Archive for the 'Bad Reasoning' Category

A Little Knowledge Is A Dangerous Thing

Published
by
Steve Landsburg
on December 10, 2012
in Bad Reasoning, Economics and Policy
. 119 Comments

Writing in The New Yorker, Elizabeth Kolbert illustrates the power of analogy:

A man walks into a bar. He orders several rounds, downs them, and staggers out. The man has got plastered, the bar owner has got the man’s money, and the public will get stuck with the tab for the cops who have to fish the man out of the gutter.

…..

The man pulls into a gas pump. He sticks his BP or Sunoco card into the slot, fills up and drives off. He’s got a full tank; the gas station and the oil company share in the profits. Meanwhile, the carbon that spills out of his tailpipe lingers in the atmosphere, trapping heat and contributing to higher sea levels. As the oceans rise, coastal roads erode, beachfront homes wash away, and, finally, major cities flood. Once again, it’s the public at large that gets left with the bill.

In both cases, Kolbert endorses the “fair and logical” solution: The man should be taxed to incorporate the costs that his choices impose on the rest of society.

I like this game. Can I play too?

A man chooses to build his house on the oceanfront instead of 100 miles inland. This makes him especially vulnerable to rising sea levels and therefore leads him to lobby for a carbon tax. The man gets his house; the builders and contractors share in the profits, and the public at large bears the consequence of higher gas prices.

Or even:

Some people want to burn a lot of carbon, which raises global temperatures, imposing costs on owners of oceanfront property. Other people want to protect their oceanfront property, imposing costs on the people who want to burn a lot of carbon. A journalist at the New Yorker convinces her readers that the only “fair and logical” solution to this conflict of interests is to come down entirely on the side of the property owners, leading to the implementation of suboptimal policies. The journalist gets paid, the magazine editors congratulate themselves on the influence of their writers, and the general public suffers the consequences.

Should the property owner and the journalist be taxed for exerting their malign influences?

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DeLong Shot

Published
by
Steve Landsburg
on December 7, 2012
in Bad Reasoning and Knowledge
. 48 Comments

First Brad Delong claimed that we can’t know things by pure reason. In response, I offered a counterexample:

The ratio of the circumference of a (euclidean) circle to its radius is greater than 6.28 but less than 6.29

Now Delong attempts to “refute” this counterexample by observing that it doesnt tell us anything about neutron stars (!!!). Leave aside the fact that it actually does tell us quite a bit about neutron stars (the circumference-to-radius ratio for a neutron star is not equal to 2π, but you’d still be hard pressed to compute its value if you didn’t know what π was). The larger point is that knowledge doesn’t have to be about neutron stars to be knowledge. It can be knowledge about, oh, say, euclidean circles.

Of course, as DeLong rightly observes, “we reason like jumped-up monkeys using error-prone Humean heuristics on brains evolved to improve our reproductive fitness”. And of course it is equally true that we perceive like jumped-up monkeys using error-prone sensory apparatus evolved to improve our reproductive fitness. Yet DeLong appears to acknowledge that our perceptions are sometimes informative. (I use the word “appears” because, true to form, DeLong prefers hissing and stamping his feet to actually spelling out an argument.) Why, then, should reason be more suspect than perception? DeLong isn’t in the mood to tell us.

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Unreasonable

Published
by
Steve Landsburg
on November 29, 2012
in Bad Reasoning, Knowledge and Philosophy
. 49 Comments

Brad DeLong appears to argue here that because pure reason once led him, Brad Delong, to an incorrect conclusion about which direction he was facing, it follows that pure reason can never be a source of knowledge.

(If that’s not his point, then the only alternative reading I can find is that Thomas Nagel is guilty of choosing a poor example to illustrate a point that DeLong would rather ridicule than refute.)

It would be too too easy to make a snarky comment about how we’ve known all along about Brad DeLong’s tenuous relationship with reason. Instead, here, for the record is a list of ten facts, of which I am willing to bet that DeLong is aware of at least 7 — none of them, as far as I can see, accessible to humans via anything but pure reason:

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Your President Hopes You’re Stupid

Published
by
Steve Landsburg
on November 1, 2012
in Bad Reasoning, Current Events and Politics
. 99 Comments

Joe Biden says that Mitt Romney has lied about Jeep and outsourcing; Romney intimates that President Obama has lied about Libya. I presume there’s been substantial truth-stretching on both sides and about many issues. Truth-stretching (or lying) relies on the ignorance of voters. There’s plenty of ignorance to go around, which is why truth-stretching works.

