Economics from the Top Down

> It’s all a bit Dunning-Kruger to me Fantastic article on the reproducability of Dunning-Kruger effect: https://replicationindex.com/2020/09/13/the-dunning-kruger-effect-expl… Also see: "The Dunning-Kruger Effect is Autocorrelation" https://economicsfromthetopdown.com/2022/04/08/the-dunning-kruger-effe… Lovely quote: “These responses to our work have also furnished us moments of delicious irony, in that each critique makes the basic claim that our account of the data displays an incompetence that we somehow were ignorant of.” (Dunning, 2011, p. 247). Of course Dunning-Kruger is self-referential. Any mention of Dunning-Kruger automatically makes you a victim on wrong side of the graph.

How grim have the outcomes for Turkey been compared to, say, Argentina and Zimbabwe where the central bank has followed orthodox dogma? Turkey, unfortunately, hasn’t gone as far as to abandon the natural rate hypothesis. [0]: https://economicsfromthetopdown.com/2023/03/23/inflation-the-battle-be…

I am starting to doubt that interest rates are the best lever against inflation. Rising prices are supply not meeting demand. It feels like improving productivity would be an equally powerful tool with less human cost. Granted that is a harder thing to control quarter over quarter. Consider this analysis that intetest rates may in some cases raise prices. https://economicsfromthetopdown.com/2023/02/04/do-high-interest-rates-… And more links along that line from the pluralistic blog. https://pluralistic.net/2023/02/04/if-i-was-a-horse/#friedman-was-a-do… Does anybody else hear talk of productivity in talk of inflation?

Here’s a post from last year that I thought did a great job of illustrating your point, and how misleading the reporting of a single inflation number is without also knowing the variance: https://economicsfromthetopdown.com/2021/11/24/the-truth-about-inflati…

This is my favorite article about inflation https://economicsfromthetopdown.com/2021/11/24/the-truth-about-inflati… Inflation is not simply a matter of the government adding more money to the supply (although that's one of the actions that can help reduce the value of currency)... the flow of money (and power) is immensely complex, and inflation as a measure is a procrustean bed (https://en.wikipedia.org/wiki/Procrustes)

Worth a read https://new-wayland.com/blog/too-much-money/ and also https://economicsfromthetopdown.com/2021/11/24/the-truth-about-inflati…

> If you don't read all of it then how would you know you're abiding by it Why would it matter, because Christianity is very much not about following a large set of rules. It's more (some branches of) Jewry, that is famous for knowing and following a large set of rules. Most of the interaction with the priests is about how that is not actually sufficient and doesn't actually matters all that much. There is even a passage how someone following all the rules still won't succeed (the rich young man). The only real hard rule fits into a single sentence (double commandment of loving). > it's a collection of works that you agree with and want to associate with? Disagreeing is a normal and expected part of the faith and is the topic of some books in the collection. If you don't disagree with anything in the bible, I don't thing you are actually believing, you are just regurgitating things. The bible is a side effect of the formation of cultures and the getting to know in a relationship, and there is quite a development in it. > I haven't read Mein Kampf / The Communist Manifesto but I would bet some pages if not chapters are agreeable to a lay-person while the overall theme wasn't. Maybe in the Communist Manifesto, but Mein Kampf is total bullshit. > Death Panels in ObamaCare. No clue what that is, must be an US insider. > This is how we end with the Dunning-Kruger effect You know that Dunning-Kruger effect is autocorrelation, right? …

publishing auto-correlation is not a 'data artefact', but a mistake. and a rather ironic one at that. The #Dunning-Kruger Effect is #Autocorrelation https://economicsfromthetopdown.com/2022/04/08/the-dunning-kruger-effe…

The Dunning-Kruger Effect is Autocorrelation (2022) https://economicsfromthetopdown.com/2022/04/08/the-dunning-kruger-effe…

