
Falsehoods programmers believe about economics (2016) - zbentley
http://exple.tive.org/blarg/2016/09/22/falsehoods-programmers-believe-about-economics/
======
maaaats
I like these lists, but the ones I like the best are the lists that also
provides examples and an explanation with the falsehoods. Pointing out a
falsehood without providing a reason does little to change my mind.

Falsehoods about phone numbers was recently on HN [0], and I liked how it came
with examples. Then it's possible to have a meaningful discussion about each
one, and if it is something we need to handle. For instance _Phone numbers are
always written in ASCII_ , gives an example where that isn't true. Then we can
discuss if that case is meaningful for us to support or not.

I cannot build a system that will handle all possible names, emails,
addresses, timesystems, currencies, locales or whatnot there is a falsehood
article about. So when writing an article like this, if you want it to have
impact please explain the point of each bullet.

[0]:
[https://news.ycombinator.com/item?id=19214035](https://news.ycombinator.com/item?id=19214035)

~~~
MatekCopatek
No disrespect, but I think the thought process of your comment is exactly what
this post is trying to address.

While falsehood lists that cover emails, phone numbers or CSV files are
basically just a much better specification than the one you were following
initially, this falsehood list works on a different level. You can't simply go
through all the items and make sure your code covers each one. You're supposed
to read it and come to a conclusion that economics is less similar to
mathematics and more similar to sociology. That it's not a set of rational
rules but something inherently more complex and chaotic.

It can still have a huge effect on your code - not in the form of additional
corner cases you need to cover, but as questions you may ask yourself about
the purpose and morality of your work. At least that's how I understand it.

~~~
throwawaymath
My reading of the parent comment is that they understand everything you're
saying, and their point is that the subject matter is thus a poor fit for the
"Falsehoods Programmers Believe" moniker.

The phone number example they gave works very well for demonstrating
misconceptions. Economics doesn't work as well for that, for precisely the
reason you stated about it being partly sociological. In fact it's
sociopolitical, which complicates matters further.

------
i_dont_know_
Thank you. Though I don't think this is a _comprehensive_ list, it really
brings home some of the frustrations when talking to others in tech about
economics, particularly getting them to critically examine economic
inequality.

Because of the higher pay in our field, many programmers/tech people have the
_luxury_ of believing in simplistic economic models, which largely fall back
on some economic version of the just-world
fallacy([https://en.wikipedia.org/wiki/Just-
world_hypothesis](https://en.wikipedia.org/wiki/Just-world_hypothesis)). Their
most salient datapoint (themselves) fits perfectly into their view, so why
bother to complicate it?

That having been said, I'd love to hear/read more on how the conversation can
be moved forward with people who stubbornly hold the beliefs mentioned here.

------
qubex
I’m an economist by training. I understand where the author is coming from but
most of these points are _arguable_ (and much argued upon) but merely stating
these points of contention without explaining why these things are considered
true and instead might not be isn't very useful. To a certain extent this text
paradoxically reduces economics to _sub_ -Econ101 levels by making a simple
list of Apparent Truths That Are Implied To Be Actually False (whose
complements therefore are implied to be True, but logically might not be).

There wouldn't be a whole field of well-meaning professionals looking into
these matters if it were this simple.

~~~
ardy42
> There wouldn't be a whole field of well-meaning professionals looking into
> these matters if it were this simple.

I think this list basically an exhortation to think twice before swaggering
into a forum thread citing "basic economics" like you've got everything
figured out. It's a _reminder_ that things are more complicated.

~~~
throwawaymath
For that exhortation to be compelling, these "falsehoods" should come with
some justification for why they're misconceptions. If you present me with just
a list like this for a field as complex as economics, one of two things will
probably happen:

1\. If I think economics is a simple junk science I won't be inclined to
change my mind, because there's no explanation here.

