understanding of it. But fine.

Clearly you don’t…it is inconceivable that you don’t grasp that consumer confidence affects spending and consumption which are an integral part of the economy as surely as production is.

Sounds like maybe you are actually admitting this though from your other post.

And it is amazing that you don’t understand that spending money one doesn’t have (regardless of how happy you are while doing it) doesn’t mean the economy is better off for it.

It is not spending that affects the economy it is production. You cannot consume something that does not exist.

Besides, what effects one’s psychology? Is it my bank account, is it my health, it is…?

…do you not see the circles one is forced to go in to figure out what affects people’s psychology?

Is it the economy that effects psychology or vice-versa? It is circular logic and it does nothing to help understanding of reality.[/quote]

You are so wrong. It’s amazing. No consumer confidence = no spending at restaurants, at stores, etc… It’s happening all over the place. Less production is necessary. Emplyoyees get fired. Businesses close. Unemployment spirals.

33

[quote]LIFTICVSMAXIMVS wrote:
belligerent wrote:

Isn’t the austrian school also called the psychological school?

No.[/quote]

From Wikipedia:

“The Austrian School (also known as the â??Vienna Schoolâ?? or the â??Psychological Schoolâ??) is a heterodox[1][2] school of economic thought that emphasizes the spontaneous organizing power of the price mechanism.”

34

As an economics major, maybe I can weigh in a little. Psychology is a huge part of economics. Economists use economics to predict how consumers will act, as well as making assumptions on behalf of the consumer to form future economic predictions (phillips curve, inflation expectations, cardinal utility, equimarginal principle).

35

[quote]and1bball4mk wrote:
As an economics major, maybe I can weigh in a little. Psychology is a huge part of economics. Economists use economics to predict how consumers will act, as well as making assumptions on behalf of the consumer to form future economic predictions (phillips curve, inflation expectations, cardinal utility, equimarginal principle). [/quote]

Cardinal utility?

Oy vey!

I thought the neocardinalists were dealt with in the 30s?

Anyways, the Austrian school is, if one must call it psychological, a behaviorist school.

What you call “psychology” in “economics” would probably be called “voodoo” by most Austrians. It is the pretension to knowledge you cannot have.

I would accept though that the behavior of markets is often interesting, to say the least, but to call that “irrational” is again pretending to know something that is unknowable and as far as it is understood, in game theorie f.e. people act far from irrational , we just do not happen to like the outcome.

36

[quote]orion wrote:
and1bball4mk wrote:
As an economics major, maybe I can weigh in a little. Psychology is a huge part of economics. Economists use economics to predict how consumers will act, as well as making assumptions on behalf of the consumer to form future economic predictions (phillips curve, inflation expectations, cardinal utility, equimarginal principle).

Cardinal utility?

Oy vey!

I thought the neocardinalists were dealt with in the 30s?

Anyways, the Austrian school is, if one must call it psychological, a behaviorist school.

What you call “psychology” in “economics” would probably be called “voodoo” by most Austrians. It is the pretension to knowledge you cannot have.

I would accept though that the behavior of markets is often interesting, to say the least, but to call that “irrational” is again pretending to know something that is unknowable and as far as it is understood, in game theorie f.e. people act far from irrational , we just do not happen to like the outcome.
[/quote]

I knew people would go to Wikipedia entry and use the “psycholoy school” quote with no understanding of how that word really translates in the German context. Besides, no one really calls it that any more because LvM offered up a better explanation describing praxeology.

Any person with any ability to reason should be able to come to the conclusion that “psychology” affects how we act but what isn’t precisely known is why – therefore it is useless in the context that people here (jsbrook, et al) understand it.

I am merely a revisionist trying to better describe reality.

37

[quote]and1bball4mk wrote:
As an economics major, maybe I can weigh in a little. Psychology is a huge part of economics. Economists use economics to predict how consumers will act, as well as making assumptions on behalf of the consumer to form future economic predictions (phillips curve, inflation expectations, cardinal utility, equimarginal principle). [/quote]

If an economist uses a Phillips curve to prove their point, I would call them a buffoon.

  • Brother
38

[quote]Brother Chris wrote:
and1bball4mk wrote:
As an economics major, maybe I can weigh in a little. Psychology is a huge part of economics. Economists use economics to predict how consumers will act, as well as making assumptions on behalf of the consumer to form future economic predictions (phillips curve, inflation expectations, cardinal utility, equimarginal principle).

If an economist uses a Phillips curve to prove their point, I would call them a buffoon.

  • Brother[/quote]

I like how you defended your point there. You offered up some real good reasons as to why the Phillips Curve is a useless metric that does not effectively show the relationship between inflation and unemployment.

39

[quote]LIFTICVSMAXIMVS wrote:
orion wrote:
and1bball4mk wrote:
As an economics major, maybe I can weigh in a little. Psychology is a huge part of economics. Economists use economics to predict how consumers will act, as well as making assumptions on behalf of the consumer to form future economic predictions (phillips curve, inflation expectations, cardinal utility, equimarginal principle).

Cardinal utility?

Oy vey!

I thought the neocardinalists were dealt with in the 30s?

Anyways, the Austrian school is, if one must call it psychological, a behaviorist school.

What you call “psychology” in “economics” would probably be called “voodoo” by most Austrians. It is the pretension to knowledge you cannot have.

I would accept though that the behavior of markets is often interesting, to say the least, but to call that “irrational” is again pretending to know something that is unknowable and as far as it is understood, in game theorie f.e. people act far from irrational , we just do not happen to like the outcome.

I knew people would go to Wikipedia entry and use the “psycholoy school” quote with no understanding of how that word really translates in the German context. Besides, no one really calls it that any more because LvM offered up a better explanation describing praxeology.

Any person with any ability to reason should be able to come to the conclusion that “psychology” affects how we act but what isn’t precisely known is why – therefore it is useless in the context that people here (jsbrook, et al) understand it.

I am merely a revisionist trying to better describe reality.[/quote]

That would be true if you knew for certain what their context was- they might have a wider idea of what the field of economics is.

I could see the use of a few theories about the psychology of markets. Of course if that knowledge became too widespread it would be built into market expectations so we would have to go one step further and factor that in, and so further and so on.

Oy vey, maybe it is useless.

Anyways, I believe that it is possible to develop a “sense” for market reactions, but that is probably more about gut reactions than logic.

40

[quote]and1bball4mk wrote:
Brother Chris wrote:
and1bball4mk wrote:
As an economics major, maybe I can weigh in a little. Psychology is a huge part of economics. Economists use economics to predict how consumers will act, as well as making assumptions on behalf of the consumer to form future economic predictions (phillips curve, inflation expectations, cardinal utility, equimarginal principle).

If an economist uses a Phillips curve to prove their point, I would call them a buffoon.

  • Brother

I like how you defended your point there. You offered up some real good reasons as to why the Phillips Curve is a useless metric that does not effectively show the relationship between inflation and unemployment. [/quote]

Want me to take apart cardinal utility or would Rothbards article be enough?