Treating voters as ignorant is one thing; treating them as stupid is quite another. You rely on ignorance when you cite “facts” that are hard for people to check — as, for example, when the President presents himself as sympathetic to immigrants and hopes you don’t know about the record number of deportations on his watch. You rely on stupidity when you blithely contradict yourself, hoping nobody will notice. The latter seems far more cynical.

I’m sure both candidates have been guilty of treating voters as both ignorant and stupid, and I called attention to several instances (on both sides) in my commentary on Debates One, Two and Three. But it does seem to me that it’s the President who is banking most heavily on voter stupidity.

A few examples:

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Krugman — So Right and So Wrong

Published
by
Steve Landsburg
on October 13, 2012
in Bad Reasoning, Current Events, Economics, Paul Krugman, Policy and Politics
. 53 Comments

Paul Krugman offers a nice thought experiment to illustrate why government debt, in and of itself, does not make the country as a whole any poorer:

Suppose that … President Santorum passes a constitutional amendment requiring that from now on, each American whose name begins with the letters A through K will receive $5,000 a year from the federal government, with the money to be raised through extra taxes. Does this make America as a whole poorer?

The obvious answer is not, at least not in any direct sense. We’re just making a transfer from one group (the L through Zs) to another; total income isn’t changed. Now, you could argue that there are indirect costs because raising taxes distorts incentives. But that’s a very different story.

OK, you can see what’s coming: a debt inherited from the past is, in effect, simply a rule requiring that one group of people — the people who didn’t inherit bonds from their parents — make a transfer to another group, the people who did. It has distributional effects, but it does not in any direct sense make the country poorer.

Two comments:

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Uncle Ezra’s Crazy Housing Plan

Published
by
Steve Landsburg
on July 26, 2012
in Bad Reasoning, Current Events and Economics
. 25 Comments

Ezra Klein at the Washington Post offers a way out of the current mess:

Tomorrow morning, Bernanke could walk in front of a camera and announce that the Federal Reserve intends to begin buying huge numbers of mortgage-backed securities with the simple intention of bringing the interest rate on a 30-year mortgage down to about 2.5 percent and holding it there for one year, and one year only.

The message would be clear: If you have any intention of ever buying a house, the next 12 months is the time to do it. This is Uncle Ben’s Crazy Housing Sale, and you’d be crazy to miss it.

Now, financial markets are not my specialty, and maybe Klein has thought about this more deeply than I have, but there seems to be a little flaw in this plan.

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The Wrong Tool for the Job

Published
by
Steve Landsburg
on July 19, 2012
in Bad Reasoning, Economics and Paul Krugman
. 43 Comments

Paul Krugman, defending the IS-LM (a/k/a “old Keynesian”) model of the macroeconomy as a non-rigorous but useful “scratchpad”, misses the point by a mile:

It’s a simplified model that more or less gets at what you think are the essentials of an issue, and is easy to work with, so you can use it to reach quick first-pass judgments about policy or whatever.

………

But IS-LM isn’t the prime example of a scratchpad. What is?

The answer is, supply and demand.

It is not easy to derive supply and demand curves for an individual good from general equilibrium with rational consumers blah blah. And it’s definitely not easy to justify consumer and producer surplus as measures of welfare. And there have always been some purists who condemn any use of the S and D curves we all grew up with, the use of triangles to measure welfare loss, and all that.

But for the most part nobody pays attention. The supply-and-demand framework is so convenient, while pretty much getting at what you want to get at, that it’s what almost everyone uses to get a first-pass analysis of economic issues.

Okay, look. Supply and demand (and, especially, triangles of welfare loss, etc) are not entirely rigorous, but they’re good useful simplifications that actually give useful (though approximate) answers to important policy questions. Sort of like Ohm’s Law for electrical circuits.

But IS-LM is not like that at all, because IS-LM does not even address the key policy questions in macroecomics. IS-LM can tell you, perhaps, how to fight a recession, but it can’t tell you whether the recession is worth fighting — not even loosely, because the model contains no individual utility functions and no social welfare function. It therefore does not allow you even to formulate the question of whether a given policy is worth its costs, because it provides no framework for weighing costs against benefits.

