Thursday, January 29, 2015

"Paul Krugman Is Brilliant, but Is He Meta-Rational?"

Paul Krugman is nuts. He admitted he wanted to be an economist after reading Isaac Asimov's Foundation Trilogy, in which a "psychohistorian" named Hari Seldon figured out how to plot the course of the Galactic Empire 10,000 years into the future with a handheld calculator. I thought it was great...when I was 12 and 13.

Fiction is one thing and reality is another, and Krugman does not dwell in reality. This article explains why.

I figured out a long time ago my mind is not totally rational and actually is more intuitive. But everyone is self-deluded through pride or greed or any of the Seven Deadly Sins. As for Krugman, he is not interested in new information unless he twists it to agree with his previous beliefs.

For at least 2500 years and probably more, Pride/Hubris has been considered the worst sin of all, because it is the basis for all the rest. So I conclude that Krugman is so full of himself he can't admit new information and therefore change his mind.

Since Pride/Hubris is the basis of all sins, it makes me think Krugman has some pretty serious problems none of us know about.

It is from The Umlaut and was written by David Shankbone.

Nobel laureate, Princeton economics professor, and New York Times columnist Paul Krugman is a brilliant man. I am not so brilliant. So when Krugman makes strident claims about macroeconomics, a complex subject on which he has significantly more expertise than I do, should I just accept them? How should we evaluate the claims of people much smarter than ourselves?

A starting point for thinking about this question is the work of another Nobelist, Robert Aumann. In 1976, Aumann showed that under certain strong assumptions, disagreement on questions of fact is irrational. Suppose that Krugman and I have read all the same papers about macroeconomics, and we have access to all the same macroeconomic data. Suppose further that we agree that Krugman is smarter than I am. All it should take, according to Aumann, for our beliefs to converge is for us to exchange our views. If we have common “priors” and we are mutually aware of each others’ views, then if we do not agree ex post, at least one of us is being irrational.

It seems natural to conclude, given these facts, that if Krugman and I disagree, the fault lies with me. After all, he is much smarter than I am, so shouldn’t I converge much more to his view than he does to mine?

Not necessarily. One problem is that if I change my belief to match Krugman’s, I would still disagree with a lot of really smart people, including many people as smart as or possibly even smarter than Krugman. These people have read the same macroeconomics literature that Krugman and I have, and they have access to the same data. So the fact that they all disagree with each other on some margin suggests that very few of them behave according to the theory of disagreement. There must be some systematic problem with the beliefs of macroeconomists.

In their paper on disagreement, Tyler Cowen and Robin Hanson grapple with the problem of self-deception. Self-favoring priors, they note, can help to serve other functions besides arriving at the truth. People who “irrationally” believe in themselves are often more successful than those who do not. Because pursuit of the truth is often irrelevant in evolutionary competition, humans have an evolved tendency to hold self-favoring priors and self-deceive about the existence of these priors in ourselves, even though we frequently observe them in others.

Self-deception is in some ways a more serious problem than mere lack of intelligence. It is embarrassing to be caught in a logical contradiction, as a stupid person might be, because it is often impossible to deny. But when accused of disagreeing due to a self-favoring prior, such as having an inflated opinion of one’s own judgment, people can and do simply deny the accusation.

How can we best cope with the problem of self-deception? Cowen and Hanson argue that we should be on the lookout for people who are “meta-rational,” honest truth-seekers who choose opinions as if they understand the problem of disagreement and self-deception. According to the theory of disagreement, meta-rational people will not have disagreements among themselves caused by faith in their own superior knowledge or reasoning ability. The fact that disagreement remains widespread suggests that most people are not meta-rational, or—what seems less likely—that meta-rational people cannot distinguish one another.

We can try to identify meta-rational people through their cognitive and conversational styles. Someone who is really seeking the truth should be eager to collect new information through listening rather than speaking, construe opposing perspectives in their most favorable light, and offer information of which the other parties are not aware, instead of simply repeating arguments the other side has already heard.

