Sunday, March 1, 2015

Are the tribal really all 100% impervious to evidence, logic, science?

You hear this claim a lot. The very tribal: The tea partiers who get affinity fleeced by get rich quick schemes (that the liberals don't want you to know because they hate America); the struggling single mothers with serious health conditions, just barely hanging on for their young children due to Obamacare subsidies, voting straight-ticket Republican; James Inhofe bringing a snowball to the Senate floor to prove global warming is a conspiracy of virtually 100% of climate scientists worldwide. 

Wait, isn't he our chairman of the Senate's Environment and Public Works Committee? Strange days indeed. Most peculiar mama.

You can't reach them with evidence and logic. They are too tribal, too anti-science.

But is this really true, or true even of the only moderately tribal and unscientific, and to that hopeless a degree? 

I'll get right to the punch line: First, most people are not that extremely tribal. That's a relatively small minority. And, there are some studies showing that at least the non-extremely tribal and unscientific can often be swayed by logic, evidence, science; at least if applied again-and-again, over the long run.

This recently came up in Paul Krugman's discussion of why he's often not so "polite" or "civil". John Quiggin makes some very good additional points, and he notes:
The implicit, and false assumption in the anti-anti-anti-science position is that there is some better way of convincing the anti-science group to change their minds, for example by framing climate change in terms more congenial to political right-wingers. This is pretty clearly wrong. Long experience has shown that nothing is going to shift the right on an issue that has become a tribal shibboleth.
It is true that the more tribal people get, the more the brain goes out the window in making decisions and accessing reality. It's why the extreme right is so preyed upon by members of their own tribe. But what percentage of the population is this tribal? 

Far less than a majority. For example, a 2013 Rasmussen poll has only 8% of likely voters saying they are Tea Party members, and a 2013 Gallup poll has just 22% saying they support the Tea Party movement.

It's true that our system still has some highly undemocratic flaws (although we've obviously come a long way from the days when only white male land owners could vote); a citizen in Wyoming has over 60 times the voting power in the Senate of a citizen in California; we have extreme gerrymandering, and Supreme Court justices who stop vote counting to install their candidate for President, and allow massive money to bend political will with few and diminishing limits. 

But if the vast majority are only at most moderately tribal, they may still be eventually reachable by strong logic and evidence. And, a strong majority can still usually get what they want over the long run, at least if it's something they feel strongly about.

So can just the moderately tribal, the moderately resistant, be reached? 

I was a top salesman at one time, and I'm a successful entrepreneur and hold an MBA from a top business school. So I have some knowledge and experience with sales and marketing, with persuasion. My conclusion is that often logic and evidence can be powerful if applied persistently and well, again and again and again, especially over the long run, even with people who are moderately tribal, or unscientific, or go largely by feel.

But what about the academic evidence? This is something I will eventually research thoroughly. But I did recently read this in support: It's from the Columbia Journalism Review:
So perhaps a single, credible refutation within a news article isn’t likely to convince people to change their views. But other research suggests that a constant flow of these kind of corrections could help combat misinformation. The theory is that the more frequently someone is exposed to information that goes against their incorrect beliefs, the more likely it is that they will change their views.

“It’s possible there is something to be said for persistence,” Reifler said. “At some point the cost of always being wrong or always getting information that runs counter to what you believe is likely to outweigh the cost of having to change your mind about something. We need to figure out what is the magic breaking or tipping point, or what leads people to get to that tipping point. I think we’re just scratching the surface.”

He pointed to a 2010 paper in Political Psychology by David P. Redlawsk and others, “The Affective Tipping Point: Do Motivated Reasoners Ever ‘Get It’?”

The researchers sought to determine if a tipping point exists that could cause voters to abandon motivated reasoning and view facts in a more rational way.

“We show experimental evidence that such an affective tipping point does in fact exist,” they write. “… The existence of a tipping point suggests that voters are not immune to disconfirming information after all, even when initially acting as motivated reasoners.”

This tipping point is far from being identified, but it’s encouraging to think that repeated efforts to debunk misinformation, or to simply to spread the truth, may have an effect.
So, it's not at all a closed case that: Of course you can't reach partisans, or the tribal, or those with a large propensity to make their decisions based on feel.

