Economics - Late Beginnings, Conventional versus Non-conventional, New And Exciting Future

A burgeoning area of interest for this weblog has been economics. Understanding the principles of economics seems essential to better understanding many of the issues that are of interest to me.

My favorite econblog, as with many others, is Marginal Revolution. Not too long ago, Tyler Cowen, one of the bloggers featured at Marginal Revolution provided some basic economic history. Why economics was late in starting via Marginal Revolution by Tyler Cowen on 4/5/08. I've added some additional links to Wikipedia articles.

I've already posed the question, I'd like to add two points. First, sustained economic growth in the Western world starts in 17th century England, as shown by Greg Clark. Interest in economic reasoning then comes rapidly, first from the mercantilists, then in Adam Smith and some earlier free trade thinkers, such as Dudley North and Nicholas Barbon.

Second, the idea of "private vices, publick virtues" was central for eighteenth century economic thought and for social science more generally. This came from Bernard Mandeville (drawing upon the French Jansenists) in 1720. It's no accident that Mandeville lived in the Dutch Republic, which had very little censorship. No, I am not a Straussian but the merits of that viewpoint are often overlooked.

What I have found fascinating in learning more about economics is how it can be related to so many fields including biology, psychology and even physics. This, however, continues to raise questions about one of the foundational concepts in economics - the economic/rational human or human economicus.

Back on 2/19/08 jason@kottke.org at kottke.org had the post The conventional theories in economics and politics contend that people act...The conventional theories in economics and politics contend that people act rationally.

Elizabeth Kolbert reviews a pair of books that suggest that's not really the case.Some of these heuristics were pretty obvious -- people tend to make inferences from their own experiences, so if they've recently seen a traffic accident they will overestimate the danger of dying in a car crash -- but others were more surprising, even downright wacky. For instance, Tversky and Kahneman asked subjects to estimate what proportion of African nations were members of the United Nations. They discovered that they could influence the subjects' responses by spinning a wheel of fortune in front of them to generate a random number: when a big number turned up, the estimates suddenly swelled. (link)

What is of particular interest is how this best serves ongoing efforts to bring greater benefit to the world.

Back on 2/21/08 Tyler Cowen of Marginal Revolution gave us "What's new and exciting in economics?"

I received dozens of diverse responses, but there was still a runaway winner. The small group of economists who work at the Jameel Poverty Action Lab at M.I.T., led by Esther Duflo and Abhijit Banerjee, were mentioned far more often than anyone else.

Ms. Duflo, Mr. Banerjee and their colleagues have a simple, if radical, goal. They want to overhaul development aid so that more of it is spent on programs that actually make a difference. And they are trying to do so in a way that skirts the long-running ideological debate between aid groups and their critics.

Tyler Cowen also provides the more practical future for budding professional economists that not only has relevance for them, but for ourselves because it defines where the brainpower for our economy will be coming from.

The future of economics via Marginal Revolution by Tyler Cowen from 4/3/08

In a nutshell, foreigners and empirical work:This short paper collects and studies the CVs of 112 assistant professors in the top-ten American departments of economics. The paper treats these as a glimpse of the future. We find evidence of a strong brain drain. We find also a predominance of empirical work.Three-quarters of the bachelor degrees were obtained from abroad. Macro, econometrics, and labor economics are the most popular fields, see p.8 for the full list. Here is the paper, hat tip to Pluralist Economics Review

Revisiting Some Old Posts For Some New Learning

A previous post of this weblog dealt with organizing some past Marginal Revolution posts under the various tagging systems used by this weblog. Those posts covered a number of areas of interest to this weblog.

• The roots of medical innovation which involved healthcare and innovation.
• Why are there no grocery stores in poor neighborhoods? which takes a look at some important issues that arise in trying to achieve something through economic development.
• Subprime fact of the day which allows comparison with what was said about the subprime issue back in November and what is happening today.
• Finally, one link which was pointed to by Marginal Revolution Balancing market freedoms - International Herald Tribune, the diigo stickynote links link back to the original Marginal Revolution posts.

All of this adds to a hopefully ever expanding education on economics, web 2.0 and other areas of interest.

Our Understanding Of Ourselves Advancing Or Retreating

Two adherents of the dismal science took a look at the other social sciences and their progress in recent times.

Tyler Cowen on 4/1/08 discussed Gordon Tullock's The Organization of Inquiry and provided the full Tullock symposium here), in a Marginal Revolution Why are the social sciences backward?

This post is a summation of the original Marginal Revolution post which was itself an entry point to further reading or study. The topic is far too complex to fit into a few computer screen's worth of text . Unfortunately, the source materials are not available without cost. What this post can provide is some additional links and consider how this fits with what has been learned before.

Tullock next turns to what he considers to be the real reasons behind the backwardness of the social sciences:

• Differences in the social organization of natural versus social science.
• The relative absence of applied research:
• One example given is that there is no way to patent new sales technique?
• Many fewer checks from the applied side on pure social science research unlike the natural sciences
• The second motive for research, curiosity, is in the social sciences "likely to get distracted to essentially non-scientific ends."

According to Tullock, this is because in the social sciences: there is a strong possibility of artistic distraction. Literature of all kinds is quite frequently based on careful observation of human beings. A large number of brilliant men led by their curiosity to study their fellow men have produced great literature instead of science (p. 151).

