Revealed Preferences (people are liars)

[pvn]

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Lol. Economics attempts to form theories on how to achieve the greatest common good.

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Plz to be explaining how you calculate this. And you're wrong anyway. Economics does not attempt this. Some people use economics in an attempt to form such theories. That's not the same thing.

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If you don't dispute that mistakes are made due to lack of information, mistakes in an individual's self-assesment of utility and/or irrational actions then you are admitting that economic policy cannot be accurately based solely on "revealed preferences",

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I would agree with this - and I would go further. Economic policy cannot be accurately based. Period.

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yet that is a basic tenet of Austrian economics.

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The "policy" that one should be deriving using Austrian theory is that "policies" (and by "policy" I am assuming we're talking about something more than just one person deciding something for himself) are counterproductive (not to mention immoral, which is really the only thing you need to know).

[pvn]

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If you want to actually assume that "my side is right", you can't just stop at saying that "government costs something". True, but where is the actual arithmetic? If "utility saved/increased through government program X" - "cost of government program X" > 0, should we then use this government program? Is this an issue of what is fundamentally right and wrong (government = bad), or an issue of pragmatics?

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Well, present some arithmetic that shows that "we" should "use this government program". Then we can go from there.

But to answer your question more directly, I'm personally not very interested in "efficiency" as most people speak of it. I'm more concerned with the moral issues. Once again, we have a case of the statists trying to argue for coercion on a dollar-efficiency basis even while we continue to hear the cries of "ACers worship the dollar above all else".

Sickening.

[Borodog]

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So I'm going to choose to do something that I would prefer not to do? Tell me more.

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First, people sometimes have no preference and still take action.

Second, people's preferences are frequently formed on faulty information and therfore their actions don't represent the action they would take in their own self-interest.

Third, even when fully informed people sometimes act against their own preferences.

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I don't think you understand the word preference.

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I do, and believe you do. You just accept the fallacy that actions always reveal preferences.

they dont

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You do realize you've linked a paper that says the exact opposite of what you just claimed, right?

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Hence, preferences are revealed in behavior, even if they are not implemented by behavior.

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It's ok though. I wouldn't expect you to read all the way through the abstract.

[xorbie]

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If you want to actually assume that "my side is right", you can't just stop at saying that "government costs something". True, but where is the actual arithmetic? If "utility saved/increased through government program X" - "cost of government program X" > 0, should we then use this government program? Is this an issue of what is fundamentally right and wrong (government = bad), or an issue of pragmatics?

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Well, present some arithmetic that shows that "we" should "use this government program". Then we can go from there.

But to answer your question more directly, I'm personally not very interested in "efficiency" as most people speak of it. I'm more concerned with the moral issues. Once again, we have a case of the statists trying to argue for coercion on a dollar-efficiency basis even while we continue to hear the cries of "ACers worship the dollar above all else".

Sickening.

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In my post, I asked questions. They were questions not addressed to you, but which you are free to answer. Your reply, it seems, is that efficiency (regardless of how it is measured) is not as important as something else (liberty, non-intervention, property rights, whatever it may be).

Naturally, from my questions alone, you infer that I'm trying to justify "coercion" (a loaded term you use so as to allow people to argue instead of communicate), and that I use "dollar efficiency" to justify it (when I clearly said something quite different in my post, which was, again, in question form).

But yes, sickening. I know. I'm sure being sickened is quite wearing on your soul, so I'll just excuse myself at this point.

[xorbie]

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It's ok though. I wouldn't expect you to read all the through the abstract.

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Be honest with me... did you read the paper in its entirety?

[Borodog]

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It's ok though. I wouldn't expect you to read all the through the abstract.

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Be honest with me... did you read the paper in its entirety?

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No, of course not. There was no need to. The abstract is completely in line with what Austrians say about revealed preferences.

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We argue that incorrect beliefs in decisionmaking are no more difficult to study using the tools of economics than standard questions, and do not imply a need to abandon the powerful revealed-preference method. Under minimal assumptions—often amounting to little more than supposing in some form that a person likes money—“bets” on an event reveal beliefs about that event, and hence can be used to identify mistaken beliefs. These revealed mistakes can then be incorporated into a generally applicable theory of preferences and mistakes that explains the betting and other behavior, and that ties welfare to behavior. Hence, preferences are revealed in behavior, even if they are not implemented by behavior. We illustrate our approach using the gambler’s fallacy, naivete about self-control problems, and projection bias.

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It's pretty clear that you actually haven't the foggiest idea what Austrians actually believe about terms like "action" and "preference" and "rational". In fact, reading your crazy rant is hilarious now that I am not pissed off about being attacked out of left field.