At least if they're not the very hard core (and only a relatively small minority are very hard core), it's not clear that the're impervious to logic, evidence, science. We should keep that in mind.

I'd also like to highlight a great point Quiggin made:
As Krugman points out, what matters is not the impact on the anti-science group themselves, but on the attitudes to that group among others. The recent measles epidemic didn’t have much of an impact on anti-vaxers, as far as I can see, but it certainly changed attitudes towards them, greatly reducing sympathy for their desire to pursue their deluded beliefs regardless of the risk to the rest of the community.
I think a good example is smoking. At one time, many people resisted the idea that tobacco was very harmful, despite already overwhelming scientific evidence, and it was a tribal and political issue for many. But what happened? Eventually those who held this unscientific view were repeatedly shamed by scientific evidence, again and again and again. Over time, even if the most hard core wouldn't change their views, they did die off. And the young, who are more open, grew up hearing the scientific evidence. 

Moreover, the non-extremely tribal, who are the majority, and even "Balanced" journalists, grew more and more shamed not acknowledging the overwhelming science (and see the last part of this). So over time, it became an embarrassment to say, smoking is safe; it's all just a conspiracy. And very few would say this today. Over time, repeated hitting over the head with logic, evidence, science, worked. You just can't expect immediate results.

Friday, October 31, 2014

Stunning Dishonesty and Chutzpah in Anti-Tucson-Democrat Mailer

Late last night I found in our mailbox a campaign piece that just knocked my socks off, even in today's world of unlimited billionaire-powered propaganda. As you see above, the piece accuses Tucson Democratic House Representative Ron Barber (Gabby Gifford's old district) of voting for the Paul Ryan Budget, and how horrifying that budget is – their budget! I contacted Dylan Matthews of Ezra Klein's Vox about it, and he verified it, and now has a post up.

It's like the fast food industry saying don't vote for Jack LaLane, he supports the junk food diet, with all the horrors of that diet. Instead, vote for the representative of the fast food industry that created and sells that diet! It's an astounding level of lying and Chutzpah, even by today's standards. For three years straight the Ryan budget passed the house 100% with Republican votes, not a single Democratic vote. For crying out loud, Paul Ryan was the Republican Vice-Presidential candidate last election!

Update: I see it's now also up at Kevin Drum's Mother Jones' blog and Huffington Post. And from ABC Chief Whitehouse Correspondent Jonathan Karl, "About as cynical and misleading as it gets".

Thursday, September 18, 2014

Guest Post at Miles Kimball's on Wallace Neutrality in Theory and Practice

University of Michigan economist Miles Kimball was kind enough to ask me to comment on a recent Twitter discussion he had with Berkeley economist Brad DeLong and Stony Brooke economist Noah Smith on Wallace neutrality. He was specifically concerned with how I would answer the question, Does Wallace neutrality result from (in theory) fiscal policy canceling out the Fed, or many private agents (the minnows) canceling out the Fed (the whale)? My answer, and more, is here.

Thursday, September 4, 2014

Am I taking crazy pills?!

In 2010 I first asked publicly what I thought was a crucial question on health care, that I thought was not that unobvious, that no one was asking. Since then, I've periodically re-asked it (recently at Noah's), and not only has no one answered it, no one else anywhere ever asks it! I read widely and deeply the economics and politics blogosphere and other media almost every day, thousands of pages per year, from Paul Krugman to Stephen Williamson, the Atlantic, the New Republic, Fed websites, major newspapers, Jonathan Chait, Jonathan Cohn, the links in Economist's View, the links in the Plum Line, on and on. And no one, no one, ever asks it! Why? Why does no one else ask this?!

Am I taking crazy pills?!

Here it is, reprinted from a January, 2010 post; maybe you can tell me if I am:
We spend about $100 billion per year on medical research, public and private combined (see here).

We spend about $2 trillion per year on health care delivery, the doctors, hospitals, administration, etc. If we adopted a European style system, cutting our spending per person in half, as in European countries (that I think the evidence shows have about as good or better health care and results anyway; see for example here), then we would save about $1 trillion per year.

Now, what if we spent that $1 trillion in savings on medical research? It would increase medical research spending more than 10 fold.

