From: nelson_p@apollo.hp.com (Peter Nelson)
Subject: Re: Libertarians & Butterflies (Was: Re: Causes of the "Cultural Elite")
Date: Wed, 22 Jul 1992 13:50:53 GMT
Organization: Hewlett-Packard Corporation, Chelmsford, MA

In article <EeP=EGa00h5yRTh1R4@andrew.cmu.edu> Conrad Poelman <cp2w+@andrew.cmu.edu> writes:
>Excerpts from netnews.alt.politics.elections: 21-Jul-92 Re: Libertarians
>& Butterfl.. Peter Nelson@apollo.hp.c (6567)
>
>But what we have to base our decisions on is what we *expect* to happen.
> This is usually based on past experience - we see certain systems
>producing certain results, and if the pattern persists we assume that
>certain results are the products of certain systems.  There is no
>guarantee that this will always be the case, but we form some sort of
>statistical likelihood estimate based on past experience.

  Well there are several issues here.   Let's take economics, which
  is arguably the most rigorous of the social sciences (i.e., making
  most use of canonical models, mathematics, hard, objective data, 
  etc.   How good is it at predictions?   The Wall Street Journal 
  published interest rate, currency and GDP growth forecasts for
  42 leading economists and economic research firms, a few weeks
  ago as they do every half.   2nd half '92 GDP growth estimates
  ranged from 1.2% to 5.0%, a 4X spread!   Dollar:yen estimates
  ranged from 110 to 150.    It's also worth noting that the December
  1991 estimates for 1st half '92 GDP growth ranged from -3.5 to 3.7,
  (the actuals aren't in yet, but they're in the high 1's, low 2's) 
  and *all but one* of the 42 estimates (6.00%-8.00%) of 30-yr bond
  rates were below the actual rates (7.78).    And we're only
  talking 6 months here!

  BTW, a good anecdotal data point is the Wall Street Journal's
  "dart board index", where they make stock picks by throwing 
  darts at the NYSE listing page in the Journal, and then invite 
  professionals in to make their picks.  Last month, the DBI
  not only beat ALL the pro's, it also beat the S&P500.   And
  this happens frequently.

  So I just don't see any basis for concluding that ANYbody's 
  economic forecasts are very reliable.   If the Demopublicans
  predict p1, and the Republicrats predict p2, and the Liber-
  socialists predict p3, and the Monster Raving Loony party
  (from the UK - my favorite political party) predicts p4, on
  what basis should I make a decision about which prediction
  is most reliable?   And yet, ultimately economic policies 
  are the major factor in modern, western politics.    Moreover, 
  I started off suggesting that economics was the most rigorous
  social science.  I have even less faith in various ism's
  theories about crime, drugs, teenage pregnancies, etc.  


  There's also another interesting issue.  (I realize we're getting 
  too theoretical for most readers here:)  And that is your phrase
  "statistical likelihood estimate based on past experience".  There
  is some very interesting research going on now in psychology
  about how humans make decisions or reach conclusions.  Researchers
  at Stanford (Leda Cosmides), UCAL/Santa Barbara (John Tooby)
  and in Europe at Salzburg (Gerd Girgenzer) have been looking 
  at how humans solve Wason, and similar tests. (word problems).
  Although it's too complicated to go into here (see the Economist,
  July 4, pg 73 for a good layman's introduction), the basic suggestion
  seems to be that "rational" thinking is not the primary way human minds
  function (despite Randian claims to the contrary).  Rather, humans
  seem to employ a kind of "analysis" based on social relationships
  and group hierarchy interactions.    


---peter


   



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