Professor Cowen also brings into the discussion Mises and Hayek, to whom in Tullock is responding , who thought that the social sciences were different because matters of human affairs are more complex and because of the subjective dimension of human choice and expectation.

More can be found at the original post with an interesting link at complexity by Bruce Edmonds of the Centre for Policy Modelling, Manchester Metropolitan University Business School,

Professor Cowen goes on to argue that "that while economics lags behind physics, we understand the economy better than we understand the human brain or for that matter the deep ocean. "

I see complexity of the topic and accessibility to information as determining the progress of a science; I am not so far from Hayek's view, although he underestimated how much progress quantitative and experimental economics could make.

It seems there were even ancient computers, not to mention advanced philosophy. So the point remains: the absence of a developed economics until the mid-18th century remains a startling anomaly in the history of ideas. Why was that?

An Addendum to the original Marginal Revolution post provides EconLog's Arnold Kling's perspective.

Stephen J. Dubner via Freakonomics back on 4/8/08 questioned, "How Much Progress Have Psychology and Psychiatry Really Made?" in a Freakonomics Quorum

The debate about the effectiveness and safety of psychiatric drugs rambles on while new (if not conclusive) psychological studies come out with the frequency of fad diets. We invited some people who think a lot about such issues -- David B. Baker, John Medina, Dan Ariely, Satoshi Kanazawa, Peter D. Kramer, and Laurie Schwartz

Again, as with the Tyler Cowen post above, this is far too complicated a topic to do the original post justice without simply repeating the entire article, so this is not a substitute. It does bring up though the same argument emphasizing the differences between social and natural sciences, but this time within the same arena. There isn't a lack of progress but an ever increasing complexity within the fields as different disciplines cross over one and other.

for John Medina:

My personal hero in the exodus away from mental superstition is a large bolus of ego named Emil Kraepelin (1856 to 1926). He had the audacity to assume everything that was psychological was simultaneously biological.

Dan Ariely, the Alfred P. Sloan Professor of Behavioral Economics at the M.I.T. Sloan School of Management, principal investigator of the MIT Media Lab’s eRationality group, and author of Predictably Irrational: The Hidden Forces that Shape Our Decisions takes the view"

“This, in my mind, is another important lesson that psychologists have learned — that our intuitions about what drives our behavior are not always correct.”

It seems to me that Professor Cowen's claim that our knowledge of economics is less than that of physics but far greater than the human brain pays too little attention to point that economics is able to smooth out the variables it studies to arrive at general principals, while modern neurosciences such as neurochemistry cannot. Economics is also arguably the consequence of the decision process by biological creatures. While we can make generalized predictions with economics, do we really understand the process if we don't understand the organisms that make those decisions?

This post has dealt with complexity, irrationality and mentioned the concept of artistic distraction, all in the course of studying economics, definitely food for further thought.

Reading to Discovery, to Know, to Understand

One past web journey included a Marginal Revolution post by Alex Tabarrok that pointed to Nepal It’s a blog world, which included a number of useful connections by the writer Ashotosh Tiwari. I can agree with him that the Marginal Revolution posts can provide an education in economics. Trouble is separating out the politically based diatribes and the fact, as somebody else pointed out, that they are impossible to keep up with. Especially, with not being focused solely on economics.

Online readings seem to come across at different levels 1. Quick review to see if it is of any interest. 2. Browse through to get basic facts and positions. 3. Reading to compare to other posts and stimulate thinking. 4. Deep reading for new knowledge and understanding of issues. The first three are usually short posts or responses which are prevalent on the web. They are necessary because there is so much interesting stuff available and one does not want to miss out. The last are full length articles and scholarly papers which take time to read and digest and are a requirement to my mind for learning. The instantaneous nature of the internet seems to discourage this approach. I have found a good deal so far to read and digest and knowing the nature of the net will likely find far more. Posting to this weblog sometimes becomes less enticing because there is more interesting things to read or watch than there is to write about. Then, to help put it all together and have it make sense, comes again the urge to write or comment, like today.

For today the video below gives a pretty good synopsis of the current economic situation

Contrasting Left, Right and All in Between

My online persona goes 'bravely" where my day job/real world self would not venture. The Online world seems to have no issue with pointing out the error of ones ways which provides a fairly quick and efficient way to learn or at the very least allows one to externally formulate one's thoughts. Marginal Revolution had a post titled Why the Left should learn to love liberalism. Liberalism similar to paradigm is a word whose definition seems dependent upon who is using it. My philosophical horizons continue to expand with new views. In addition to the ones put forth in the article, a recent Freakonomics post lead me to Liz Seymour - It Started with A Question. I may not agree with her answer but the sentiment of inquiry is a motivating factor behind this endeavor.

My comments on the Marginal Revolution article are below. Again it is an exercise in trying to better understand economics and incorporate that understanding into my belief system.

The discussion seems painted with very broad brush strokes from any particular side each with claimed benefits that I strongly suspect would last about a week and we would be right back at the debate. The range of thought within the discussion though is rather impressive. The concept of Free Market Anti-Capitalism is a new one to my fledgling economic education. Though I have to agree with the observation about Professor Cowen's overstatement. Obviously there are more than just two sides to this debate.

