Thursday, January 28, 2010

Maybe irrationality's a good thing

Even before I was an economist I was a big fan of rationality. My friend from Singapore spoke with pride about how another economist friend of hers noted "it's like they've given my people (economists) a country, and they did good! I didn't hear an irrational comment all week," something I noted myself when I was there 8 years ago (wow time flies).

But now, my reaction was, well maybe a little irrationality is good.

To explain, let me just cite Wachowski (2003)
"The first matrix I designed was quite naturally perfect. It was a work of art. Flawless. Sublime. A triumph only equaled by its monumental failure. "

"As I was saying, she stumbled upon a solution whereby nearly ninety-nine percent of the test subjects accepted the program provided they were given a choice - even if they were only aware of it at a near-unconscious level. While this solution worked, it was fundamentally flawed, creating the otherwise contradictory systemic anomaly, that, if left unchecked, might threaten the system itself. Ergo, those who refused the program, while a minority, would constitute an escalating probability of disaster."

"Your life is the sum of a remainder of an unbalanced equation inherent to the programming of the matrix. You are the eventuality of an anomaly, which despite my sincerest efforts I have been unable to eliminate from what is otherwise a harmony of mathematical precision. While it remains a burden assiduously avoided, it is not unexpected, and thus not beyond a measure of control. Which has led you, inexorably, here. "

Or consider Huxley's Brave New World for a more literary citation.

Rationality is all fine and good and probably great for 99 percent of the people. But maybe you need irrationality for beauty, or for innovation, for disruptive change, for paradigm shifts, for freedom (whatever that means; I took a class on defining freedom and still don't know what it means), and all that. For magic too.

(And I bet you thought watching that movie was a waste of your time...)

Friday, January 22, 2010

Thoughts on Copenhagen II: On Negotiations amidst the Circus

Back in Copenhagen, I attended a briefing for US NGOs. Two things that struck me.

One is I am ambivalent about NGO invovlement. One notable thing was at the meeting, you had Fred Krupp, president of the one of the largest environmental groups (who quite reasonably should be there), but he was sitting next to a couple kids painted and dressed as green aliens carrying placards. On the whole, it was a surprisingly young group.

The other was again, how similar the US government position is in the current administration as it was under the previous. That the US will not concede sovereignity in terms of taxes it must pay. That the US cannot commit to greater cuts than Congress will allow. That the US cannot commit to spending, in such contexts.

And again, on the sovereignity issue, which is not unique to the US (but a big part of why negotiations broke down with China and India), that the idea of a binding carbon price/limit may be futile because it requires a higher extra-governmental power. The WTO did achieve this (somewhat) but that took half a century, and in general, free trade is win-win (countries generally benefit from lower trade barriers, even though they may suffer from political trouble from noisy constituents, overall countries are typically better off). Whereas in climate change, it is by and large a pure public good to constrain carbon, so an even harder sell without a world government. This suggests again that the technology push is key making green technology cheaper than dirty. (This was the position of the Bush administration--I don't mean to be so defensive on that, really--and also what Bjorn Lomborg has been pushing, hopefully that doesn't automatically discredit the idea) I think economists by and large agree that technology is key, though many would then say that a carbon price would be the key the incentivizing new technology, though I think most economists agree that we have little evidence to that effect, only faith.

Thursday, January 14, 2010

Thoughts on Copenhagen I: Legitimate Policy or Optimal Policy?

It is kind of fascinating. How different policy is actually made, compared to political econonmy models. I am reminded a bit of the march and olsen garbage can model, but instead of policy by flight and by oversight, this is policy by pseudo-consensus, generated by people sitting in a room, making comments, randomly interacting, and in the end, people agreeing not because they are happy with the outcome, but out of fatigue, or out of agreement that sufficient process has been conducted.

It has been noted that while economists focus on outcomes, lawyers care about process. Economists have written a bit about preferences over actions (legitimacy) vs preferences over otucomes, but the latter still largely defines the field.

Policy folk like typologies. I worry a bit that much is decided by policy folk who understand politics and process well but have often only a cursory understanding of the scientific and economic details. They like colorful bar charts, and 2 x 2 typologies.

Not so different than whitehouse. A consensus process. Difference is there is no executive, essentially a dictator, of last resort, who may be convinced to make the optimal decision.

This leads to interesting implications for what good policy should look like. Economists would like a global carbon tax (or cap and trade) since that is likely optimal, but given that consensus is required this may no longer work. Even amongst the countries that agreed to Kyoto, half of them failed to comply and many of the ones who did, did so because they had an economic collapse.

This gives further credence to the Bush administration's technologically focused environmental policy.

Wednesday, January 13, 2010

xkcd fixed point problem

Self-Description: The contents of any one panel are dependent on the contents of every panel including itself. The graph of panel dependencies is complete and bidirectional, and each node has a loop. The mouseover text has two hundred and forty-two characters.
I'm a big fan of xkcd. Something that bothers me about these graphs though. If the lines (including the lines used to form the letters) were Euclidean lines (in that they have no width and hence no area), then there should be no ink at all. If you think about the pie chart in the first panel, and say it is x% full, where x%=x/C (where W is the area of the wedge and C is the area of the pie), then if I is the area of the whole image then since C < I, you get W/I < W/C, hence contradiction. So what you need to balance this equation, is that the lines must have area, in fact we can calculate how much. Let L be the area of the lines, then W/C = (W+L)/I which we can solve for W to get

IW = CW + CL
W = CL / (I-C)

The bar chart complicated this a bit, but we assume that away for now.

Thursday, January 07, 2010

My first real tweet: Does being #vegan and #prochoice make you a hypocrite?

Usually stuff I want to post requires more than 140 characters, but "Does being #vegan and #prochoice make you a hypocrite?" was idea that I was contemplating after a recent NY Times on why killing plants is as unethical as killing animals, that I didn't have anything else to add.

I don't really twitter much, since few of my friends use it, but created the account long ago mostly just to stake out a username in case I had some need in the future. Had to settle on ho_ben since every other permutation of my name that I could think of was taken.