Even if delivery did get a little worse, even if we did get a little bit less of our brightest and best becoming doctors due to lower pay, it seems like this would be totally outweighed over the long run by tremendously more advanced medical understanding and treatments due to the 10 fold increase in medical research spending (or more, as some advanced universal healthcare countries provide comparable health care to the US at about a quarter of the cost per person) .

So it looks like if you want better medical results, better treatment, breakthroughs in rejuvenation, better odds of surviving cancer, you name it, you should support going to a European style system, and using the immense savings to increase medical research more than 10 fold.

So if our health care system really is more efficient than the Europeans, then why is it possible to make such a vastly favorable trade?

If the Republicans really care about our children and grandchildren so much why don't they do this, so in 50 years they could have medicine as advanced as it would take perhaps 150 years to achieve with our current system. I don't care how bad you imagine European health care to be, you cannot think a European medical center of today is less effective than even the Mayo Clinic of 100 years ago, when penicillin and polio vaccines hadn't even been invented.

Sunday, August 10, 2014

The Intuition behind Wallace Neutrality, Attempt 3

Ok, if I might make another attempt to explain the elusive intuition behind Neil Wallace's model, and why Wallace neutrality doesn't work in the real world. The issue recently re-arose in the econoblogosphere. I have two earlier attempts that I think are interesting and show some good intuitions. Here's try three:

Please consider this:

With Miller Modigliani (MM), if the firm borrows more, it increases the overall debt level of its shareholders. Since we're assuming at the start that everyone's a perfect optimizer, with perfect expertise, public information, etc., and since we're assuming we start at equilibrium, then everyone is already at their optimal debt level, that they want to stay at.

So, when the firm borrows more, the shareholders just borrow less, enough less so that their overall debt level remains unchanged.

In MM, it's a partial equilibrium model, in that the interest rate is taken as given, exogenous, to use the term of the biz; the people in the model can't change it. But even if it weren't, the total demand for debt in the debt market doesn't change, because it all comes down to the fundamental demanders: the people. The firm is just an intermediary for them. The firm demands more debt? Well, they just demand less by an equal amount. Total demand in the market as a whole remains the same, and thus so would the market interest rate, even if this were a global equilibrium model.

So, now we go to Wallace's 1981 AER paper, “A Modigliani-Miller theorem for open-market operations”. You look at it, and it's a wall of very terse math. I have the dreaded ABD in finance. But at least I took all the courses and passed all the written exams, plus a whole lot of study on top of that. I think I'm pretty good at decoding the intuition behind math. And I spent about 50 hours on this two years ago, a giant amount for me. Still, I would love to have two months uninterrupted to just study this paper. Ah, a man can dream… Some want to pet turtles in the Galapagos when they retire, some want to get jiggy with Wallace…

Oh, oh, ok, wake up. Anyway, I think I got, nonetheless, a substantial amount of intuition out, and I would venture this:

In Wallace's model, the government is like a big MM firm. And the citizens are shareholders of the government. When the government does the Wallace version of a QE, it basically is like it borrows more money (really lends, but let's look at the converse for now). That would make its citizens overall debt level higher than they like, so they want to borrow less by an equal amount to stay at their optimal overall debt level. The total demand for debt in the market remains unchanged. Government demand goes up by X, and private demand goes down by X, so the interest rate remains the same.

In Wallace, all people are perfectly expert, with perfect public information, can do all analysis and information gathering and digesting instantly, at zero cost, and are perfect rational optimizers. They start the model in equilibrium with their optimal level of debt, and if the government, that they're "shareholders" in, borrows more, then they just instantly borrow less by an equal amount. So, interest rates don't change.

More specifically, in Wallace there is a single consumption good. I called it C's. People save some of their C's for period two of their two period lives. The government's "QE" is to print dollars and exchange them for C's, which it will store for one period. Then it will sell all of those C's back again out into the market for dollars – with 100% certainty. That's their plan, everyone knows it, and they're going to stick to it.

The people own the government. They're its shareholders; they get dividends in the form of government transfer payments, so when this government "firm" saves more C's, by selling newly printed dollars to get C's, and puts them into storage, then the people's overall savings goes up – up above their optimum that they had settled on in equilibrium.