The most recent post packages the issues neatly for consideration. It is easy to agree that "actions have consequences and that only fools and crazy people build economic systems that ignore them.", but that advice applies to both sides of the ideological fence. It is also easy to agree that wealth redistribution is always more creative and prosperous than wealth concentration, because concentration promotes complacency and laziness, while distribution creates opportunity. Historical, from my perspective and here all sides can argue, an extremism of either right or left has resulted in a concentration of wealth or at the very least done a lousy job of redistribution in a sustainable fashion. Most appealing is arguing from empirical experience, because reality isn't interested in who's a liberal and who isn't, but only in consequences and experiences. This still leaves plenty of opportunity for philosophical pondering about moral sentiments and wealth creation. I still lean towards what has been described as classical liberalism but my recent self-questioning raises self-doubts about my premises.

One question that has been on my mind. China is often brought up in these discussions and there are many issues that justify concern and opposition to China's current polices - Darfur and Burma readily come to mind in addition to those cited. Despite that the question still arises as to the best means of having China take a primary role in the world economy. In particular comparing it to the path that Russia has taken and the effects its policies have had on its people and where its stands today in the world. Would anybody want a Chinese "Putin"?

Tagging and Cross-Tagging For Better Learning

This weblog is designed with the understanding that its collected sites would be revisited and restudied. Sometimes though things were put aside, despite the optimistic and good intention of coming back, for far too long. Marginal Revolution has had a number of posts of interest which lay fallow, but they are now being revisited and seen as another means of self-education.

However, beyond the information in the posts themselves there is also how that information is organized by this weblog. That is the focus of this post.

A recent review of old Marginal Revolution links stored in an Ask.com (private) folder found a number of items of interest.

These have now been placed under the various tagging systems used by this weblog, but beyond tagging in the different systems this weblog has also been experimenting with cross-tagging or cross-linking between links with diigo. The question is whether diigo highlights and stickynotes appear if one reaches the original weblinks through the different tagging systems.

Under Stumble Upon the new links all come under the "Discoveries" designation. This means my using them for my own education is solely a personal choice, which in turn is not surprising as there innumerable paths one could choose. It does seem that Stumble Upon does not recognize diigo highlights or bookmarks so cross-tagging does not seem possible within Stumble Upon. (In the future I will figure out that there a ways to crosstag. The web can be beyond time and space.)

In diigo itself, it seems that stickynotes are a better means of cross-tagging than highlights as you can't see diigo comments at the original tagged websites, only in diigo itself. One problem though is that when a link is clicked within a sticky note appearing at an original site, it does not bring up a new window as it does within diigo itself. Adding a target blank extension seems to work, except that they open in new windows and not new tabs. More importantly, all of this only works if someone is a member of the diigo community.

Finding the sites through Ma.gnolia does allow the diigo highlights and stickynotes to appear so cross-tagging is possible. However, they do not appear in the Ma.gnolia site itself.

Blinklist also permits one to see the diigo highlights and stickynotes.

It still seems that the web 2.0 world is balkanized with very different outcomes depending upon the system you decide to use or constantly having to keep track of multiple systems if you use more than a few.

Micro-Loans Snake Oil Panacea Or Pathway To New Economic Paradigms

This weblog has skirted around questions about micro-credit, micro-loans and micro-finance in the past. They were either related to other economic issues or links to online programs like Kiva. Recently, a number of articles have passed by my computer screen inspiring me to learn more. Two articles in particular caught my eye.

Microfinance's Success Sets Off a Debate in Mexico - New York Times

They are the center of a fractious debate: how far should microfinance go toward becoming big business? At one end stand traditional microlenders, like the economist Muhammad Yunus, founder of the most famous microlender, the Grameen Bank, and winner of the 2006 Nobel Peace Prize. At the other are the Two Carloses, as they are widely known in this tight-knit world that gave them their start as starry-eyed idealists.

U.S. 'micro-loan' effort yields big results in Iraqi province - Los Angeles Times

Al'laur Abd Mottar, 50, had a dream of starting a business to support his wife and eight children. He would buy and sell scrap iron, a material much in demand as residents seek to rebuild homes and businesses damaged by fighting between U.S. Marines and insurgents.

In November, Mottar got a $3,000 loan from a program underwritten by the U.S. Agency for International Development that is bringing the "micro-loan" concept to war-ravaged Anbar west of Baghdad.

To oversee the micro-loan program, USAID turned to the Louis Berger Group, an international consulting firm based in Morristown, N.J. Supervision of the micro-loans is only a small part of a $154-million contract between USAID and the firm to promote economic growth in all 18 provinces.

Different paths but same destination, either small entities becoming large ones or large entities taking over the territory of small ones. Although the micro-lending industry began in the 1970's, it it is in the last few years that is has been around long enough to have raised some issues and gendered some controversy. Some of these issues have basic economic principals behind them, some are overly optimistic predictions, and some are simply human greed. The following link to the Tyler Cowen's post on this subject provided some rationale economic insight and some history.

Marginal Revolution: My micro-credit essay with Karol Boudreaux

For better or worse, microborrowing often entails a kind of ­bait ­and ­switch. The borrower claims that the money is for a business, but uses it for other purposes. In effect, the cash allows a poor entrepreneur to maintain her business without having to sacrifice the life or education of her child. In that sense, the money is for the business, but most of all it is for the child. Such ­life­saving uses for the funds are obviously desirable, but it is also a sad reality that many microcredit loans help borrowers to survive or tread water more than they help them get ahead. This sounds unglamorous and even disappointing, but the ­alternative—­such as no doctor's visit for a child or no school for a ­year—­is much ­worse.