2\. If I already think economics is a complex field I'll think this list
utterly sucks the nuance out of it.

~~~
qubex
Economics is mathematically mired by a lack of conserved quantities. Those are
global invariants that (particularly in physics) that allow to desume facts
about the final configuration of a system based only on the initial
configuration (conservation of mass, of energy, of linear or angular
momentum... each of which is a handy approximation to solve various problems
and that surprisingly depend on the theories one is applying).

In economics even something as fundamental as _wealth_ is not conserved
(that's the whole wonderment of nonzero-sum games and interactions in
general). That means that predictions are very sensitive to the dynamics one
presumes to apply, and the practitioner has no amazing bookkeeping sleights-
of-hand to resort to to verify that which one is predicting is defensible.

~~~
Nasrudith
Not conserving wealth is fundamentally correct in my opinion but you need to
keep in mind forms of wealth - it is utility not just raw goods. It also
fundamentally isn't universal. As long as there is more useful work to do we
can create more wealth.

We are thousands of times wealthier than ancient goat herders and yet do we
have ten thousand goats each? No. Wealth has many forms. A full course of
antibiotics to treat Hansen's disease would be incredibly valueable miracle
cure in medieval times and anyone capable of producing them effectively a
miracle worker. A smartphone's in the 1940s is effectively alien nanotech to
them.

~~~
qubex
I agree absolutely. However, utility is typically expressed as a nonlinear
function of wealth, and therefore aggregate utility is even _less_ constrained
(further from being even approximately conserved) than wealth itself.

------
metalchianti
I don't know if I agree with a lot of these and I don't know why these
falsehoods pertain specifically to programmers and not the general populace.

"People are rational actors." should be number 1 and most of the other points
are redundant. Much of this is just behavioral economics à la Kahneman and
Tversky.

~~~
dwd
Correct, you could generalise it further as: people believe economics reflects
reality, not that they are simplistic models used to facilitate a political
idea.

The only economist I've heard of coming close to creating an all encompassing
model is Steve Keen. It was through his work on debt cycles that he called the
GFC before it occured.

[https://hackernoon.com/debunking-economics-and-why-
bitcoin-w...](https://hackernoon.com/debunking-economics-and-why-bitcoin-will-
fail-with-steve-keen-51f51eb9a477)

~~~
Nasrudith
Economics do reflect reality but not in advance necessarily - granted in that
case it is a reflection after reality comes knocking and it is clear that
maybe mercantilism was a bad idea after all of their colonies revolted over a
lack of representation and misrule bad enough they started doing /better/
economically after severing ties with their large home country. In hindsight
that suggests majorly underutilizing the potential of the colony and
colonists.

------
segfaultbuserr
> Pareto efficiency exists.

> Information symmetry exists.

> People are rational actors.

Programmers? Aren't they the falsehoods an ideal theoretical economic model
believes about the economy?

~~~
whatshisface
Perhaps you could call them, "common misconceptions about economics," but even
then it seems a bit subjective. Now that the falsehoods meme has moved past
business logic details, I'm waiting for "falsehoods programmers believe about
the Republican/Democrat party platform." ;)

------
richardhod
(2016)

the posting from back then, for ref:
[https://news.ycombinator.com/item?id=12556983](https://news.ycombinator.com/item?id=12556983)

------
notacoward
Hugged to death. Outline version:
[https://outline.com/Fpy4Js](https://outline.com/Fpy4Js)

~~~
pault
This site is really cool, but it desperately needs a bookmarklet. An extension
that adds an "outline" link to hacker news submissions would save me many
hours per day. :)

~~~
StellarTabi
According to:
[https://www.designernews.co/comments/257987](https://www.designernews.co/comments/257987)

javascript:(function()%7Bwindow.location.href %3D
'https%3A%2F%2Foutline.com%2F' %2B window.location.href%7D)()