So they sell C's out of their private stores in an equal quantity to compensate. The total demand overall for the market to save C's for the future does not change, and so the interest rate doesn't either. And that's the thinking; that's why it works in Wallace's model. That's why you can prove no change when you do the math in this model.

But why wouldn't this work in the real world?

Well, first off, people are far from perfectly expert (especially in the super complex modern world), with perfect public information that they can gather, digest, and analyze at zero time, effort, or money cost. This should be like, duh, but then you hear some of the things some freshwater economists imply, and you're stunned. Partly to sell their ideology, partly to make the models they're top experts in more valued, partly, perhaps, just detached from reality from selling, and smelling, their own B.S. for so long. But for whatever reasons, obviously the vast majority of people are far from this.

So, when the government "firm" starts to lend a lot more, almost no one thinks, MM style, or Wallace style, I want to start selling some of my bonds to compensate in equal measure as I see them doing that. And so total lending in the market does, in fact, go up, and market interest rates drop. People just don't react that way. And it won't be nearly enough if a savvy minority do. They won't control enough money to drive us to Wallace neutrality.

It's like in Miller and Modigliani's model if the firms start borrowing a lot more, but the shareholders are mostly not really paying attention, and/or don't know well the implications, so, for the most part, they don't want to borrow any less to compensate. In that case, aggregate demand for borrowing would not remain unchanged. The aggregate demand curve for borrowing would, in fact, shift out, and the interest rate would rise.

Other issues: In the real world there are a lot more different kinds of financial assets than just money, and borrowing and lending the single consumption good risk-free, like in Wallace's model. So, if the government does a QE in just some types of assets, people, even if they are perfect at optimizing, won't be able to funge their portfolios to relieve completely price pressure on those assets. Markets are not complete, and far from it, so that you could construct a synthetic for any asset. I talk about this in an earlier post on Wallace neutrality when I ask what if the government did a QE where they printed up a dollars and used it to purchase 100 million ounces of gold.

Next, Miller-Modigliani irrelevance doesn't hold if investors face different borrowing costs and liquidity constraints than the firm. Likewise, Wallace irrelevance will not hold if individuals and firms face different borrowing costs and liquidity constraints than the federal government. Do they? 

Finally, Wallace's model assumes that with 100% certainty the central bank will completely reverse the QE one period later, and everyone knows this. All of the C's purchased with the newly printed dollars will be sold back. In the real world, investors cannot be completely certain a QE will be 100% reversed in the future.

From UCLA economist Roger Farmer:
A wealth of evidence shows not just that quantitative easing matters, but also that qualitative easing matters. (see for example Krishnamurthy and Vissing-Jorgensen, Hamilton and Wu, Gagnon et al). In other words, QE works in practice but not in theory. Perhaps its time to jettison the theory.

Sunday, May 4, 2014

Always rule out all options but the two libertarian ones, Pareto and nothing, is value-free?

Oxford macroeconomist Simon Wren-Lewis has a great post on how economics' extreme bias towards Pareto optimality is, of course, not value-free. 

I'll add this: You often hear from economists that Pareto optimality is value-free and no one can object to it because no one is hurt by the Pareto option.

But here's the huge problem with that. What you're immediately doing when you say that is saying we will consider only two options, and rule out as unacceptable every other. We decide every other option is unacceptable except the two libertarian options, Pareto and nothing. THAT's value-free? That's positive and unideological? To rule out all of the many other options, including the utilitarian one, immediately as unacceptable, and only consider permissible for analysis the two libertarian ones? That's positive value-free? You can't even positively state, without endorsement, this is what the total societal utils optimum is, so people can know it and consider it?

This is a source of extreme, pervasive, and profound bias in economics toward libertarianism, as well as plutocracy.  And I discussed this in a 2012 post, which Simon cited.

Tuesday, March 25, 2014

Guest Post at Carola Binder's on The Second Machine Age

My thanks to Carola, Berkeley economics PhD student and excellent blogger. The post tackles one of the biggest issues of the day, Will the explosion in computer/robot/machine ability result in mass unemployment this time, even though previous technological revolutions haven't? I make use of insights from MIT professors Brynjolfsson and McAfee's important new book, as well as their first book on this subject, Race with the Machine.