This 2006 report provides a rosy outlook from a more liberal-progressive perspective.

The Chronicle, 7/20/2006: The Big Promise of Small Loans

Microfinance, pioneered in the early 1970s by nonprofit groups like Grameen Bank, in Bangladesh, and Acción International, in Latin America, is one of the hottest ideas in philanthropy — and it may become the next big thing in the investment world, too.

The overly optimistic and idealistic perspective is not limited to the liberal-progressive outlook. From the other side of the spectrum

The Entrepreneurial Mind: Cynicism about Free Enterprise

It takes time to build wealth. And real wealth comes from free enterprise. Are microloans the answer to transform an economy? Of course not. But they are a critical step in building long term transformations. Microloan programs are not just jobs programs, or worse yet, mechanisms for the redistribution of wealth from one country to another. Instead, they are creating a cultural seedbed for economic freedom and independence.

While I can agree with the good intentions of Professor Cornwall's philosophy, I am also wary of the overly optimistic outlook from the more business oriented perspective. The New Yorker article that Professor Cornwall takes issue with is based on the libertarian Marginal Revolution post above. Professor Cornwall may say cynical but Professor Cowen is likely to say realistic.

So far I have covered economic principles and overly optimistic predictions. The question of human greed will be looked at more closely in a subsequent post.

Looking For Loopholes In Law of Unintended Consequences

Stephen J. Dubner of Freakonomics wrote Toward a Better Understanding of the Law of Unintended Consequences on 1/25/08.

We recently published a column describing a few instances of the law of unintended consequences — specifically, what happens when well-meaning legislation winds up hurting the parties it is designed to help.

I thought it was a pretty good column. But I see now where it could have been better. Alex Tabarrok, writing on Marginal Revolution, , addresses the law of unintended consequences per se,

Alex Tabarrok of Marginal Revolution cites Statistical Modeling, Causal Inference, and Social Science which had the post on What kind of law is the Law of Unintended Consequences?

The Statistical Modeling ... blog is maintained by Andrew Gelman, Aleks Jakulin and Masanao Yajima.

This weblog linked to the original Freakonomics post back in October and has further considered the concept of unintended consequences with regards to the healthcare programs of the Gates Foundation and other related organizations.

Andrew Gelman does a u-turn on the citation back to Alex Tabarrok.

P.S. Interesting comments below. Also, Alex Tabarrok has further elaboration:

The law of unintended consequences is what happens when a simple system tries to regulate a complex system. The political system is simple, it operates with limited information (rational ignorance), short time horizons, low feedback, and poor and misaligned incentives. Society in contrast is a complex, evolving, high-feedback, incentive-driven system. When a simple system tries to regulate a complex system you often get unintended consequences.

I can agree with the concept of complex and evolving but would argue that we only know in hindsight what the system is evolving into. There may be high-feedback for the system as a whole but we don't have full access to that total system information so the problem of limited information remains. The alignment of incentives is also something it seems to me that is determined only after the event and can involve complex interactions which are often not always apparent. I also have problems with the implied concept that there is some overall arching system out there which is true and correct and our little political/economic systems are poor and inadequate copies. We also need to look at the alternative options that Andrew Gillman provides, "examples of intended consequences that actually happened? Or unintended consequences which, although unfortunate, were minor compared to the intended consequences," including as well "unforeseen adaptations".

There are a number of expanding links related to this subject running through the posts and comments and it's interesting to see the difference in approach between the economist and social scientists.

Macro-Economics and Sex

The podcasts on Macro-Economics from University of California Berkeley have been explaining the Solow Growth Model created by Robert Solow. You have to like a Nobel prize winning economist who comes up with a line like,

"Everything reminds Milton Friedman of the money supply. Everything reminds me of sex, but I try to keep it out of my papers."

Using the Google Search box within Marginal Revolution, this weblog's favorite economics blog, gets a number of hits on either Robert Solow or his model, including Solow on Schumpeter whose ideas on creative-destruction have been discussed before.

In looking for more information on Robert Solow at Marginal Revolution, I ran across a post on Rodrik vs. Stiglitz, that's Professor Randi Rodrick and Professor Joseph Stiglitz. I know I said I was cutting down on the comments until I got a bit more knowledge under my belt regarding the dismal science but I couldn't resist leaving one, especially since this weblog had featured Professor Stiglitz previously. Since I said that I appreciated many of Professor Cowen's ideas on globalization, here is a link to some of those ideas - Creative Destruction: How Globalization Is Changing the World's Cultures.

Economic Facts And Striving For Fair Play for Kenya Farmers' Market

In the effort to understand the principles of economics and how they constrain efforts to bring about positive change through social-entrepreneurship, Africa has been a major educational source since its has been the arena of greatest challenge and opportunity for those engaged in such efforts.

One means of endeavoring to bringing about positive change is through "Fair Trade". Back at the end of March, the TEDBlog ran a post on Fair play for Kenya farmers' market

Ode Magazine : Small farmers, bigger markets write of the inspiring efforts of TEDGlobal Fellow and agriculture activist Thomas George to build fair-play marketplaces for poor farmers in Kenya. His organization, Vipani, is a resource for workers on small farms -- people without credit, connections or know-how -- to access networks of other farmers, buyers, suppliers and lenders.