Contemporary macroeconomic debates are a case where it is clear that a number of participants on both sides possess less than average levels of meta-rationality. It seems clear, for instance, that the “Internet Austrians” are not meta-rational. It seems equally obvious that Krugman is not meta-rational.

For example, when Jeff Sachs put forth a long, reasoned argument that Krugman’s crude Keynesianism was inadequate and dangerous, Krugman responded by saying that his model was not crude but sophisticated, pointing to published research that Sachs has no doubt already read. He did not respond to Sachs’s factual assertion, for instance, that profits are soaring, or to his claim that this conflicts with Krugman’s argument that our economic problems are purely demand-related.

Another recent example comes from Krugman’s hasty dismissal of Miles Kimball, who argued more narrowly that Krugman’s advice to Italy in particular to spend more was misguided. Krugman’s response, in full, was that the paper that Kimball cited, by Reinhart, Reinhart, and Rogoff, did not constitute conclusive proof that high debt levels were bad for growth. I happen to agree in general about that paper, but, as Noah Smith pointed out, Krugman himself had argued a mere three days earlier that Eurozone countries, because they do not control their own currencies, do need to be concerned about their levels of debt. In case you need reminding, Italy is a Eurozone country.

And to take a non-recent example, who can forget Krugman’s blanket dismissal of the “conservative” blogosphere: “I don’t know of any economics or politics sites on that side that regularly provide analysis or information I need to take seriously.” As if this were not already a caricature of self-deception, recall that Krugman frequently and irritatingly refers to libertarian economists as conservatives.

What does this mean for the rationality of disagreement with Krugman? To quote Cowen and Hanson (emphasis added):

"For a truth-seeker, the key question must be how sure you can be that you, at the moment, are substantially more likely to have a truth-seeking, in-control, rational core than the people you now disagree with. This is because if either of you have some substantial degree of meta-rationality, then your relative intelligence and information are largely irrelevant except as they may indicate which of you is more likely to be self-deceived about being meta-rational."

Our intellects may be inferior to Krugman’s, but if we cultivate our own meta-rationality, we are more likely to be right than he is. Meta-rationality trumps intelligence. We would be fools to dismiss Krugman out-of-hand, because, after all, that would not be very meta-rational of us. But, having given due weight to his and other arguments, if we continue to disagree, we may do so with the strong suspicion that our disagreement is warranted.


Anonymous said...

What is the best flavor of ice cream? Can two rational people disagree?

Economics is not largely a question of rationally analyzing data. It's largely a matter of taste.

John said...

'Japan is a financial disaster!' - Krugman pre-crash

'Japan's policy is exemplary in crisis situations' - Krugman post-crash

Mindstorm said...

@Anonymous above.

It's also a question of which kind of data is to be dismissed as irrelevant, and which is to be left for analysis.

One is expected to be capable of providing a better justification for his choice than 'because I am right' or 'because it feels to be true'.

Anonymous said...


In economics there is not even broad agreement on the end. Krugman would make his choice, and I another on the basis of taste.

When one talks about making choices for others, and that's a lot of what drives modern economics, you're already rejecting their tastes, and that's a hell of a starting point.

kurt9 said...

You might want to consider the possibility that the field of macroeconomics itself is nothing more than criminal sophistry. This is a subset of the idea that much of intelligence is nothing more than a tool used for deception. Given this, I would not have so much regard for Paul Krugman.

Anonymous said...

Do you understand Modern Monetary Theory (MMT)?

Did you know that the federal government, which is monetarily sovereign, does not actually require taxation to fund itself?

See these links:

sth_txs said...

Krugman is a despicable idiot. He really lost me there years ago with his stupid idea about pretending there are invading space aliens so we could spend money on something. I guess he read too much science fiction.

He also lies about the views of the Austrian school.

Anonymous said...

Debunking Austrian Economics 101:

sth_txs said...

Those site 'debunking' Austrian economics are total crap written by a nobody.