Home > Uncategorized > Unrealistic mental models 6

Unrealistic mental models 6

from Asad Zaman

In the previous post (Three Types of Models 5), we discussed three types of models. The first type is based purely on patterns in observations, and does not attempt to go beyond what can be seen. This is an “observational” or Baconian model. The second type attempt to look through the surface and discover the hidden structures of reality which generate the observations we see. The best approach to this type of models has been developed by Roy Bhaskar, so we can call it a critical realist model or a Bhaskarian model. The third type of model creates depth and structures in our minds which create the patterns we see in the observations. The question whether our mental structures match reality is considered irrelevant. These may be called Kantian, or mental models.  The models of modern Economics are largely Kantian, while Econometric models are largely Baconian. The key defect of both of these approaches is that they GIVE UP on the idea of finding the truth. Max Weber’s ideas about methodology played an important role in this abandonment of the search for truth, but it would take us too far away from our current concerns to discuss this in any detail. Briefly, Weber thought that heterogeneity of human motives made “explanation” of social realities via “truth” impossibly complex. Instead, he argued that we should settle for a weaker concept based on “ideal-types” – deliberately over-simplified models of behavior which create a match to observed aggregated patterns of outcomes. We now discuss the disastrous consequences of this abandonment of truth in greater detail.

There is a famous article of Milton Friedman on methodology in economic theory, which recommends the abandonment of truth: read more

  1. Frank Salter
    January 18, 2020 at 9:36 am

    The only useful models are quantitative. Valid models will be based on theoretical analysis conforming to the quantity calculus. When this is considered, no orthodox nor heterodox analysis is true.

    First is necessary to find valid theory and then to make models based on it. What economists do when they create models is simply guesswork. This is a valid procedure when models which fail to conform with the empirical evidence are eliminated. Unfortunately this is not being done.

  2. January 19, 2020 at 3:01 am

    Frank – Right, if all you care about are score, numbers & stats that have nothing to do with the vast majority of qualitative factors that influence or determine human decisions, actions & consequences. Then, of course, you can decide that a theory is valid because it seems to support your paradigm & priorities, no matter how ecocidally psychopathic you may be. The advantage there is clearly that ignoring a bioethical-axiological calculus of qualitative human values permits rampant plutonomic rape & pillaging of ignorant and/or bamboozled victims of kleptocracy, and well-paid jobs dedicated to that project.
    Asad – Thanks for the post & for exposing Weber’s awful mistake.
    However–unless economics is only for academic economists & teachers of ivory tower doctrine & dogma–it seems to me that calling a realistic approach Bhaskarian is less useful than simply calling it Realist. It also seems important to remember what sociocultural paradigms (mental models) really are, and how they limit and/or enable what is thinkable & discussable (even for economists/plutonomists).
    A mental-cultural paradigm is made of: definitions, beliefs, assumptions, opinions, illusions and, more or less, to our favorite doctrines, dogmas & shibboleths (popular fictions commonly accepted as fact).
    That is why Veblen was right about what it takes to do really valid economics. Also, what he did not say was that without a valid, holistic, unifying metatheory of meta-economics based on truly bioethical meta-axiology, there can be no truly valid theory or praxis of scientific economics useful for creating or fostering & supporting a humane civilization worth sustaining.
    That is a statement of factual logic, not dilettantish sophistry & specious reasoning.

    • Frank Salter
      January 20, 2020 at 10:12 am

      I agree with your comments on the difficulty of predicting human behaviour, but my paper is on production theory, neither more nor less. It deals with physical reality and describes relationships which amenable to mathematical analysis. What’s more the mathematics describes the results of every possible human decision and it is utterly consonant with every regularity found in economic analysis. It is valid by Popper and Lakatos’ standards as well as mine. To simply rail against my analysis is unproductive. If you feel it is error say what is in error, not say it does not describe the whole economy. That was not claimed.

    • Craig
      January 20, 2020 at 6:10 pm

      @Michael,

      “A mental-cultural paradigm is made of: definitions, beliefs, assumptions, opinions, illusions and, more or less, to our favorite doctrines, dogmas & shibboleths (popular fictions commonly accepted as fact).”

