The Tim Lee Experience

As some of you have gratefully noted, I've temporarily given social security blogging a rest. However, my colleague Tim Lee is on the ball. Tim points out that Yglesias is either being shady or doesn't know what he talking about in his article on transition costs to personal accounts. And, looking at the debate between Kevin Drum and Will Saletan over the retirement age, Tim wisely wonders why we got ourselves into the sort of system where extremely personal issues, like the age at which people choose to retire, becomes a matter government policy.

Empiricism, Normativity, and the Burdens of Judgment

Here's another little point I want to make about the idea of empiricism in politics and social science. The “empirical” results in the social sciences are often not gained through direct observation, but through often quite loose measurement techniques involving all sorts of proxies and approximations. So, when I hear somebody say “Real wages have declined since 1970” or something like that, and I snort with absolute incredulity, and they point me to some BLS chart, and I demand to know how we calculate real wages, and then I'm told about the CPI, and I assert that the methodology of the CPI must be flawed because it is obvious by casual observation that real wages have increased a great deal, who's the empiricist? Were economic liberals being good empiricists when they bitched about the Boskin report?

Alex Tabarrok (like his co-blogger, also at least as good an economist as Michael Kinsley) makes this sort of measurement method contesting move this morning on the WSJ Econoblog:

Is America on a consumption binge? In 2003 the savings rate was a paltry 1.2% — the lowest rate since the Great Depression, when savings briefly went negative. But before we tighten our belts we need to know that the standard measure of personal savings (from the National Income and Product Accounts) is highly flawed.[empasis added]

Savings in the NIPA are defined as income minus consumption. But what is consumption? The NIPA defines education expenditures as consumption, but try as I might to keep my students' attention with the occasional joke, I think few would report that they are paying me for entertainment value alone. Education expenditures ought to be defined as investment financed from savings.

The NIPA also measures savings on an annual basis. But suppose that you are asked what your savings are. You probably don't add up this year's income and subtract this year's consumption, instead you add up your stock of savings; the value of all of your assets including equities, bonds, net housing value, cash and so forth. The latter measure is the right one if we want to measure provision for the future.

The flow and stock measures of savings can easily move in different directions. Indeed, a major reason that the yearly savings rate has declined is precisely because the value of assets has increased.

A declining savings rate, therefore, can easily signal positive things about people's net asset position. Similarly, we have in recent years experienced a boom in productivity. If individuals expect the boom to continue, it may be quite rational to reduce current savings.

If I insist that the CPI is screwy, or Alex insists that NIPA is screwy, it's probably because we think it fails to adequately measure observed economic phenomena, or fails to take into account what our best theory says a measurement device ought to be taking into account. Imagine that the motivation for our complaints about measurement comes from our ideological commitments. So be it. Empricism care not about our motivation, as long as we are doing our best to save the phenomena.

My broader point is that the social sciences have a normative upshot. We care about how we measure and reason about the social world because we want to make the social world better. Our normative commitments will inevitably guide the way we generate hypotheses and affect our choice of methodological tools for testing those hypotheses. But this is not counter to empiricism. These are the mechanisms through which empiricism in the social sciences operate. Chait's hackish claims of virtuous wertfreiheit empiricism betray a kind of self-satisfied naivete that actually threatens the kind of epistemic virtue necessary for empiricsm in social sciencces by encouraging a lack of reflection about the scientific producer's and consumer's necessary engagement with and commitment to norms in the social domain.

The empirical, descriptive task in the social sciences is not separable from the normative task. I believe that empirical investigation in the social sciences ought to be as neutral among values as possible. But the question of what constitutes a neutral investigative stance is not itself a question of social science, is essentially contestable, and the argument for wertfreiheit is itself a contestable normative argument. Science in general works because scientific practices and scientific communities embody certain norms and epistemic virtues. Science does not proceed through the application of a Baconian algorithm. Social science studies human action and human coordination, phenomena that cannot even be adequately described without mentioning the normative, goal-seeking nature of practical reasoning or normative features of coordination. (The idea of a market failure, for example, which Chait makes use of, is a normative notion about coordination.) And it seems neither plausible nor desirable for the social scientific community to to pretend indifference to the norm-ladeness of their domain.

Just how and to what extent the social scientist should engage with or be guided by normative conceptions in the conduct of empirical inquiry are very hard questions. Discuss at will.