George's work -- which he plans to expand to Rwanda and Uganda -- will resonate with fans of Eleni Gabre-Madhin, who spoke on Ethiopian commodities markets at TEDGlobal Africa in 2007, and Iqbal Quadir, who talked about empowering communities by connecting farmers with mobile phones.
"A thriving rural economy," says George, "will benefit not only farmers, but everyone in the community." -- Matthew Trost

diigo tags: farmers, economics, social-entrepreneurship, global, fairtrade

Professor Tyler Cowen via Marginal Revolution has also weighed in on the economic challenges facing Kenya through fact of the day.

The two women carried on about liquidity and profit margins, and recalled with pride attending the first shareholder meeting of KenGen this year, an event so huge that it had to be held in the city's largest soccer stadium. About 200,000 people from all corners of the country came like so many newly minted executives.

"I felt so good," Kariuki recalled. "It was just normal, common people. People dressed well. What impressed me was the number of old women -- they were coming in their traditional clothes. They were telling me, 'Yes, we bought!' "

Professor Cowen provides the full story that ran in the Washington Post.

More on the debate from a European perspective. The links below were tagged Kenya under the EUFORIC del.icio.us tagging account. There are more links available. The way this post was set up to use all of this weblog's tagging systems, you can save theoretically save to StumbleUpon or to del.icio.us, as always, this is an experiment.

Does Fair Trade contribute to sustainable development? - Audience reactions

1. stumble / save this to del.icio.us

   2008/04 - Brussels Development Briefings

   del.ico.us tags to euforic coop_life brubriefings euforic_member cta fair_trade text en dominican_republic kenya ... on april 27, 2008
   

About the briefings « Brussels Development Briefings

The ACP-EU technical Centre for Agricultural and Rural Cooperation (CTA), the European Commission, the EU Presidency, the ACP Group, Euforic, Concord, and other partners plan to organize regular development briefing sessions in Brussels on key issues and challenges for rural development in the context of EU/ACP cooperation.

These issues are complicated even more with concerns over diverting crops for use as bio-fuels and farm subsidies in developed countries. I gave my two-cents at a past Marginal Revolution comments section discussing Kill the Farm Subsidy Bill.

Questioning Assumptions

There is no great desire to get too immersed into what seems to be the tit-for-tat gotchas of Marginal Revolution coments again, because they either offer little real insight into economics just political bickering or are just too much technical minutiae. There are a few posts that get to the heart of what is of interest. One particular example directly questions a previously held premise. Tyler Cowen introduces us to Vivian Hoffman, currently a Ph.d. candidate at Cornell.

Here is the abstract on her main paper

This paper reports results from a field experiment in Uganda. Whether a mosquito net was purchased or received for free affected who within the household used the net. Free nets were more likely to be allocated to those members of the household most vulnerable to malaria, whereas purchased nets tended to be used by the household's main income earners. The effect was strongest for free nets received by the mother, increasing the probability that all children five and younger slept under nets by 26 percent relative to when nets had been purchased by either parent or given to the father.

This makes a seemingly substantial argument against the social entrepreneurship approach as it relates to the distribution of mosquito nets. Of course what it might be indicating is that women, in these situations, should be making the economic decisions and not men regardless of whether it was charity or social entrepreneurship. The social status of mean and women and their interrelationships has shown to be very important in these programs. The Grameen successes were, as I understand it, mostly with women.

Vivian does, however, find the discussion on the Marginal Revolution blog helpful having far greater familiarity with the language of economics.

Thanks everyone for your interest in my work. In my current revision I’m dropping the (tedious and unnecessary) theory section and dealing with the potential sample selection bias arising from the fact that I only observed net use in the households that purchased any nets. The new version should be up tomorrow (what timing!!)

Posted by: Vivian at Oct 16, 2007 7:39:29 PM

Blogging as Self-Experimentation

Marginal Revolution: Blogging as self-experimentation

I have fallen way behind in reading Marginal Revolution and am spending the evening catching up. Also not having any input into the discussion until I get a bit more macro-economics in my head. Instead I am just reading to learn. Tyler Cowen's thinking, however, expands often times beyond economics and provides more general insights. This one, from way back in February of 2007, I found especially true.

Blogging as self-experimentation Seth Roberts writes:

“Blogging, of course, is one of the ultimate forms of self-experimentation,” Tyler Cowen wrote me. I wasn’t quite sure what he meant. He explained: “Your blood pressure, how your brain is working, what new ideas you have, how your attention span has changed, how you now read other people’s work differently, who you find yourself liking more (and less), etc. I believe those effects [of blogging] are often quite striking.”

Tyler Cowen adds,

"Blogging makes us more oriented toward an intellectual bottom line, more interested in the directly empirical, more tolerant of human differences, more analytical in the course of daily life, more interested in people who are interesting, and less patient with Continental philosophy. All you bloggers out there, or spouses of bloggers, what effects do you notice?"

In truth, I don't blog in the usual understanding of the word, I write more for my own education than trying to teach or convince anybody else. This weblog is an expression of interconnected self-reflection and quest for knowledge. I can agree with everything Professor Cowen says but then this weblog was intentionally created with those goals in mind. The responses from the various bloggers who participate in the discussion was interesting. I have collected them for a closer look to see what they offer and how they present themselves. They seem to cover a wide span of thought.

