Quote:
Originally Posted by Bremen
Wouldn't an austrian just say the answer is meaningless? You can't really know someone is willing to pay $50 for something unless they actually pay for it. Since they didn't and went to Clapton instead all you can really say is they prefer free Clapton to $40 Dilan (and that preference is crazy obv ).
To which Clowntable replied:
Yes we wouldn't answer the question in money terms but rather just say "whatever you have to give up to see that concert" (opportunity cost = next best alternative forgone). The question becomes moot since costs are subjective. Alas that's not an option in the MC test and while many non-Austrians struggle or are unwilling to change their POV to an Austrian one the reverse isn't true for me.
Here's the thing--in this case/question, what mainstream economists are trying to get at is how a person 'correctly' makes a choice. See the adjusted question later in the linked paper as an example--they say that they're not really changing things, but the modified question is more in line with what I'm saying--it's how a person makes a decision for himself, not how someone makes the decision for them. So it's not a "you" saying "they" think/want something, there's no needing to 'get inside someone's head' at all.
So you are correct in saying what we can get from observation, but again, that's not what's going on. What is going is the following:
"Well, *I* have a free ticket for Clapton. *I* could purchase a ticket for Dylan at a cost of $40. What *I* would be willing to pay is $50 for that concert. That means I'm giving up $10 worth of enjoyment by forgoing the Dylan concert. Given this, should *I* go to the Clapton concert?"
Note that there is only one person involved, the economic actor. No second or third parties at all. No need to base what we know from observation, because the person making the decision/calculation knows their own valuations.
Quote:
Originally Posted by clowntable
Nah I probably should have clarified. I wouldn't characterize knowing what OC are and especially identifying them in the real world as a math puzzle. The math involved is trivial enough.
I'd characterize this as knowing a concept and its application.
I'd agree with where the failure is.
Quote:
FWIW I think there's certainly some more complicated math in economics that I concider quite relevant. Game Theory comes to mind.
What I'm talking about is endless empirical studies or mindlessly grinding through calculations without ever stopping to wonder why you do those calculations.
My pet peeve, the DSGE models would qualify.
Most economists (in training or with a degree) that I know and/or have talked to remind me a lot of poker players that just randomly make plays because they were told it's good without thinking about it too much.
Note: I haven't played with DSGE models. But what I can say is that you might just be seeing some bad economists. I've known good and bad Physics, good and bad Economists, and good and bad poker players. I'd go a bit further--I'm a theorist. Most of the people I've come in contact with have tried to base their calculations on intuition. An important part of a paper (one my adviser kept reminding me about) was the interpretation of the model/work. I would just have to disagree with you in that respect. I would say though that I agree with you if you're just gathering data and 'doing' econometrics on those data sets. I have seen a lot of what you're describing there. At the risk of sounding like a 'no true scotsman' argument, I don't really consider econometrics 'true' economics. Or, to put it in a nicer way, a lot of the people using econometrics are using it as a tool, and not really doing 'economics'. Well, that might not be coming across correctly--what I'm sort of getting at is that I'd like to separate those two areas.
That said, I'm going to a huge economics conference this weekend, and I'll keep the 'intuition question' in the back of my mind. With 15-20 minutes to present a paper, one *should* be focused on the intuition. I'll report back what I observe.