> But the lack of optimism surprises me. People now understood that the vast majority of productivity boosting technologies benefited a few % of people at the top, while the rest of use still basically live like in the 70s, except we work longer, have worse job security, can't buy houses, &c. "Automation will free us from work", "Your car will drive itself in two years", "owning a car will cut your commute time in half", "LLMs will bring UBI", "Robots will fold your clothes so you can spend time on your family", fool me once... https://economicsfromthetopdown.com/wp-content/uploads/2020/01/epi_pay…

The Dunning-Kruger effect is auto-correlation. From the article: https://economicsfromthetopdown.com/2022/04/08/the-dunning-kruger-effe… > The irony is that the situation is actually reversed. In their seminal paper, Dunning and Kruger are the ones broadcasting their (statistical) incompetence by conflating autocorrelation for a psychological effect. In this light, the paper’s title may still be appropriate. It’s just that it was the authors (not the test subjects) who were ‘unskilled and unaware of it’.

While I get your point and agree, there apparently is no Dunning-Kruger effect. It was determined to be yet another case of faulty data analysis in behavioral psych.[1] 1. https://economicsfromthetopdown.com/2022/04/08/the-dunning-kruger-effe…

> Dunning-Kruger effect https://economicsfromthetopdown.com/2022/04/08/the-dunning-kruger-effe…

https://economicsfromthetopdown.com/2022/04/08/the-dunning-kruger-effe… Dunning Kruger is autocorrelation and does not replicate --- I am a bot

I agree with pretty much all the other comments here - I always find it amusing when an article bemoans the lack of humility in others with a style that is supremely self-assured and cocksure. Note the author mentions the Dunning-Krueger effect. The DK effect is a statistical artifact, not a psychological phenomenon: https://economicsfromthetopdown.com/2022/04/08/the-dunning-kruger-effe…

https://economicsfromthetopdown.com/2022/09/24/how-to-make-the-oil-ind… I think the title is amusing. People in the comment section responded not based the content but on the title asking "why do you want to make the oil industry go bust?" The entire point of the post is that nobody has to do anything to achieve that outcome. It already is bankrupt.

Fair enough. I think at the time I felt that just one data point wasn't enough to evoke the effect. Maybe I'm just biased against the effect since it was dis-proven: https://economicsfromthetopdown.com/2022/04/08/the-dunning-kruger-effe…

Related hypothesis: https://economicsfromthetopdown.com/2021/10/24/redistributing-income-t…

Inflation is a tricky concept and attempts to grasp it using purely monetary intuitions are liable to confuse. Inflation is a summary statistic that tries to compress the behaviour of many markets, in an economy where markets come into being and wither away, into one time series, and summary statistics of complex phenomena rarely behave simply. Blair Fix has a nice essay that outlines some of the problems with the conception of inflation that lies behind the CPI: https://economicsfromthetopdown.com/2021/11/24/the-truth-about-inflati…

The graph showing a supposed sharp fall in US productivity isn't without its own serious criticism as well: https://economicsfromthetopdown.com/2020/01/17/debunking-the-productiv… Their argument is what the graph is actually showing is related to the fact that labour's share of US income peaked around 1970 and then began to drop, not some tautologically-defined concept of "production".

Well, not everyone agrees with the conclusions made by the article. For example, here it is argued that the graph used by the article is suspect: https://economicsfromthetopdown.com/2020/01/17/debunking-the-productiv… > This wasn’t a matter of productivity, either: workers were more productive every year, we just stopped being rewarded for it. In particular, this point is being disputed. Besides, I object to the use of the word "worker" here; some workers are surely more productive, but I can think of many classes of work that are fundamentally the same as they have been in the 70s; indeed, this kind of thing has been talked about under the heading of "cost disease" already: https://en.wikipedia.org/wiki/Baumol%27s_cost_disease Note that the article still points out inequality as a problem.