      That’s a good definition of a current/old paradigm. A new one washes away most or all of the dross therein. The problem here and elsewhere on the internet and academy is that no one is actually analyzing on the paradigmatic/truly integrative level. Thus they only come up with aspects of the new paradigm with various degrees of accuracy.

      I agree with virtually all of the heterodox critique here. All I’m trying to do is get people here to focus on the essence of the problem which is the current/old monetary and financial paradigm…so that the economy can be transformed by the new one.

      Historically, new paradigms are problem resolving, transformative phenomenons. The new paradigm I’ve advocated here for years mathematically resolves individual monetary scarcity, systemic austerity, creeping inflation and enables sane action toward dealing with climate change which are the main things the heterodox critique the current paradigm for not doing, and the other regulations I advocate in my book would stabilize the new paradigm through time.

      When are we going to have a debate on this blog about what the new monetary and financial paradigm is?

  3. January 20, 2020 at 2:25 am

    @Michael I am in broad agreement. In these posts, I am just trying to understand/explain how we got to this place where crazy models rule the roost and nobody knows or cares about this.

    • Frank Salter
      January 20, 2020 at 10:20 am

      I agree with this. I am trying to show how to eliminate the dross by applying the quantity calculus. If this were truly understood by economists, only a handful of papers would need to be considered. It would simplify your task at a stroke.

  4. Ken Zimmerman
    January 26, 2020 at 1:48 pm

    Asad, I don’t agree with Friedman that our work needs to “abandon” truth. At the same time we need to recognize truth for what it is. As contextual, as historians would say, as relational, as anthropologists would say, The point in both cases is the same. What truth is changes depending on the context of the observer and those using the term. Their location in time and place, that is. What truth is also changes based on the relations through which it’s made real. The simplest example here is this: for truth to be real there must be untruth to which it can be compared. In a relationship that may change over time but must be present for their to be any sort of truth.

    • Craig
      January 26, 2020 at 7:38 pm

      @Ken,

      “The simplest example here is this: for truth to be real there must be untruth to which it can be compared. In a relationship that may change over time but must be present for their to be any sort of truth.”

      Correct. The truth is, in the temporal universe there is no such thing as total freedom…because there is only freedom amongst known barriers. Wisdom is the integration of the truths in opposing perspectives and wisdom’s pinnacle concept grace is the dynamic, interactive and integrative state of mind and logically aligned personal action/systemic policy.

  5. ghholtham
    January 26, 2020 at 6:21 pm

    Much of what Asad says surely commands agreement. Friedman’s methodological instrumentalism, DSGE and rational expectations are easy targets and his critique is justified. The point about Friedman is the inconsistency in arguing that a theory or model must explain and predict the movements of a target variable but it doesn’t matter if other variables in the model are assumed to behave at variance to observation. No need to beat that dead horse further.
    The point at issue seems to me that Asad argues: “we start our journey in life with a HUGE amount of built in-knowledge, not given to us by observations and logic” This claim enables him to distinguish trying to explain phenomena from searching for truth about the world.
    By proposing a theory for why observable phenomena are as they are a scientist is proposing a story about reality. It could be right or wrong but if it is coherent the only way we will know it’s wrong is when observations tell us it can’t be right. So what is the difference between proposing a structural explanation for phenomena and searching for the underlying truth about the world? Asad insists there is some difference but fails to clarify what it is. It seems to have something to do with this built-in knowledge he claims for us.
    But I never had built-n knowledge, for example, that quantum particles could communicate at a distance or be in two places at once. The whole of quantum theory violates our common-sense and presumably our “in-built knowledge”. Does that mean it explains observations but – contrary to the Copenhagen interpretation does not explain the structure of reality? How do we know?
    Here’s my question: if I look at the practical procedures of a Bhaskarian scientist and a Kantian scientist, could I tell which was which? If so how? My suspicion, until enlightened, is that the answers are ‘no’ and ‘no way’.
    So we are creating distinctions with no difference.

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