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Charting the Tax Plans

Published
by
Steve Landsburg
on July 16, 2012
in Back of the Envelope, Bad Reasoning, Current Events, Paul Krugman, Policy and Politics
. 48 Comments

Ezra Klein, quoted with approval by Paul Krugman, offers this chart of how the Obama and Romney tax proposals will change rates for taxpayers in various quintiles:

What we’re supposed to infer, according to Krugman, is that

we have an election in which one candidate is proposing a redistribution from the top … downward, mainly to lower-income workers, while the other is proposing a large redistribution from the poor and the middle class to the top.

But no such thing is remotely true. What we actually have is an election in which both candidates are proposing massive redistributions from the top downward, one slightly less so than the other. You’d never know this from looking at Klein’s chart because it illustrates changes in rates, whereas what actually matters is the rates themselves. It makes no sense to ask whether any particular group ought to be paying more or less without reference to how much they’re already paying.

Indeed, this is a classic example of what I once called the “Grandfather Fallacy” — by focusing on changes instead of absolutes, Klein’s chart conceals any existing inequities and hence treats them as “grandfathered in”.

Fortunately, Greg Mankiw has provided the numbers that allow us to make the requisite correction. Here, according to Mankiw, are the current tax burdens on various income groups (counting transfers as negative taxes, as of course one should):

Bottom quintile: -301 percent
Second quintile: -42 percent
Middle quintile: -5 percent
Fourth quintile: 10 percent
Highest quintile: 22 percent

Top one percent: 28 percent

That “-301 percent” means, for example, that a typical family in the bottom quintile receives $3.01 in net transfers for every $1 that it earns.

By adding these numbers to the numbers in Klein’s graph, we can construct a picture that actually depicts something interesting, namely the projected tax burdens for each group. It looks like this (the vertical axis represents percentage of income):

Note, for example, that, contrary to the impression you might have gotten from Klein’s and Krugman’s posts, both plans place the highest percentage burden on the top 1%, and both plans place a negative burden on the middle quintile — though Obama’s does both of these things to an ever-so-slightly greater extent than Romney’s does. There’s room for disagreement about which plan is fairer, but no room, I think, for disagreement about which chart is relevant.

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And Everyone Who Supports Vaccinations is Motivated by a Desire to Stab People….

Published
by
Steve Landsburg
on June 19, 2012
in Bad Reasoning
. 27 Comments

In an apparent case of libertarianism run amok, two cognitive scientists and one economist have declared (in effect) that proponents of income redistribution are always and everywhere motivated by exactly the same psychopathic impulses that lead people to scratch other people’s cars, break streetlamps, and engage in other forms of senseless destruction.

That’s not a conclusion; it’s their starting assumption. Then they do an experiment in which some subjects choose to engage in a mild form of income redistribution — and conclude that psychopathic behavior is frighteningly widespread.

Now I too am generally skeptical of the impulse to redistribute other people’s income, but even I concede that redistribution is rarely entirely senseless and pretty much never entirely destructive. In particular, the experimenters consider a case where money has just been redistributed and subjects are given the opportunity to (partly or fully) reverse that redistribution. Those who exercise that opportunity are labeled “destructive”. So apparently, in order to avoid the “destructive” label, you must passively accept any arbitrary redistributions imposed by authority figures without ever feeling any impulse to redistribute in the opposite direction.

In the experiment, each subject is initially awarded 1000 tokens. The paper is so poorly written that it’s hard to be sure, but I think these tokens are ultimately exchangeable for money; it’s mentioned that the average subject earns the equivalent of nine British pounds. One subject is then given the opportunity to destroy some of the other subject’s tokens, thereby returning some funds to the experimenters or to the taxpayers who are funding this experiment.

Rather shockingly (to me) only about 15.5% of the subjects exercised this option; given the presumption of public funding, I’d have hoped for a higher number. The experimenters, however, want to conclude that these 15.5% are the sorts who are likely to key your car.

This stuff is infuriatingly stupid. Even more distressingly, Robin Hanson, who is much much much too smart for this, seems to have fallen for it.

Continue reading ‘And Everyone Who Supports Vaccinations is Motivated by a Desire to Stab People….’

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Block Grants and Bad Faith

Published
by
Steve Landsburg
on March 30, 2012
in Bad Reasoning, Economics, Paul Krugman and Policy
. 90 Comments

Paul Krugman on last week’s Supreme Court arguments:

I was struck, in particular, by the argument over whether requiring that state governments participate in an expansion of Medicaid … constituted unacceptable “coercion.” One would have thought that this claim was self-evidently absurd. After all, states are free to opt out of Medicaid if they choose; Medicaid’s “coercive” power comes only from the fact that the federal government provides aid to states that are willing to follow the program’s guidelines. If you offer to give me a lot of money, but only if I perform certain tasks, is that servitude?

