Can we have an axiomatic theory of psychology?
A bit of background: since at least the time of Spinoza, up until the present day, a limited number of people have made attempts at creating an axiomatic approach to understanding and studying the human psyche.
They have all failed to gain any traction or respect. The most likely reason, in my assessment, is quite simply having way too many axioms.
An axiom is supposed to be a clear, “self-evident” truth, from which one can then logically derive other truths. The most famous use of axioms is by Euclid, where he used 5 very simply stated axioms (like “The whole is greater than the part”) to derive a few hundred pages of geometry. Modern mathematical economics also uses a handful of axioms, while the Austrian economist Ludwig von Mises only required one axiom (“Human action is purposeful behavior”) to understand the world.
However, modern attempts at axiomatizing psychology include dozens of axioms. For example, the “pyscho-logic” approach has over 50 axioms. What’s worse, is that many of these axioms have been expressed mathematically.
To me, this is unnecessarily complicated analysis. So below, I have attempted to give a start to a new kind of axiomatic psychology, using only one axiom:
Axiom: Thinking is the ability of a brain to observe, analyze, and decide.
Continue reading “Axiomatic Psychology” →
An interview I did with Garret Peterson’s podcast, The Economics Detective. Garrett is an economics PhD student at Simon Fraser University. Topics of discussion were the articles I wrote on mathematical economics versus “literary” economics and whether the Austrian School is a cult.
Originally posted on mises.ca July 28, 2014
Famed Chicago economist John Cochrane gives a report from a recent meeting at the National Bureau of Economic Research (NBER, the US government institution which is tasked with determining whether or not the economy is in a recession, and where Ludwig von Mises was first employed upon moving to the United States). He reports that a recurring theme throughout the discussions was about “just how we do economics”. Certainly a topical conversation. Unfortunately, just how Professor Cochrane frames the discussion proves that gross methodological misunderstandings are still pervasive in the profession.
Firstly, Cochrane frames the methodological debate as “math vs. literature”. While the current orthodoxy in economics is to have quantifiable theories that can be “proved” or falsified by empirical evidence, and though there may be some who hold that the proper way to ascertain economic truths is through “imaginative and creative writing, especially recognized artistic value”, this dichotomy is not comprehensive of the Austrian view.
The Austrian methodological position is that economics should proceed logically from realistic foundations. Continue reading “Mathematical Economics vs. “Literary” Economics?” →
Originally posted on mises.ca February 7, 2014
I’ve got a confession to make: my favourite economics blog name is Noah Smith’s “Noahpinion”. It’s a really great blog name.
With the niceties out of the way, let’s address Smith’s latest screed: “How the New Classicals drank the Austrians’ milkshake”. In it, Smith tries to make the case that the reason that the Austrian school is “dead” as a serious scholarship program isn’t because the Austrians have too many different ideas from the “New Classical” mainstream, but rather because all the best Austrian ideas have been incorporated into the New Classical tradition.
Smith does this using cutting edge blogging techniques: a list. First he lists three similarities between central Austrian and New Classical claims, and then lists two “big differences”. Let’s see what Smith gets right, and wrong, in his comparative analysis of Austrian and New Classical economics.
Smith Claim #1: “Rational Expectations” is a refinement of the Action Axiom
Smith starts out his characterization of the Austrian school by quoting Mises from Human Action, which is good. He goes on to describe Mises’ writing as “pre-WW2 European literary style”, which is somewhat funny, given that Human Action was written after the Second World War, and in the United States. But I get what he’s saying.
Let’s reproduce the Mises quote here: Continue reading “Noahgreement on similarities between Austrians and New Classicals” →
Originally posted on mises.ca on January 25, 2014
Much fuss is made in macroeconomic circles over so-called “microfoundations”: microeconomic justifications for macroeconomic models, as opposed to macro models that make ad hoc assumptions about utility, preferences, and price setting. People like to bring up the “Calvo pricing model”, where (supposedly) a magical fairy selects a firm at random to change its price, as both an example of a solid microfoundation and a brazenly nonsensical one.
Of course, when the even foundations of mainstream microeconomics are shaky at best—assuming such silly things such as perfect competition, farmers who solve calculus equations, perfect information, infinitely lived households, and infinitely divisible tractors—many macroeconomists are rightly skeptical of blanket calls by microeconomists to cite their papers and books when macro guys are constructing a new model for inflation targeting or growth modeling. Some have even gone to deny any strong linkages between microeconomics and macroeconomics.
Ludwig von Mises acknowledged this debate and made a veiled attempt to solve it over a century ago in his first treatise, The Theory of Money and Credit (TMAC); and then made a more explicitly argument in his magnum opus, Human Action (HA). Continue reading “The Ultimate Microfoundation: Human Action” →