The dangers of using unproved assumptions

from Lars Syll

2014+22keynes%20illo2The unpopularity of the principle of organic unities shows very clearly how great is the danger of the assumption of unproved additive formulas. The fallacy, of which ignorance of organic unity is a particular instance, may perhaps be mathematically represented thus: suppose f(x) is the goodness of x and f(y) is the goodness of y. It is then assumed that the goodness of x and y together is f(x) + f(y) when it is clearly f(x + y) and only in special cases will it be true that f(x + y) = f(x) + f(y). It is plain that it is never legitimate to assume this property in the case of any given function without proof.

J. M. Keynes “Ethics in Relation to Conduct” (1903)

Since econometrics doesn’t content itself with only making optimal predictions, but also aspires to explain things in terms of causes and effects, econometricians need loads of assumptions — the most important of these are additivity and linearity. Important, simply because if they are not true, your model is invalid and descriptively incorrect. It’s like calling your house a bicycle. No matter how you try, it won’t move you an inch. When the model is wrong — well, then it’s wrong.

  1. yoshinorishiozawa
    November 14, 2022 at 1:13 pm

    I have a complaint and a notice about Lars Syll’s post on November 2, 2022.

    (1) All comment names in the list Recent Comments in the right column (at the far down) that should direct to the comments to the Lars Syll’s post in this page are misdirected to Lars Syll’s personal web site. I hope this misdirection would not repeat again in this new post.

    (2) Comments on Lars Syll’s post on November 2 now count 14. At least three comments (two of mine and one of Garrett Connelly) that were posted after November 10 had been hidden until today (to wait moderation). Readers are requested to visit those comments.

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