Wrong question. The right question is:

If you take a lot of money from me and then offer to give it back, but only if I perform certain tasks, is that servitude?

Because, you see, the federal government is not handing out its own money to state governments — it’s handing out money that it takes from the citizens of those very states for the purpose of (conditionally) handing it back. (Of course “handing it back” isn’t exactly right either, because the payments go not to taxpayers but to their state governments — but it’s a lot closer to right than Krugman’s formulation.)

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And the Winner Is….

Published
by
Steve Landsburg
on March 29, 2012
in Bad Reasoning, Current Events, Economics and Policy
. 114 Comments

The Supreme Court has been a veritable festival of economic ignorance the past few days, but if I had to pick a prize specimen, I think it would be Paul Clement’s response to Justice Kennedy’s observation that the uninsured — given our unwillingness to turn them away from emergency rooms — impose a burden on the rest of us. Mr. Clement (the plaintiff’s attorney) tried to argue that the same is true in any market:

When I’m sitting in my house deciding whether to buy a car, I am causing the labor market in Detroit to go south…

thereby blurring the key distinction between a pecuniary and a non-pecuniary externality.

The point is that Mr. Clement’s decision not to buy a car (and therefore to drive down the price) is bad for Detroit auto workers only to the extent that it’s good for other car buyers. It is therefore in no sense a net burden on the rest of society. Contrast that with the clear burden imposed by the uninsured fellow who wants you to pick up his hospital tab.

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Some Questions for Uwe Reinhardt

Published
by
Steve Landsburg
on March 16, 2012
in Bad Reasoning, Current Events, Economics, Fairness and Policy
. 94 Comments

First Greg Mankiw wrote a good piece in the New York Times about how there’s sometimes a hazy line between ordinary income and legitimate capital gains. Then Uwe Reinhardt wrote a puzzling (at least to me) followup in which he concluded that we might as well just give up and tax both at the same rate. I have some questions for Professor Reinhardt.

Question 1:

  1. Sometimes there is a hazy line between quotation and plagiarism. Does it follow that we should treat every quotation as an instance of plagiarism?
  2. Sometimes there is a hazy line between a pat on the back and an assault with intent to harm. Does it follow that we should treat every pat on the back as an intent to harm?
  3. Sometimes there is a hazy line between adolescence and maturity. Does it follow that we should treat everyone as an adolescent?
  4. If the answer to any of the above is no, what’s different about capital gains?

Professor Reinhardt goes on to instance the case of a person who buys a vacation home for $500,000 and sells it two years later for $1.5 million, suggesting that it would be unfair to let this person hang on to all of this gain, so it should therefore be taxed at the same rate as ordinary income. This brings me to the next questions:

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The Analogists

Published
by
Steve Landsburg
on March 14, 2012
in Bad Reasoning, Current Events, Policy and Truthseeking
. 167 Comments

    

Viagra analogies have been in the news a lot lately, both in connection with contraceptive coverage and in connection with state laws restricting abortion. I love good analogies and I hate bad ones, so I’d like to take a little time to sort out the bad from the good.

Because there are several scattered points to be made here, I’m putting them in sections and labeling them with Roman numerals, to make it easier for commenters to tell us just which section(s) they’re responding to.

I.

My insurance policy covers Viagra. I would prefer that it didn’t. Given the costs and the probabilities, erectile dysfunction seems to me like a crazy thing to be insured against. There are a whole lot of other things I feel the same way about. I’d prefer not to be insured against losing my eyeglasses. On the other hand, I’m very glad to be insured against needing chemotherapy or kidney dialysis.

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Letter to a Reporter

Published
by
Steve Landsburg
on March 9, 2012
in Bad Reasoning, Current Events and Economics
. 164 Comments

I suspect we’re all getting bored of talking about Sandra Fluke, contraception policy, alternative solutions, and the reaction thereto, but I’ve just had an email from a reporter who’s confused on a point so basic, I thought it might be worth clearing it up for a larger audience.

The reporter writes:

As you might suspect, I disagree with your assertion that “All she said, in effect, was that she and others want contraception and they don’t want to pay for it.” I was wondering if you happened to catch the part of her speech where she talked about wanting women whose doctors have prescribed birth control pills to treat medical disorders like endometriosis to be able to get such drugs without having to pass tests demanded by religious institutions? Is this an unimportant part of the debate?