Austrians use these terms in very precise, very circumscribed ways, and make it eminently clear in what ways they DO NOT mean them. Nor do they claim that these terms cannot be meaningfully used in other ways, in other disciplines. They just have very particular meanings in the science of praxeology, the study of purposeful action as such, which is what Austrian economics is all about. So you can blather on about "action not always being purposeful", and that's fine; it's just that those aren't the kinds of actions that Austrian economics is interested in or applies to. Similarly you can claim that actions don't reveal preferences, and that's great. That's just not the sort of preference Austrian economics applies to; Austrian economics applies to the kind of preference that is revealed by purposeful action.

So you can say that the drug addict would really "prefer" not to shoot up, because he knows that its bad for him and his kids and whatnot but then still does, and that's fine. But that isn't the kind of preference that Austrians are talking about. Austrians talk about preferences revealed by actions; at the moment he took the action, he prefered taking that action to the available alternatives. How he formed that preference scale is not relevent to the study of purposeful action as such. That is not to say that it is not interesting, or cannot be the subject of scientific inquiry. It is both. But just like quantum mechanics is interesting and scientific but is not structural engineering, so too is the study of how and why preferences form interesting and scientific but not praxeology (Mises actually had a name for a science like that, thymology, but it never caught on).

Similarly, what "rational" means to an Austrian is not "logical", or "perfect", or "infallible", or "dispationate", or "far thinking", or "sane", or "profit maximizing" or any of that. It simply means purposeful. That's it. Nothing more, nothing less. You could be completely insane and think that shaving your head and painting your ass green will bring world peace. But you still shave your head and paint your ass green purposefully in the belief that it will help you achieve some desired end, and that is the only sense in which an Austrian ever claims that man is a "rational actor". It doesn't mean they won't regret their action either, regardless of whether the action achieved or failed to achieve the intended goal. Austrians would simply say that if they experience regret, they have revealed a mistake, either of choice of ends or means or lack of information or what have you, and for their trouble reaped a psychic loss rather than a psychic profit.

Austrian economics makes no value judgements about which ends are good or bad. Your end could be to destroy civilization, and a proper understanding of Austrian economics could help you achieve that end. It is truly value neutral (unlike a lot of mainstream economics which sneak in normative bits through the back door, imo, but that's another thread).

But what Austrian economics can do is tell you, via the logic of purposeful action as such, is whether the means you choose to achieve your ends are good or bad, in terms of achieving your stated ends. Your end can be to help the poor, and you might choose the means of a minimum wage, and economic analysis can show you that this is a poor choice of means because it has the opposite effect. Your end could be to help the poor get access to good quality affordable housing, and you might choose the means of rent controls, and economic analysis can show you that this is a poor choice of means because it has the opposite effect.

You have fundamentally [censored] up preconceived notions about what my beliefs are, and your tirade makes that clear.

[xorbie]

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Austrians use these terms in very precise, very circumscribed ways, and make it eminently clear in what ways they DO NOT mean them. Nor do they claim that these terms cannot be meaningfully used in other ways, in other disciplines. They just have very particular meanings in the science of praxeology, the study of purposeful action as such, which is what Austrian economics is all about. So you can blather on about "action not always being purposeful", and that's fine; it's just that those aren't the kinds of actions that Austrian economics is interested in or applies to. Similarly you can claim that actions don't reveal preferences, and that's great. That's just not the sort of preference Austrian economics applies to; Austrian economics applies to the kind of preference that is revealed by purposeful action.

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I haven't read the rest of your post yet, so I'll say this for now:

1. Read the paper. I'm doing the same thing. I think it's interesting. Perhaps afterwards we can have a reasonable discussion about said paper, instead of pointlessly arguing about the abstract.

2. Nowhere in this thread did anyone say "Austrian economics" or even "preference/choice/action/rational as defined by the Austrian school". This isn't Vienna, and the goalposts I'm aiming for are right here in good 'ole America, where the OP made a post using regular 'ole English. See, I'm not interested in having a discussion where your side of the debate is automatically correct because you have castrated the English language to the point where the language used makes only your theory intelligible.

[Kimbell175113]

Borodog,

that was very educational for those like me who mostly lurk in this forum. thanks.

[xorbie]

Now reading the rest.

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So you can say that the drug addict would really "prefer" not to shoot up, because he knows that its bad for him and his kids and whatnot but then still does, and that's fine. But that isn't the kind of preference that Austrians are talking about. Austrians talk about preferences revealed by actions; at the moment he took the action, he prefered taking that action to the available alternatives. How he formed that preference scale is not relevent to the study of purposeful action as such. That is not to say that it is not interesting, or cannot be the subject of scientific inquiry. It is both. But just like quantum mechanics is interesting and scientific but is not structural engineering, so too is the study of how and why preferences form interesting and scientific but not praxeology (Mises actually had a name for a science like that, thymology, but it never caught on).

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Fair enough. We can talk about it that way, and I'll have to invent some word for what I, and most everyone else, means when they say "prefer". I hope you will at least allow me to stop you every step of the way and explain that if we use "preference" your way, that what I normally believe to be good and important about "preference" may no longer hold.