Intentions Words Actions Of the Brain By The Brain For The Brain

This weblog started with a bias towards behavioral economics when it began its philosophical inquiry into the dismal science because of my undergraduate degree in Research Psychology and well established inclinations. Psychology has a tendency though to focus on the individual as in the question asked by Gary Marcus.

Does your brain have a mind of its own? by Gary Marcus on May 4, 2008 at latimes.com

Why can't we stick to our goals? Blame the sloppy engineering of evolution.

How many times has this happened to you? You leave work, decide that you need to get groceries on the way home, take a cellphone call and forget all about your plan. Next thing you know, you've driven home and forgotten all about the groceries.

This obviously takes a evolutionary/biological approach, but using the prevalent analogy of brain as computer there is also the programing needed to make it interact with other brains. That programing would seem to be language, though to what degree it is hardwired/genetic or software/environmental learning is still something to be far better understood.

Study finds some thoughts really do require language Posted on: February 14, 2008 3:17 PM, by Dave Munger Category: Language • Reasoning • Research

I don't need words to think about the shape of a car, or how to throw a football, or the taste of a chocolate chip cookie. In fact, things like that are probably easier to think about without using language. That's why the strong form of the Sapir-Whorf hypothesis -- that language is necessary for conscious thought -- doesn't hold up. But even if language isn't required for some domains, it's still possible that it is required for certain types of mental processes. It may even be required for some thoughts that aren't obviously related to language.Some research suggests that understanding the thoughts of others -- having a theory of mind -- is one such process. Many children who are late in learning language are also late in developing a theory of mind. This story illustrates the classic theory of mind test:

• Mouse nibbles cheese.
• Mouse puts cheese under box A
• Mouse leaves room
• Cat enters room, moves cheese from box A to box B, and leaves.
• Mouse returns.
  

• Where does Mouse think the cheese is?

Raising the question, does understanding false beliefs of others require language? The "answer" is at the original post

David Munger goes on to write about Ashley Newton and Jill de Villiers who developed a very clever experiment to test this question.

Newton and de Villiers say there are a number of aspects of language processing that could be responsible for interfering with the false-belief test, but it's quite clear that some sort of language processing is necessary in order to reason about false beliefs. So while language isn't a requirement for all thought, it most definitely appears to be a requirement for some thought.

So how does this apply when we move outside the psychological laboratories and experiments? This weblog has been contemplating the many-to-many interactions of sociology and social-grouping that the web helps to make more apparent. With Web 2.0, it is possible to draw the lines. With economics, the lines would seem to be harder to specifically determine until after the fact, though models can be created for useful and often practical approximations.

Andreessen on The Psychology of Human Misjudgment via Marginal Revolution by Alex Tabarrok on 3/28/08

Professor Tabarrok provides access to the, "Great insights from two legendary entrepreneurs" - Marc Andreessen and Charlie Munger author of The Psychology of Human Misjudgment.

Mr. Anderson: Mr. Munger's magnum opus speech, included in the book, is The Psychology of Human Misjudgment -- an exposition of 25 key forms of human behavior that lead to misjudgment and error, derived from Mr. Munger's 60 years of business experience. Think of it as a practitioner's summary of human psychology and behavioral economics as observed in the real world.

Mr. Munger: ...almost everyone thinks he fully recognizes how important incentives and disincentives are in changing cognition and behavior. But this is not often so. For instance, I think I've been in the top five percent of my age cohort almost all my adult life in understanding the power of incentives, and yet I've always underestimated that power. Never a year passes but I get some surprise that pushes a little further my appreciation of incentive superpower.

What the Marginal Revolution post does, to my mind, is put the individual question raised by Gary Marcus to a human species level of inquiry, not as individuals within the species but as a biological organism whose survival depends not only upon its interaction with the environment but its interaction with itself.

A Question of Greed and the Human Condition

My last post involved a exchange with an anthropologist. There have been a number of other posts on the Internet involving behavior and social interaction. One was pointed to by Marginal Revolution blogger Alex Tabarrok, Chimps More "Rational" than Humans . The original United International Press article is here.

My contribution to the Marginal discussion was a recent link from Scientific American Mind, Is Greed Good?

Economists are finding that social concerns often trump selfishness in financial decision making, a view that helps to explain why tens of millions of people send money to strangers they find on the Internet By Christoph Uhlhaas.

Contributions from others in the same Marginal post included Patience, Fairness and the Human Condition from the Economist.

Other articles passing by my computer screen also brought up a variety of ideas. The Business Pundit pointed to an article on Contagious Negativity and Social Media from the Journal of Consumer Research concluding that negativity is contagious. A recent Washington Post article says that the persistence of social myths such as Iraq was behind the 9/11 bombing could affect the implementation of public policy. All this would seem to put a dent in the notion of Homo economicus and indicate that we are in truth far more complicated.

However, there are other articles that would seem to indicate that there are forces in play beyond the solitary individual that creates new rules for the group, crowd or society as a whole. One example is from Cosmic Variance: Birds of a Feather which was found (8/11/09) to be recently updated with a video.

Jeff Sachs Writes, Tyler Cowen Asks, Wired Warns, Europe Ponders and E.O. Wilson Educates About Biodiversity

Some time ago in April of this year Marginal Revolution had a post featuring Jeff Sachs on biodiversity. Professor Cowen expressed his current perspective on the issue.