Here is a slightly edited version of my reply:

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Contraceptive Sponges

Published
by
Steve Landsburg
on March 5, 2012
in Bad Reasoning, Economics and Policy
. 139 Comments

todayOver the last week, we’ve heard a lot from the people who (with a hat tip to one Joker), I now call “contraceptive sponges” — people who want others to pay for their contraception because — well, just because they don’t want to pay for it themselves.

I don’t think we need to take those people seriously. But others have taken the trouble to make actual arguments, both on this blog and elsewhere. Some but not all of those attempts deserve serious attention.

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Frank Redux

Published
by
Steve Landsburg
on March 1, 2012
in Bad Reasoning, Economics, Policy, Progress and Progress2
. 24 Comments

Thirteen years ago, in 1999, when I wanted to illustrate the astonishing march of progress, my Exhibit A was a new $250 stereo system that held 60 CD’s and could play tracks in random order.

My new Exhibit A is the fact that it’s been only thirteen years since this was a great example.

That was in an essay focused mostly on Robert Frank’s hypothesis that people care largely about relative position as opposed to absolute wealth. I was reminded of that essay following yesterday’s post, and I managed to dig out a copy, which I’ve posted here. Despite the dated examples, I still think it’s pretty good.

Click here to comment or read others’ comments.

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In Which Paul Krugman Leaves Me At a Loss for Words

Published
by
Steve Landsburg
on January 20, 2012
in Bad Reasoning, Economics and Paul Krugman
. 60 Comments

Okay, this one’s almost too bizarre for words. First, Paul Krugman makes an argument that ignores the existence of corporate dividends. Then, pretty much everybody in the world points out his error. Then, he admits his error, but, true to form, takes an irrelevant swipe at his critics. But in this case, the irrelevant swipe is: “Aha! You’ve just admitted that corporations pay dividends! So much for your past claims that corporations pay wages!”

Umm…Paul? They pay both. I’d lift Krugman’s own favorite dismissive phrase and say “That’s Economics 101”, but actually it’s probably standard knowledge among middle schoolers.

To review the details:

First, Krugman reposted (from the website of a left-wing advocacy group) a highly misleading chart purporting to illustrate the federal tax burdens borne by various income groups. The chart accounts for payroll and income taxes, but omits corporate taxes, thereby making the burden on high-income tax payers appear substantially smaller than it is, because corporate taxes reduce dividends which are disporportionately paid to high-income taxpayers.

Next, he got called on it by lots and lots of people, including, for example, Greg Mankiw.

Next, Krugman acknowledged his error. But, as always, he did so with the least possible grace, suggesting that his critics, by virtue of pointing out Krugman’s mistake, have somehow undermined their own principles.

In particular, his position is that by acknowledging that corporate profits benefit shareholders, “conservatives” have undermined their own ability to claim that corporations benefit anyone other than shareholders (e.g. workers). He relies, in other words, on the cockamamie notion that if something is good for group A, it can’t possibly also be good for group B.

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Mitt Romney’s Taxes

Published
by
Steve Landsburg
on January 18, 2012
in Bad Reasoning, Current Events and Economics
. 108 Comments

Mitt Romney says his tax rate is “probably around 15%”. It’s not clear what he means by that (marginal rate? average rate? federal rate? federal-plus-state-plus-local rate?) but the New York Times is quick to point out that he’s a beneficiary of the “fact” that investment income is taxed at a much lower rate than wages and salaries, leaving him with a lower percentage tax burden than the working-stiffs he employs.

For at least the eighth time on this blog, I want to point out that this widely believed “fact” is not true.

To understand Mitt Romney’s tax burden, you have to compare him to his doppelganger Timm Romney, who lives on a planet with no taxes. In the year (say) 2000, Mitt and Timm both earned (say) a million dollars. Timm invested his million dollars, saw it double over the past decade or so, and cashed out his investment this year, leaving him with two million dollars. Mitt, by contrast, paid 35% tax in 2000, leaving him with $650,000. He invested it, saw it double, and cashed out last year, paying 15% tax on the $650,000 capital gain. That leaves him $1,202,500, which is about 60% of what Timm’s got. In other words, the tax system costs Mitt almost 40% of his income.