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Similarly, what "rational" means to an Austrian is not "logical", or "perfect", or "infallible", or "dispationate", or "far thinking", or "sane", or "profit maximizing" or any of that. It simply means purposeful. That's it. Nothing more, nothing less. You could be completely insane and think that shaving your head and painting your ass green will bring world peace. But you still shave your head and paint your ass green purposefully in the belief that it will help you achieve some desired end, and that is the only sense in which an Austrian ever claims that man is a "rational actor".

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And we know, quite well, that this same crazy man might shave his head but then paint his ass brown instead of green. Even according to your rather constrained definition, people are not rational. Their actions don't line up with either their stated "preferences" or their previous revealed "preferences". And it's not because they don't have the information, it's because our (human) brain does not make decisions correctly always.

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It doesn't mean they won't regret their action either, regardless of whether the action achieved or failed to achieve the intended goal. Austrians would simply say that if they experience regret, they have revealed a mistake, either of choice of ends or means or lack of information or what have you, and for their trouble reaped a psychic loss rather than a psychic profit.

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So in a nutshell, we do not always prefer our "revealed preference".

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Austrian economics makes no value judgements about which ends are good or bad. Your end could be to destroy civilization, and a proper understanding of Austrian economics could help you achieve that end. It is truly value neutral (unlike a lot of mainstream economics which sneak in normative bits through the back door, imo, but that's another thread).

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All this tells me is that Austrian economics is completely useless as a stand alone discipline (and I'm not claiming you've said anything different), which is what makes its usurping of language all the more annoying.

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But what Austrian economics can do is tell you, via the logic of purposeful action as such, is whether the means you choose to achieve your ends are good or bad, in terms of achieving your stated ends. Your end can be to help the poor, and you might choose the means of a minimum wage, and economic analysis can show you that this is a poor choice of means because it has the opposite effect. Your end could be to help the poor get access to good quality affordable housing, and you might choose the means of rent controls, and economic analysis can show you that this is a poor choice of means because it has the opposite effect.

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So what would you say about my preferences if, after I read your post, I choose to enact rent control? Since, you know, that is the subject at hand. It seems like Austrian economics has a good deal to say about results and economic behavior and all that good stuff and [censored] all to say with the topic at hand.

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You have fundamentally [censored] up preconceived notions about what my beliefs are, and your tirade makes that clear.

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Which of my points was wrong? I'm not interested in semantics, so if you need me to clarify something, just ask. I want to know what of all the empirically proven things that I presented are somehow wrong, and I don't want to hear about how someone uses language differently.

[Borodog]

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Austrians use these terms in very precise, very circumscribed ways, and make it eminently clear in what ways they DO NOT mean them. Nor do they claim that these terms cannot be meaningfully used in other ways, in other disciplines. They just have very particular meanings in the science of praxeology, the study of purposeful action as such, which is what Austrian economics is all about. So you can blather on about "action not always being purposeful", and that's fine; it's just that those aren't the kinds of actions that Austrian economics is interested in or applies to. Similarly you can claim that actions don't reveal preferences, and that's great. That's just not the sort of preference Austrian economics applies to; Austrian economics applies to the kind of preference that is revealed by purposeful action.

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I haven't read the rest of your post yet, so I'll say this for now:

1. Read the paper. I'm doing the same thing. I think it's interesting. Perhaps afterwards we can have a reasonable discussion about said paper, instead of pointlessly arguing about the abstract.

2. Nowhere in this thread did anyone say "Austrian economics" or even "preference/choice/action/rational as defined by the Austrian school". This isn't Vienna, and the goalposts I'm aiming for are right here in good 'ole America, where the OP made a post using regular 'ole English. See, I'm not interested in having a discussion where your side of the debate is automatically correct because you have castrated the English language to the point where the language used makes only your theory intelligible.

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My God what an insufferable prick you are.

Your entire ridiculous attack on myself an pvn was about preference, action, choice, and rationality. Did you forget that? You accuse me of a bunch of bull [censored] in your ridiculous rant, I point out that you are squalling about a bunch of stuff that has NOTHING to do with any of my positions or anything that I've ever posted and explain *exactly* where the foundations of my positions come from and what their context is, and you churn out another stream of condescending, incindiary, insulting, point-dodging bull [censored].

Perhaps capslock will help you comprehend:

I NEVER SAID THAT MY SIDE OF THE "DEBATE" IS AUTOMATICALLY CORRECT. THERE ISN'T EVEN A DEBATE EXCEPT THE ONE YOU ARE TRYING TO MANUFACTURE OUT OF THIN AIR BY ACCUSING ME OF SAYING THINGS I HAVEN'T SAID. I SAID IF WE'RE GOING TO HAVE A DISCUSSION WE HAVE TO UNDERSTAND EACH OTHER'S DEFINITIONS.

But you aren't really interested in having a discussion, are you? You're interested in your preconceived (incorrect) notions and not losing an argument on the intarwebs.