Monday, February 10, 2014

Affirming the Consequent: Predictive vs Prescriptive Economic Science

What a day, what a day. Neoreaction gets a hearing in my wee lil' network cluster. My man Adam G. stuffs his face straight into a hornets' nest for whatever reason, traipsing through a meadow of monarchy revivalism toting a shepherds' crook of new institutional economics and wearing a pair of public choice clogs.

And there's this:

Neoreaction is a big chicken dinner. There's a lot there to digest. But pay attention to the core of both Adam and Noah's critiques: they're wary of a very common logical fallacy: affirming the consequent.

The Wiki link there is easy, but the Twitter version is even easier... "This is false: If A then B. B therefore A"

This is the kernel of a slew of critiques of the role of economics, and by extension any attempt to apply econometric results to policy prescription. Married people are more affluent? Why, let's encourage folks to marry—Affirming the Consequent. Nurses with BA degrees provide better care? Let's force RNs to get a BSN in ten years or strip them of their certification—AtC. Monarchies have some nice cultural features compared to democracy? Install an Enlightenment-era-style monarch in a Western secular nation—AtC.

Can I get a yikes, people?

Economics is okay at A→B. Unfortunately, it's awful at teaching elementary logic, so there's a whole lot of assuming that B→A.

Consider carefully what this implies for euvoluntary exchange. Identifying a problem with an exchange is merely the first step towards a remedy. Economics is not necessarily a prescriptive science, and to treat it as such pries open the footlocker of public choice with a crowbar wrought from a logical fallacy. Social engineer beware.

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Do you have suggestions on where we could find more examples of this phenomenon?