Now, loyal MR readers may remember that I am genuinely uncertain how much we should worry about the loss of biodiversity. I do know the following:

1. Many smart people who know much more science than I do are very worried about the loss of biodiversity.

2. Given that the human population has ballooned for the foreseeable future, massive losses in biodiversity are inevitable. The question is how bad the marginal losses will be, if we do not adapt policy accordingly.

3. If I had to conduct a debate and argue that the marginal loss of biodiversity was going to be a tragedy for human beings (obviously, I can see the loss to animals, and yes I do count that for something), I would not do very well. Yes Yana's children won't eat tuna and then I would sputter something about carbon and nitrogen cycles.

I genuinely would like to learn more.

The current source of information being Jeffery Sach's new book Common Wealth which devotes an entire chapter to this important topic. Sachs writes:

The main lesson of ecology is the interconnectedness of the various parts of an ecosystem and the dangers of abrupt, nonlinear, and even catastrophic changes caused by modest forcings...It is a basic finding that biological diversity increases the productivity and resilience of ecosystems. With more species filling more niches in a given location, a biodiverse ecosystem is better buffered against external shocks in is more adept at cycling nutrients, capturing solar radiation, utilizing water resources, and preventing the takeover of the system by single predators, weeds, or pathogens. In other words, preserving biodiversity helps to preserve all aspects of ecosystem functions. Removing one or more species from an ecosystem, for example, by selective harvesting of trees or fish or hunted animals, can lead to a cascade of ecological changes with large, adverse, and nonlinear effects on the functioning of the ecosystem.

Professor Cowen could get part of his answer from Wired Magazine's article Conserve Biodiversity or Risk Medical Losses, U.N. Warns via Wired Top Stories by Associated Press on April 23, 2008.

Poor stewardship of the Earth's diverse organisms could deal a major setback to medical research, a top U.N. environmental official says, because scientists are heavily dependent on naturally made chemical compounds to develop new medicines.

Here are some additional links from one of my del.ico.us network partners EUPHORIC which provides multiple perspectives on biodiversity and the efforts of the European Union in meeting them.

Finally, here is E.O. Wilson and the fruits of his TED Prize wish from 2007: Encyclopedia of Life launches! via TED | TEDBlog by on 2/28/08

Help me build the key tool that we need to inspire preservation of Earth's biodiversity: the Encyclopedia of Life. Today, the Encyclopedia of Life website has launched, with the first 30,000 pages, each one describing a single species, with descriptions and photos contributed by scientists and naturalists and people around the globe. Within a decade, it'll have more than 1.5 million pages, each for a single species.

More on this from the New York Times which provides additional background on this wish >>

Learning Macro-Economics Web 2.0 Style

I have started viewing webcasts on macro-economics from the University of California Berkeley. This is to get a better understanding of economics, which I realized was lacking in my interactions with Marginal Revolution and other venues. I get the basics of supply and demand but I want to get a greater understanding so that I can better understand the issues this weblog has been considering over the last few months. Economics is apparently still the most relevant topic for this weblog. It also helps to understand how what I do as a government agent fits, effectively or not, into the larger economy and how I might make my own paradigm changes to fit outside the government sector.

Enjoying Economics

I have been following the talk on Naomi Klein's new book "The Shock Doctrine" on Marginal Revolution and the New York Times putting my two cents in. I don't want to read the book and as far as continuing to invest two cents into discussing the book, one should get change back. However, there is another discussion/debate/donnybrook going on between the so-called main stream and the so-called heterodex economists which is much more interesting.

Interesting in that it helps me get a better understanding of the methodologies used by economists. It also directly applies to my ongoing study of understanding how economics would fit in with my idea of intentional beneficial paradigm shifts. The larger debate is still between capitalism and socialism it seems but the world gets more interesting when the capitalist side includes Grameen phones with Iqbar Quadir from MIT and CARE refuses federal funds. I find value in both the thoughts of Professor Cowen and the newly discovered Professor Stiglitz and have not resolved any of my internal conflicts within the logic of my own perspective.

I must admit that I find the theoretical discussions very interesting recognizing that naiveté is one of the best sources of enthusiasm, but it is the more practical and closer to the ground work that I really admire. Its like having a theory of gravity which is interesting to read and think about but it is not that same as using that theory to explore our solar system.

A Question of Nets Malaria and Social Aid 2

My latest post on the malaria net issue on Marginal Revolution received a response from Greg Laden who has an interesting scientifically based blog Evolution not just a theory any more. Gregg is, according to his blog, an independent scholar affiliated with the University of Minnesota (Graduate faculty of Quaternary Paleoecology, Anthropology, and some other departments, occasional instructor, and administrator). He has the credentials and is doing something that this weblog sees as very worthwhile - utilizing other disciplines such as anthropology to get new perspectives by disciplines such as economics on current world challenges. However, that works both ways, anthropology could use some new perspectives from economics. While he does provide food for thought, I do have disagreements or at least alternative viewpoints from his line of thinking. My response follows.