Is the Pundit's Fallacy a Fallacy?

Since Matt accused me of committing the pundit's fallacy(and although I claimed in his comments that I didn't, I sort of did,) I got to wondering what makes it a fallacy, exactly. The pundit's fallacy putatively occurs when a pundit sets forth his own preferences as the solution to some kind of strategic political problem. So if Kerry is trying to become president, and I want federal money to save the narwals, I'd argue: “Kerry has thus far failed to recognize the vast but quiet pro-narwal constituency. A firm commitment to use federal resources to save the narwals could be the difference between victory and defeat on election day. Blah. Blah. Narwals.”

Clearly, this is ridiculous. But this kind of thing is a fallacy only if one misconstrues the intended illocutionary force of the pundit's punditry. If the point of the pundit's utterances are merely assertive, well, then the conditions of satisfaction are correspondence truth. If there is no vast narwal constituency, and it could not tip the election, then our pundit's speech act goes unsatisfied. However, the illocutionary point of acts of punditry are very often directive, trying to get somebody to do something, so that the state of the world changes, rather than simply report on the state of the world. The pundit is trying to get enough people to believe that there is a narwal constituency so that (1) the Kerry people feel enough pressure to make promises about doing something about narwals, and/or (2) more people join the constituency, on the belief that many people are already on board, in order to increase the likelihood of (1).

Now, the narwal cause might be dead in the water (not sorry!), but it seems likely to me that this kind of thing often works. You can create a consensus by claiming a consensus, or by claiming the uniquely effective means to a widely shared end. If you can get enough people to share your preferences, then your preferences come to have actual political heft, and one way to get people to share your preferences is by persuading them that satisfying your preference would satisfy some other preference that they already have.

I have no doubt that acts of punditry with this kind of illocutionary point can and do meet their conditions of satisfaction. We are not surprised to learn that “It's a little drafty in here,” can be intended to communicate a request to close the window rather than comment on the draft conditions in the room. We should not be surprised to learn that a claim of strategic necessity for one's own preferences can be used to alter other people's commitment to one's preferences rather than make a comment on what's really stategically necessary for what. So there is no good reason to think of this as a generally fallacious form of utterance. If a pundit out of myopic enthusiam asserts that their pet idea REALLY WILL make all the difference, that's one thing. But if the pundit is trying to recruit allegiance to their pet idea by, in effect, asking people to imagine how their pet idea COULD make a difference, to try it on, to consider it, then it's all good.

Jonathan Chait: Confirmation Bias in One Satirical Lesson

Jonathan Chait's article, “Fact Finders,” in the new TNR is one of the most obnoxiously blinkered pieces of self-serving political magazine writing in recent memory. I'm just flabbergasted by the stupidity of this thing. Chait's claim is that liberals by and large are empiricists, willing to go where the evidence takes them, while conservatives (loosely and irresponsibly identified with free-market types) are dogmatists who will unaccountably but doggedly cling to principle even after being brought low by data. The claim is almost self-refuting. It should be impossible for an intelligent and observant person, such as Chait imagines himself to be, to fail to see the ravages of dogmatic narrowness on all sides. To claim the mantle of empiricism exclusively for liberalism (or any -ism) in the teeth of overwhelming evidence that that empiricism is water in ideology's oil is a signal failure of empiricism.

An empiricist about the alignments of empiricists will surely comes to this (my) conclusion:
Continue reading “Jonathan Chait: Confirmation Bias in One Satirical Lesson”

Minding the Philosophy Gap

Michael Tomasky worries out loud that contemporary liberals don't make any sense. Liberals strategize and strategize, but means require ends, and those are . . . what? Conservatives do better:

I’ve long had the sense, and it’s only grown since I’ve moved to Washington, that conservatives talk more about philosophy, while liberals talk more about strategy; also, that liberals generally, and young liberals in particular, are somewhat less conversant in their creed’s history and urtexts than their conservative counterparts are . . .

This is interesting largely because conservatives of late have been manifestly superior at strategy, too. Tomasky's rumination raises the obvious question: to what extent is a coherent governing philosophy a strategic necessity? Answer: To a very large extent.

