
The Story of a Lucky Economist - apsec112
http://allegedwisdom.blogspot.com/2017/03/the-story-of-lucky-economist.html
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cperciva
This sort of occasional oversized impact is not limited to economics. Take
bsdiff for example: I wrote it because I was a poor university student and
wanted to make sure usage of FreeBSD Update didn't push me beyond my free
bandwidth tier; making updates faster wasn't really a priority (the speedup
from downloading binaries vs. recompiling dwarfed everything else) and I
wasn't at all sure if anyone else would want to use bsdiff. It turns out that
bsdiff has now saved _thousands of lifetimes_ of people waiting for software
updates to download.

Even a small impact becomes huge if you scale it up to billions of users.

~~~
tomrod
That is so cool! Thanks for bsdiff.

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caseysoftware
It's worth remembering the opposite of his example of "C" (the economist who
pushed back against the water standards)..

The faceless bureaucrats in these positions have the ability to destroy
livelihood, whole towns, and even industries with the stroke of a pen. And
they suffer zero consequences as a result.

~~~
pjc50
The stakes are rather high on both sides of this. The same chemist was
responsible for both leaded petrol and CFCs:
[https://en.wikipedia.org/wiki/Thomas_Midgley_Jr](https://en.wikipedia.org/wiki/Thomas_Midgley_Jr).

Safety regulations can wipe out businesses. Not having (or following!)
regulations can wipe out lives on an enourmous scale:
[https://en.wikipedia.org/wiki/Bhopal_disaster](https://en.wikipedia.org/wiki/Bhopal_disaster)

The point is not to say "regulation good" or "regulation bad", but that these
decisions are important and should be taken seriously with submissions from
those involved as well as experts. The process has to be sound, and we need to
de-partisanise it where possible.

~~~
cperciva
For all the environmental damage they caused, I'm not convinced that CFCs were
a net negative. We have better alternatives now, but the refrigerants R12
replaced at the time were really really nasty; how many lives would you be
willing to sacrifice to avoid damaging the ozone layer?

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jopsen
The question is how many lives were lost due to a damaged ozone layer?
(increased risks of skin cancer, etc).

The point is that regulation is important. Whether you have good regulation,
bad regulation or no regulation it has impact and the discussion is important.

~~~
cperciva
Right. My point is just that people tend to condemn CFCs based on their costs
while completely ignoring the benefits they brought at the time.

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pyromine
I mean every narrative about the invention of CFCs is basically found a great
thing, didn't realize the great thing has downsides.

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scandox
> the 'PhD Economist' credential is a signal that you might be the kind of
> person who can escape groupthink

I am open to this concept but I don't think I'm being cynical when I say that
most people would surely think the opposite when they hear the expression PhD
Economist.

~~~
xapata
> most people would surely think

An example of groupthink?

If you haven't studied economics in graduate school, you may not be aware that
the field is very different than what is taught in traditional undergraduate
economics classes. There are different branches, of course, but the field
emphasizes modeling and acceptance of initially-unintuitive results based on
careful analysis of system dynamics.

Many people can think through the second-order effects (and beyond) of some
policy change. Economists are just one group that has been trained to do so.

~~~
cowardlydragon
Economics is a highly politicized "science" however. Desperate for their pet
views self-validating their world dominance, endowed chairs, think tanks,
consulting, and special access to finance deals fundamentally skew the
practice of economics at an academic level, essentially bribing them into line
with oligarchical capitalism / "Reaganomics".

Economists routinely are placed in politically powerful positions, invariably
due in large part to their professed views on economics being in line with a
dominant political (aka rich cabal or pro-industry) view of economics.

If economics was truly up to snuff, it would be at the forefront of guiding
policy to resolve the existential threat our global scale environmental
disruption poses to us as a species, which is a direct result of the imperfect
economic systems of the world.

But the fundamental problems in economics remain:

\- if you can't measure it, it doesn't really exist to economics, especially
to academics \- if it isn't going to run out in three months or kill you in
three months, it doesn't matter and is ignored by economic study

Of course those two points are slight exaggerations, but if one views the long
course of economic study, they become pretty apparent.

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true_religion
> If economics was truly up to snuff, it would be at the forefront of guiding
> policy to resolve the existential threat our global scale environmental
> disruption poses to us as a species, which is a direct result of the
> imperfect economic systems of the world.

Economics can predict 'disaster' but does not have anything to say about
whether or not disaster should be avoided.

To give an example closer to home, in W. Africa predominant economists believe
(but do not publicly say) the AIDs crises is not a general threat to humanity.
AIDs rates will increase until a peak point, then society will self-correct
whether this is via enforced monogamy rituals, enhanced testing,
stigmatisation of carriers, wide-spread STD protection, better medical care
for carriers to prevent morality, or other methods is besides the point.