------
pjc50
Back in the days of Adam Smith it was known as "political economy", believing
the two were inextricable. I should really get round to reading his actual
text some time rather than the ideologically filtered popsci versions.

~~~
Nasrudith
I think that is taken for granted that the assumptions were based upon a
state's existence for one. Lack of a state means economic pressures promote
the eventual rise of one from either strongmen (influence on goods and their
production gained through monopoly on force) or "oligarchs"/ priests
(influence on force through goods including intangibles on force).

Being "too useful to destroy" can give an oligarchic or priesthood role. It
need not be tangible and is in fact better if it is not because killing them
will destroy it instead of stealing it. While thugs could kill a drug cook
keeping him alive killing him and taking his drugs would get something of
value. Killing an ascetic would get nothing of value - which might be an
origin of vows of poverty sticking around.

A "shaman" or who people follow because he can treat illnesses better than
nothing and/or has enough of an understanding to avoid diseases has real power
even if his etiology is wrong or incomplete.

A belief that boiling water drives out evil spirits (bacteria) or that malaria
is caused by evil swamp spirits is somewhat accurate but very imprecise as
metaphors with some physical truth. The last especially sounds absurd but
lacking microscopy and thus germ theory but makes sense thinking about it.
Absent microbiology what else describes invisible forces that can make someone
sicken and die and hails from the swamp? While clearly inferior practicallyvl
to a more in depth scientific framework which allows for things like a very
expensive malaria vaccine derived from dissected mosquitoes literal "spirits"
as a framework is outdated but gets some fundamentals of survival right - boil
water or you'll be sorry and avoid swamps and mosquitoes.

------
kyancey
In terms of rational actor theory, it just means you have preferences and you
try to achieve optimal results using all the data available to you. It doesn't
matter if your preferences seem irrational or are not apparent to others as
long as they are consistent.

~~~
Nasrudith
Yeah reminds me of one discussion I had about bakeries wanting the right to
discriminate based on religion or orientation back in the news. In pure money
it is obviously stupid. However if they value the influence or not it is
technically "rational".

Paperclip maximizers technically qualify - their goal isn't for them to be
useful or even self-preservation but to get the paperclip number as high as
possible.

------
XCabbage
Obnoxious. The other "Falsehoods Programmers Believe" taught me things I
didn't know and pointed out mistakes I'd made in the past. This is just a load
of patronising progressive preaching which teaches me nothing.

~~~
defaultprimate
Yeah, over half of them are just plain wrong too lol

~~~
pavel_lishin
Which ones?

~~~
defaultprimate
3 & 4 are blatantly false. Economics isn't concerned with morality or
demographics (beyond the study of their statistical facts). Concerning these,
the question should arise: What do these statements even mean?

The Efficient Market Hypothesis has consistently held true, especially in the
long term and with respect to indexes and mutual funds. Some of the
implications and conclusions drawn from the hypothesis are audacious, but the
hypothesis itself is sound.
[https://www.hindawi.com/journals/ecri/2013/238253/](https://www.hindawi.com/journals/ecri/2013/238253/)
[http://www.ccsenet.org/journal/index.php/ijsp/article/view/1...](http://www.ccsenet.org/journal/index.php/ijsp/article/view/17911)

Price is absolutely a indication of cost and/or value, at the time of
exchange.

Rational Choice Theory is empirically sound
[https://www.annualreviews.org/doi/abs/10.1146/annurev-
soc-07...](https://www.annualreviews.org/doi/abs/10.1146/annurev-
soc-071811-145441)
[https://journals.sagepub.com/doi/10.1177/0951692899011002001](https://journals.sagepub.com/doi/10.1177/0951692899011002001)

Although Classical Economics is empirically shakey is some respects,
Neoclassical are not

~~~
CharlesColeman
> 3 & 4 are blatantly false. Economics isn't concerned with morality or
> demographics (beyond the study of their statistical facts).

I don't think that's correct. Economic theories make statements about the
distribution of resources, which is an _intensely_ moral question. They also
tend to be tightly wrapped up with political ideology, which makes them even
more moral.

~~~
Nasrudith
Those are implications really - as are political ideologies based upon what
people do with it. Similarly demographics are a reflection of current society
- it doesn't tell you /why/ it is the case.

Pointing out that the true father may have implications for a family and
society but that doesn't make genetics a moral question.

~~~
CharlesColeman
> Those are implications really - as are political ideologies based upon what
> people do with it.

When programmers talk about economics, they're pretty much always talking
about the implications and political ideologies that surround them, not the
abstract nuances of some theory for its own sake.

------
MLij
Falsehoods programmers believe about UX: 1. Blue text on black background is
very readable.