With, however the caveat that scientific papers can be embarrassingly wrong, and the error can not be spotted for 17 years, and the paper can go on being widely believed and quoted many years after the full debunk (and the case I link is apparently an honest mistake, not fraud which may be obfuscated). https://economicsfromthetopdown.com/2022/04/08/the-dunning-kruger-effe…

I'm surprised how often this site gets linked despite being almost entirely composed of correlation graphs[1]. If you're going to argue that the end of the gold standard is responsible for many of today's economic woes, I'm going to need more rigorous evidence than a bunch of charts with arrows on them. Speaking of which, a quick search has shown that the first charts has some flaws[2]. The use of several dozen images in lieu of substantive analysis/evidence makes is reminiscent of a gish gallop[2], which is a red flag for me. [1] cellphone and cancer, anyone? https://www.explainxkcd.com/wiki/index.php/925 [2] https://economicsfromthetopdown.com/2020/01/17/debunking-the-productiv… [3] https://en.wikipedia.org/wiki/Gish_gallop

Inequality always expends until the political interests of the rich and poor diverge so much that societies come apart at the seams. Relative equality is just as important, people get all kinds of stress related illnesses if they cannot keep up. One example is people people putting themselves in debt in order to get a college degree. Furthermore, the financial system works as a procyclical tool for the wealthy, since they can use debt financing as a leverage mechanism, while the poor have an insufficient credit score. This makes is easy for those with money to commandeer an outsized share of the available resources within an economy. For example, wealthy owners using real estate and as an investment vehicle, bidding up house prices for everyone. The banks make a killing on selling mortgages while the population becomes indebted and precarity rises. Here are some theories which I find interesting: The Iron Law of Oligarchy https://en.m.wikipedia.org/wiki/Iron_law_of_oligarchy Structural Demographic Theory https://peterturchin.com/structural-demographic-theory/ Elite Overproduction https://en.m.wikipedia.org/wiki/Elite_overproduction Firm Hierarchy predicts Income https://economicsfromthetopdown.com/2022/11/19/firming-up-hierarchy/

On a pure human level, a large portion of DK discourse seems to be a fight over which people are the "Unskilled and Unaware." Or more bluntly, who gets to call who stupid. The author says as much in this article: > Why so angry? [...] [Frankly], for the last few years, the world seems to be accelerating the rate at which it’s going crazy, and it feels to me a lot of that is related to people’s distrust in science (and statistics in particular). Something about the way the author conveniently swapped “purely random” with “null hypothesis” (when it’s inappropriate!) and happily went on to call the authors “unskilled and unaware of it”, and about the ease with which people jumped on to the “lies, damned lies, statistics” wagon but were very stubborn about getting off, got to me. Deeply. I couldn’t let this go. It's true, the previous article (https://economicsfromthetopdown.com/2022/04/08/the-dunning-kruger-effe… was pretty harsh on the authors of the original paper: > In their seminal paper, Dunning and Kruger are the ones broadcasting their (statistical) incompetence by conflating autocorrelation for a psychological effect. In this light, the paper’s title may still be appropriate. It’s just that it was the authors (not the test subjects) who were ‘unskilled and unaware of it’. But on some level, the original paper sounds just as condescending and dismissive. It presents a scholarly and statistical framework for looking down on "the incompetent"…

I feel like this article is severely over-complicating the analysis. Looking at the original blog post [1], their key claim appears to be that "random data produces the same curves as the DK effect, so the DK effect is a statistical artifact". However, by "random data", the original blog means people and their self-assessments are completely independent! In fact, this is exactly what the DK effect is saying -- people are bad at self-evaluating [2]. (More precisely, poor performers overestimate their ability and high performers underestimate their ability.) In other words, the premise of the original blog post [1] is exactly the conclusion of DK! Looking at the HN comments cited [3] by the current blog post, it appears that the main point of contention from other commenters was whether the DK effect means uncorrelated self-assessment or inversely correlated self-assessment. The DK data only supports the former, not the latter. I haven't looked at the original paper, but according to Wikipedia [2], the only claim being made appears to be the "uncorrelated" claim. (In fact, it is even weaker, since there is a slight positive correlation between performance and self-assessment.) So, my conclusion would be that DK holds, but it does depend on exactly what is the exact claim in the original DK paper. [1] https://economicsfromthetopdown.com/2022/04/08/the-dunning-kruger-effe… [2] https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect [3]…