My diagnosis of the malaise of American statist liberalism is that it has failed to accept that many of the ideals of FDR and LBJ are best realized by decentralized means. Clinton represented the best in the possibilities of liberalism in welfare reform and his advocacy of free trade.

Tomasky implores liberals to revisit the Dewey/Lippmann debate. History and thought has moved on so much from the time of Dewey
and Lippmann that although their debate about democracy versus expertise still has some limited relevance, their politics simply do not. But I do encourage a review of the debate. If you can understand why Lippman was right about public ignorance & democracy, and wrong about bureaucratic expertise, then you're on the road to a sensible liberalism.

However, American liberalism has a phobia of what's down the road to a sensible liberalism and so remain The American Society for the Preservation of Historic Welfare Programs. This is both comical and dangerous. Comical because it's hilarious to witness sophisticated adults confuse contortionist apologetics for ill-functioning, haphazardly structured, historically accidental government programs as an intellectually serious enterprise. Dangerous because the intellectual vacuity of the left allows the conservative juggernaut to pick up speed unimpeded.

I find the Tomasky article through Matt, who I would love to hear attempt to articulate a philosophy. I know what Matt is for, but I can never really make out why. I know Matt is some kind of utilitarian. That's silly, but, well, utilitarians will always be among us, so what can you do? What I clamor for is the story of how Yglesian liberalism maximizes net utility? Come on Matt! Your people need you!

Institutions are Capital

Arnold Kling also discusses the Daley/Hooks microfinance piece. But the valedictory Kling question poses a false alternative:

For Discussion. Which is an easier problem to solve–a shortage of capital, or institutional deficiencies?

I think it's increasingly apparent that institutions are a form of capital. Money and machines are more or less useless, aren't really capital at all, in the absence of a system of formal and informal rules that enables extended, stable mutually beneficial coordination. That was my largely point in this TCS article on the prospects of success in Iraq, and I'm sticking to it.

Microfinance and Institutions

Steve Daley and Brian Hooks, my former colleagues at the Mercatus Global Prosperity Initiative, have put out a nice op-ed explaining why microfinance doesn't get you far in the absence of a well-integrated set of political, legal, and economic institutions.

Personal bias aside, I don't think anyone is making the case for the importance of institutions for development and growth with more force and clarity than GPI. Blather about institutions is ubiquituous in development circles, but the Mercatus guys actually know what they're talking about. Speaking of which, check out Frederic Sautet's new policy primer on “The Role of Institutions in Entrepreneurship“(pdf) for a good overview of the Mercatus position. And take a look at Steve Daley's new policy comment on “Microfinance in Action: The Philippine Experience” for further detail on the problem of getting microfinance over the hump into the extended order.

Questioning Layard

In my notebook I see my notes for the question that I asked Layard at the Brookings talk last week, and which I meant to blog. Here's more or less what I said/asked.

Well, context first. . . Layard had promoted abandoning the theory of revealed preference as the basis of economic inquiry and policy analysis and recommended substituting his brand of normative hedonism/eudaimonism.

I said:

You said we should give up on the idea of theory of revealed preferences. I want to defend it, and hear your response.

Perhaps the fact that people behave in ways that don't maximize their happiness is evidence that people don't always demand happiness. This raises two points, one scientific and one political.

The scientific point: Social science based on taking a side in hotly contested arguments about the metaphysics of value doesn't count as science.

The political point: In a pluralistic society where people have fundamental disagreements about the nature of value, taking a side and basing policy on one philsophical conception of value is inappropriate.

Layard's answer? He seemed to me to avoid the question. He reiterated a point he had made earlier to the effect that we can't tell what makes people happy by observing their revealed preferences, or that individual behavior when scaled up to the macro-level can have results that fail to maximize happiness, or some such thing. (If someone who was there can remember just what he said, please do correct me, or elaborate.) Whatever it was, he didn't even approach the scientific and political points, which I think deserve to be taken seriously.

How would you respond?

Public Statement

I am not now, nor have I ever been, an acrobat.

[Update: The mysterious Fey Accompli vouches for my authenticity. Now, regarding the Libertarian Girl debacle, it may be that I know all of the extremely attractive libertarian women in existence, although I am very glad to doubt it, but there are a passel of ladies of my acquaintance who put the mail-order bride to shame. (Fey, by the way, is loveliest of them all.) Why all the fuss for a 7.5?]