By contrast, people on our planet without investment income collect their wages, pay 35% in taxes, and spend what’s left. The tax system costs them 35%, while it costs Mitt almost 40%. In other words, people with investment income bear a higher tax burden, as a percentage of their income, than anyone else — and that’s before you even start accounting for the taxes on dividends, interest, corporate income and inheritance.

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Off the Deep End

Published
by
Steve Landsburg
on January 11, 2012
in Bad Reasoning, Paul Krugman and Progress
. 54 Comments

Paul Krugman argues that success in business is not, by itself, a qualification for making wise economic policy, and I agree. But then he goes all looney-tunes on us:

A businessman can slash his workforce in half, produce about the same as before, and be considered a big success; an economy that does the same plunges into depression, and ends up not being able to sell its goods.

So according to Krugman, it’s better for you and your spouse to earn $40,000 each than for one of you to earn $80,000 while the other stays home with the kids. I wonder how many two-earner families would agree with him.

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Alas, Poor Yoram

Published
by
Steve Landsburg
on December 19, 2011
in Bad Reasoning and Education
. 149 Comments

crazyskullThis just in: The study of physics makes people less compassionate. Data show that when cornered at a party by the inventor of a perpetual motion machine, physics majors are particularly unlikely to offer positive encouragement.

Also, the study of history leads to closed-mindedness. After taking an American history course, students become considerably less open to the idea that Millard Fillmore might have been Abraham Lincoln’s vice president.

Meanwhile, the study of chemistry makes people less ambitious. Chemistry students are particularly unwilling to invest in lead-to-gold conversion kits, even when they are conveniently offered over the Internet.

Geology students are just plain nasty. Among all majors, they are the least likely to participate in coordinated meditation exercises for the prevention of earthquakes — even when the organizers estimate that hundreds of thousands of lives might be at stake.

And economics majors are so greedy that they are particularly unlikely to donate to left-wing interest groups that seek to undermine capitalism.

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Why Not Bob Dole?

Published
by
Steve Landsburg
on October 13, 2011
in Bad Reasoning, Outrage, Policy and Politics
. 31 Comments

So Mitt Romney wants to exempt capital gains from taxation — but only for taxpayers who earn less than $200,000 a year. In Tuesday night’s debate, Newt Gingrich asked him (I’m paraphrasing) “Why the cap?”. Romney’s answer — that he’s looking out for the middle class because “the rich can take care of themselves” — was as incoherent as anything I’ve heard this election year.

Here’s why:

I interpret Romney’s answer to mean that he wants to cut capital gains rates not on efficiency grounds, not on supply side grounds, and not on philosophical grounds, but on redistributionist grounds. Well, okay, I myself don’t think very much of redistribution as a primary driver of tax policy, but Romney and I can disagree on that one. But where the incoherence comes in is this: If your goal is to redistribute from the rich to the middle class, why on earth would you do it by cutting the capital gains tax, as opposed to lowering income tax rates in the middle and raising them at the top?

To put this another way: If you care about efficiency, you’ll want to cut the capital gains rate to zero for everyone. If you care about fairness, and if you believe fairness mitigates against double/triple/quadruple taxation, you’ll still want to cut the capital gains rate to zero for everyone. If you care about redistribution, you’ll want to juggle the tax brackets. But I can’t think of a single thing you could care about that would lead you to laser in on cutting capital gains rates for middle income taxpayers only.

Now it might be that somewhere in Romney’s 59 point economic plan there’s an answer to this. If so, Herman Cain was surely right when he intimated that Romney himself can’t be terribly familiar with the contents of that plan. Because, when asked a simple question about the justification, Romney wasn’t able to come anywhere close to making sense.

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There He Goes Again

Published
by
Steve Landsburg
on October 3, 2011
in Bad Reasoning, Economics, Paul Krugman, Policy and Politics
. 84 Comments

Paul Krugman’s latest venture into self-parody starts with a recent paper on the cost of air pollution, which finds that said costs are big and heavily concentrated in a few industries. Krugman then links to a New York Times article surveying Rick Perry’s past clashes with the EPA. With no further argument, he concludes that

Today’s American right doesn’t believe in externalities, or correcting market failures; it believes that there are no market failures, that capitalism unregulated is always right. Faced with evidence that market prices are in fact wrong, they simply attack the science.

Where to begin?