Greg,

First off thanks for the response. Also checked out your blog and was impressed. You would seem to be working at a technical level a number of levels deeper than my college anthropology class. My own view is that is is very beneficial for us to have those with technical knowledge in other fields to provide input to the discussion in other realms. Second you may be being too cynical but perhaps not that skeptical. A few points for consideration - my own included with the caveat that I might be being too optimistic. I would agree with your assessment if we limit the scope of the analysis to one large governmental bureaucratic institution interacting with another. As you point out, one criticism often laid upon these efforts is that this aid helps corrupt governments and little gets to the people who need it. Here is another source of information which addresses both your point that the foreign aid a country receives lands in the pockets of corrupt officials. and the position I wish to put forward . http://mitworld.mit.edu/video/395/ (I can't seem to make links in these posts perhaps because I am using a freebie blogger) This is where I am perhaps being too optimistic but arguably this does not apply to organizations like Acumen Fund which emphasizes sustainable bottom-up solutions over traditional top-down aid. If the nets are actually made in Africa there is less need to my mind for "parental" oversight by outside agencies. I fully agree with you that one of the great fallacies of the "market" distribution method is the assumption that a good will not generate a price unless a government official or economist puts a price on it. There is, however, still an allocation of resources in terms of cost and a value. I am not arguing that the recipients should pay either the cost or any profit value but a system of sustainable distribution should recognize these factors. This approach does more than take a band-aid (albeit a really big and important band-aid) approach helping the sick and poor become just poor. I do have to admit though that this approach does arguably have its limitations in being able to achieve "market penetration" to the degree required because the enterprise can only grow or produce so fast which may not be fast enough for the health need.. Assuming the mind set of a "change agent" with the best of intentions, one needs to manufacture the nets, if not in the country of need then transport the nets, and distribute the nets. I can use a lump sum charity donation in the form of foreign aid but then you have the issue of the bureaucracy tied to the money. Golden Rule - He who has the gold makes the rules. Even if I use your distribution system of showing up in Kinshasa with a barge full of mosquito nets, left unguarded for a month, one still has to consider the first two steps. You don't really get to do "regardless of how they get there". Furthermore, I have to wonder if there wouldn't be the equivalent of the mosquito net scalper arising out of all of this. There is no perfect system and much (most) of what goes on could be a hell of a lot better but hopefully things can get better through new technology and new thinking. Brian

So Money (of any currency) Can Buy Happiness

I have run into this blog and specifically this post from The Happiness Project: how money CAN buy you happiness a few times during my recent web-wanderings. Two of those times are of particular note. The first time did not have anything to do with happiness but with connectivity or commonality. I share common interests with Ashotosh Tiwari the writer of the Nepal Times article, "It’s a blog world". Mr. Tiwari also uses Google Reader and reads marginalrevolution.com, which according to Mr. Tiwari, "is the destination if you want to learn why, among others, high brow game theorists were again awarded Nobel Prizes in economics". He also suggests that for advice on how to operate a business better, businesspundit.com , is "a useful hub of articles, blog rolls and links. With postings on topics such as “How not to run a meeting?” the site is packed with tips for hurried and harried managers". One that this site has visited in the past is blog.guykawasaki.com which "is billed as “a practical blog for non-practical people”." Another website that I may not share but others surely do is tompeters.com. Of course there are a couple which focus on Mr. Tiwari's part of the world Indianeconomy.org and chinalawblog.com , one core77.com/blog which focuses on design and zenhabits.net which provides, "workable suggestions to increase personal productivity at work and home." Finally he reads happiness-project.com which, "has test-driven both schmaltzy and serious happiness theories, and it offers advice on everything from avoiding office romances to filling up your life with simple acts of happiness." Mr. Tiwari recognizes that "Running a business is only a small slice of life. Being happily productive every day is what probably matters more to people". The post that was current on the day I visited Mr. Tiwari's article was The Happiness Project: how money CAN buy you happiness. The second time was while going through my recent web-wandering while working with the concept of achieving happiness through our choices in life especially at work. Arguably, Mr. Tiwari and I have a good deal in common, at least on the Internet, and at least in the human commonality of seeking happiness. The original discovery of Nepal It’s a blog world was through Marginal Revolution.

No, Not The Right Person But Still A Great Job

Seth's Blog: Great job for the right person

Seth Godin's post for November 15 this year was about Acumen and a great job being offered. According to Seth, "it just might be the most important job you ever do."

"This individual would join the Portfolio Strategies team which focuses on sharing knowledge and influencing how the world tackles poverty. The associate would be primarily responsible for using the internet, video, and a range of tools available for building community to share what Acumen Fund is learning about effective ways to bring critical goods and services to people living in the developing word who make less than $3 per day. "

A review of their website quickly demonstrates that the applicant is going to have to be experienced and talented.

Seth does marketing and this sounds like a marketing position. A viable and important endeavor but there is still the questions floating around the back of my mind as to whether this is the best means of addressing these issues. This has been raised before with the posts on malaria nets usually with me supporting the efforts of Jacqueline Novogratz and other working in this field, but I still have not resolved all questions in my mind. Especially, those raised by Vivian Hoffman whose study had more impact on me than the New York Times article cited by Marginal Revolution. I used a del.icio.us link above for some of the sites I have saved. Here is a link to sites saved by others with a far wider range of views. There are many more trying to make a difference who can be found in Social and Economic Paradigms. It is not that I am turning away from my former perspective, rather it is obtaining enough knowledge to answer these concerns and being able to be open to new ideas and letting old ones go when they no longer work.