What method you _choose_ to promote is a political question, not an economic
one. Just because something increases X in circumstance A, does not bear into
question if circumstance A is really something you want even if X is "lower
mortality rates".

Economists in international organisations learn this truth, and have to be
extremely careful not to substitute their own personal bias, or the
preferences of their society for that of their client. For a non-morbid
example, working in the US an economists would be tasks to report on how to
best expand the existing highway system. Taking a step back, and saying "we
should all use bullet trains and live in dense cities", isn't going to be
appreciated as the 'American Dream' is predicated on suburban living.

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skookumchuck
This is a good article about the costly unintended consequences of well-
meaning regulations. The author seems to think, however, that this can be
resolved by hiring more educated economists, but I seriously doubt it.

~~~
willbw
My takeaway from the article is that the author completely missed the point,
which is that centralised bureaucracy and decision making can be very harmful.

Why are we reliant on an economist to pick up on this irrigation issue? You at
least need people from industry to be consulted before regulations like this.
Lucky that this particular person noticed the problem, but there probably
shouldn't be a lawyer, a scientist and an economist making centralised farming
regulations.

~~~
hwillis
>Why are we reliant on an economist to pick up on this irrigation issue? You
at least need people from industry to be consulted before regulations like
this.

It's naive to think that effective, efficient regulation can happen without
consulting the people actually affected. It's also naive to think those people
should be the ones making regulations.

Even beyond the inherent problem with industries regulating themselves, they
are just not capable of doing so in many cases, especially farming. What does
a farmer know about public health, or water-borne pathogens, or heavy metals?
Farmers know what makes plants grow or not. They don't know how those plants
affect the people that eat them.

Plus, says who that irrigating with drinkable water is even a bad idea? It's
the most accessible standard. Drinking water is everywhere. It's literally the
most unscientific reasoning possible that manure is dirty, therefor water can
be dirty too. Self righteous, pretentious stories like this are everywhere,
where the clever, down to earth common guy stumps all the big brains. The fact
is that the people who study the effects of an industry are in a far better
position to assess regulation.

Yes- a producer will be able to say that a regulation may be burdensome. They
will definitely not be the best person to know if it's warranted or not.

~~~
AllegedWisdom
When irrigation water is put directly on produce that will soon be consumed
raw, it will transmit pathogens and should be drinking-water standard. This
was not disputed, and was in the final rule.

However, if the water will go through manure before being absorbed by the the
plant's roots, it is very wasteful to first purify it to drinking-water
standard. Drinking-quality water is not everywhere in the quantities needed
for irrigation, it requires expensive filtration and processing. Everyone saw
the logic of this when it was pointed out, nobody was 'stumped'.

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southbridge
Can someone go more into what is meant by framing and anchoring?

Is this like 'sandbagging?'

Does one fail on purpose to set a low standard so that they can have an easier
time reaching a goal?

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cperciva
If you present people with several options, they'll be biased towards
selecting options in the middle of the range. This is particularly relevant to
SaaS startups and pricing plans; but in the article the author was using it to
steer the decision maker towards the option he had already determined to be
optimal.

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AllegedWisdom
The optimal cutoff would probably have been $20 million rather than the $10
million that was chosen, but that change would have been too much for a lot of
people. If I had only presented options from $1M up to $20M, then the group
probably would have chosen $5M no matter how much I argued for $20M. I had to
put the $50M number in people's heads so $10M seemed less of a jump.

~~~
southbridge
Ya that's kind of what it seems like you did... throwing a big number out on
purpose so that $9M jump would be "rational." The math in my head says you
could weight figures on estimated acceptance probability. By throwing out a
low probability figure first before a relatively higher probability acceptance
figure - versus just presenting them with a reasonably high probability figure
- give a better result. It is almost like expected value.

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hive_mind
This guy seems obsessed with "impact". People such as this usually embellish
what impact they have.

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____a
If he is embellishing, he is certainly doing it in an understated way by
saying he's impacted/saved fewer than 1,000 lives.

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rtfs
good post. add some stories about dealing with lobbyists as an economist, and
the post will be even more interesting.

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AllegedWisdom
In most agencies, economists almost never interact with lobbyists. The
lobbyists always aim at senior management, and almost all lobbying takes the
form of 'We care about X and we want you to validate that by signalling that
you also care about X' or 'We are presenting a credible threat to sue you if
you do Y'. This is useful political and tactical information for management,
but it does not affect the economic numbers at all. In theory a lobbyist could
present useful information about a hard-to-research topic that informs our
analysis, but I've never seen that happen.