------
lenticular
I've noticed many programmers have difficulty with nuance and shades of gray
on policy or social issues, which are complicated, fuzzy, and irreducible to
simple rules. I think this might be a reason why the field has such a strong
libertarian presence.

~~~
malvosenior
Given the replication crisis is it not more accurate to say that social
"scientists" have difficulty understanding data and logic? It's no wonder that
programmers who are grounded in both of those can see through the holes in
their subjective and feeling driven arguments so often.

~~~
lenticular
I'm a former physical scientist, and I am very critical of statistical
practices in the sciences.

Also, biology and biomedicine is just as bad, so don't act like like the
super-smart physical scientists are somehow superior. Rigor in social sciences
is difficult because there are no solid axioms as there are in physics or math
to guide hypotheses.

Folks with your type of opinions act like there are such axioms, but that is
just simply wrong. This kind of thinking is exactly what I was talking about
in my above comment.

~~~
malvosenior
> _Folks with your type of opinions act like there are such axioms_

No, I agree with you that there are no such axioms which is why the value of
social "science" is near zero.

------
malvosenior
Has this person made a ton of money investing or otherwise deploying their
economic theories? If not, then it's likely the falsehoods are on their end.

 _" Economics is morally neutral."_

Of course they are. Unless the author is implying that they are some sort of
moral arbiter or religious I'm not sure how they would judge this anyway.

 _" Economics is racially- and gender-neutral."_

Citation needed.

 _" The efficient markets hypothesis is true."_

By all means try to outsmart the market, then come back to us and report your
results.

~~~
throwawaymath
_> Has this person made a ton of money investing or otherwise deploying their
economic theories? If not, then it's likely the falsehoods are on their end._

This is a terrible heuristic for deciding if someone understands economics.
Economics is far more nuanced than that, and it's very possible to be able to
show something non-constructively.

~~~
malvosenior
If you truly understand a system you should be able to navigate it
successfully. I certainly wouldn't take advice from someone who can't
quantifiably show that they know what they're talking about.

That this person can't compile a convincing list with evidence just further
shows that they aren't worth listening to.

~~~
Nasrudith
That assumes no other preconditions apply that would prevent them from taking
advantage. Knowing heavier than air flight is possible doesn't allow one to
build a 747 on a desert island.

------
airstrike
Well, the efficient markets hypothesis _is_ true, just as much as Newton's law
of universal gravity is true.

It's perfectly fine to point out its shortcomings, but dismissing it entirely
is to throw the proverbial baby out with the bathwater.

The market is generally efficient with pockets of inefficiency due to the cost
of information.

From the Wikipedia article on the Grossman-Stiglitz paradox[0], "because
information is costly, prices cannot perfectly reflect the information which
is available, since if it did, those who spent resources to obtain it would
receive no compensation, leading to the conclusion that an _informationally
efficient_ market is impossible." (Emphasis mine)

"The rational efficient markets formulation recognizes that investors will not
rationally incur the expenses of gathering information unless they expect to
be rewarded by higher gross returns compared with the free alternative of
accepting the market price. Furthermore, modern theorists recognize that when
intrinsic value is difficult to determine, as is the case of common stock, and
when trading costs exist, even further room exists for price to diverge from
value"

__________

[0] [https://en.wikipedia.org/wiki/Grossman-
Stiglitz_Paradox](https://en.wikipedia.org/wiki/Grossman-Stiglitz_Paradox)

~~~
notacoward
> Well, the efficient markets hypothesis is true, just as much as Newton's law
> of universal gravity is true.

That's a terrible analogy. Gravity works exactly the same way except in some
_extremely_ exotic conditions that none of us will ever experience. The
"pockets of inefficiency" in watered-down EMH are so pervasive that we should
really be talking about "pockets of efficiency" instead. The physics analogy
to EMH would be something like magnetism - a phenomenon that is undoubtedly
real and useful, but not really all that common.

~~~
Nasrudith
Yeah it isn't wrong but I would compare it to frictionless plain physics - it
can point in the right direction but it is missing other things and some
applications which stray from it and its assumptions can wind up vastly
different if you try to take it as gospel but at the same time there are
fundamental "can't do thats" predicted. You can't get rich through printing
money because that devalues holdings in exchange for more fine grained
divisions - fine to have some with economic growth creating corresponding
goods.