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Recap

Published
by
Steve Landsburg
on September 2, 2011
in Bad Reasoning, Economics, Paul Krugman and Policy
. 31 Comments

Some commenters still seem confused about the locus of disagreement in this week’s back-and-forth with Paul Krugman. I post today not to beat a dead horse, but to clarify the issues for those who are interested in understanding them. Please keep any discussion both civil and on-topic. I’ve numbered the points below for easy reference.

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Krugman Followup

Published
by
Steve Landsburg
on September 1, 2011
in Bad Reasoning, Current Events, Paul Krugman and Politics
. 31 Comments

What I like about people in academics is that when we disagree, we actually care about figuring out who’s right — and therefore we have a tendency to reach consensus, though it can take a while.

Anybody who blogs often enough (very much not excluding yours truly) is occasionally going to post something that, at least as written if not as intended, is objectively plain flat out wrong. Paul Krugman did that a couple of days ago, I responded, he’s responded to my response, and at least 4/5 of our disagreement is now resolved. That’s exactly as it should be.

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Panglossian Economics

Published
by
Steve Landsburg
on August 31, 2011
in Bad Reasoning, Current Events, Economics and Paul Krugman
. 102 Comments

PanglossIn a radical departure from his previous expressions of dissillusionment, Paul Krugman has implicitly declared in his latest blog post that we are now living under the best of all policy regimes. I presume he will now be able to retire with satisfaction from his career as a gadfly.

The context is Eric Cantor’s demand that any federal disaster relief in the wake of Irene be offset by spending cuts elsewhere. Krugman thinks this is silly, and proves his point with an appeal to the standard Ricardian theory of public finance. According to that theory, which all economists understand and accept, if you’ve got to bear a cost, it’s best to spread that cost out over as many activities as possible. So ideally, you’d pay for disaster relief partly through spending cuts, partly through (current) tax increases, and partly through an increase in the deficit. Therefore says Krugman, “the bottom line is that basic, regular economics says that Cantor isn’t making sense.”

Since Krugman has carelessly neglected to spell out an important detail of his argument, let me fill in the gap for him: The Ricardian conclusion does not come from thin air; instead it follows logically from certain premises, key among which is that you’re starting from an ideal policy regime.

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A Consequential Study

Published
by
Steve Landsburg
on August 24, 2011
in Bad Reasoning and Morality
. 22 Comments

By now you’ve probably encountered one of the various “do you push the fat man in front of the subway train to stop it from running over five innocent people trapped on the tracks?” puzzles that moral philosophers have been using lately to distinguish the consequentialists (who care only about ends) from the deontologists (who care also about means). (I invoked some of these puzzles, in a slightly non-conventional way, in Chapters 16 and 17 of The Big Questions.)

Now come psychologists Daniel Bartels and David Pizarro to report that choosing what they call the “utilitarian” solution (by which they mean the consequentialist solution, though one might have more faith in their scholarship if they’d used the accurate word) is correlated with higher scores on measures of psychopathy, machiavellianism, and “life meaninglessness”. Those who would push the fat man are more likely to agree with statements like “I like to see fistfights” or “The best way to handle people is to tell them what they want to hear” or “When you think about it, life is not worth the effort of getting up in the morning”. In other words, they are what we tend to think of as an unpleasant bunch.

But you see, here’s the thing: Bartels and Pizarro did the wrong test. Because in every one of the dozen or so moral dilemmas presented to the subjects, they asked: Would you shoot the crewmember? or would you execute one of the hostages? or would you flip off the switch to the ventilator? — which doesn’t get to the moral issues at all. The moral issue is this: In your opinion, should you shoot the crewmember or execute the hostge or flip the switch? The researchers never asked those questions, so we have no idea what the subjects’s opinions were.

Tell me a story about 20 children trapped in a burning building and ask me if I think I should rush in to save them. My answer is yes. Now ask me if I would. If I’m honest, I am very unsure I would do the right thing.

So what do we learn from this research? Here’s one interpretation: Maybe most people agree that you should push the fat man, and most people realize that they themselves would shrink from this moral duty out of squeamishness (just as most people agree that you should save the children from the fire, and most realize they might shirk this moral duty). Therefore they answer “No, I would not push the fat man.” But it’s only the psychopaths and Machiavellians who exaggerate their own moral virtues by claiming that they would rise to this particular occasion.

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Is “Legal Reasoning” an Oxymoron?

Published
by
Steve Landsburg
on June 22, 2011
in Bad Reasoning and Law
. 81 Comments

Our reader Jonathan Campbell has an excellent post on a bizarre example of legal “reasoning”. A defendant fires 95 shots into the woods; his friend fires 5. A man in the woods is hit by a bullet and dies. The defendant is 95% certain to be the killer (in other words, he is the killer beyond a reasonable doubt), but he is acquitted because the nature of the evidence is “statistical” and therefore cannot be the basis of a conviction.

This tends to confirm my suspicion that a legal “education” consists primarily of having your capacity for logic beaten entirely out of you. As Jonathan points out, all evidence is statistical in exactly the same sense that this evidence is. I put a bullet through your heart and you take five minutes to die. Did the bullet cause your death? Well, not certainly — there’s some small chance that you died of a heart attack that would have killed you anyway, thirty seconds before the bullet was able to finish its job. Is there a high probability I caused your death? Yes. Did I do so beyond a reasonable doubt? Yes. Is the remaining doubt of a statistical nature? Yes. So if there were any consistency in the law, of course I’d be acquitted. And of course I would not be. Which means, as has been noted in this space before, that the law is an ass. So, perhaps, are a substantial fraction of its practitioners.

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Dakota Winds

Published
by
Steve Landsburg
on June 15, 2011
in Bad Reasoning, Outrage, Policy and Politics
. 58 Comments

thune ethanol

Here is Senator John Thune (R-SD), speaking on the floor of the United States Senate:

Ethanol producers have been ripping us off for a long time, and they’ve come to rely on that for a source of income. So it’s only fair to let them rip us off a little longer.

I’m quoting from memory, so I might have the wording slightly off, but that was the gist of it. Oh, wait, here’s the exact quote:

We have a lot of folks who made investments, you have people across the country whose livelihoods depend upon this. I think it makes sense, when we put policy in place and we say it is going to be in place for a certain period of time, that it be honored.

As you can see, my parapharase was accurate.

Senator Thune speaks in the great tradition of his institution. Back in 1848, senators by the score made exactly the same argument for preserving slavery. A lot of folks had invested in slaves, you know. And their livelihoods depended on it.

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D’oh — Second in a Series

Published
by
Steve Landsburg
on May 2, 2011
in Bad Reasoning and Economics
. 14 Comments

homerThe problem with locavores — the breed of environmentalists who tout locally grown food, partly to minimize energy costs — is that they’re insensitive to the quality of the environment. A New York locavore spurns California tomatoes because of the energy spent trucking them across the country. But to focus on a small number of factors, like energy consumption, is to ignore a vast number of others: Do California tomatos, grown in locations where there might have been vineyards, displace California grapes? Do New York tomatos, grown in greenhouses where there might have been housing developments, lengthen morning commutes? What other useful services might California or New York workers provide if they weren’t growing tomatos? What are the alternative uses in each location for fertilizers, or farming equipment, or the resources that go into producing fertilizers and farming equipment?

Last August, Steven Budiansky, the self-described “Liberal Curmudgeon”, wrote a New York Times piece that I criticized on this blog for, essentially, making 1% of the right point and ignoring the other 99%. Now, having reread Budiansky, I think I was unfair to him. He had this right all the way through.

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D’oh — The First in a Series

Published
by
Steve Landsburg
on April 25, 2011
in Bad Reasoning, Blogging, Economics and Policy
. 39 Comments

homerWhen something is wrong on the Internet, bloggers love to pounce. But since no blogger is infallible, most of us can find ample fodder in our own past writing, if we go back and reread it with a sufficiently critical eye. Over the next few weeks, I plan to revisit some things I got wrong the first time around. (You’ll recognize those posts by the Homer Simpson logo.) I hope others will be inspired to do the same.

To lead off this series: In December, 2009 I blogged about space scientiest James Hansen, who prefers carbon taxation to cap-and-trade. His argument: A carbon tax allows for the possibility of additional carbon abatements through altruism. Under cap-and-trade, if I altruistically decide to buy a fuel-efficient car, someone else gets to buy an SUV. Whereas under a carbon tax, if I altruistically decide to buy a fuel-efficient car, less gas gets consumed.

Wait a second, though. Under a carbon tax, if I decide to buy a fuel-efficient car, I drive the price of gas down, which encourages someone else to buy an SUV. So altruism is equally ineffective under either policy, no?

That’s the argument I made in December, 2009. I now believe that:

  • Under a plausible interpretation of Hansen’s argument, I was wrong.
  • But Hansen is still unconvincing, though for somewhat subtler reasons.

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