Bitcoin Is Venice And Academic Economics \ stacker news ~econ

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Bitcoin Is Venice And Academic Economics

1211 sats \ 11 comments \ @siggy47 18h econ

I have been doing a deep dive into Bitcoin Is Venice for the past 6 months or so. I will probably be posting more about the book, but I wanted to get our resident economists to weigh in on something the authors wrote in the introduction:

In Chapter Two, The Complex Markets Hypothesis, we argue that academic economics has become overly mathematised and enamored with finance. First, this is in part due to the overwhelming mass of data financial markets throw off on which scientistic statistical analysis can be performed. Second, it’s in part due to political interference in economic activity primarily and most destructively being directed through financial markets, creating an attractor for corruption — political and intellectual alike.

I get lost in this book frequently, so I'm looking for guidance. I don't know if our resident economists have read chapter two of Bitcoin Is Venice? I'm specifically asking @Undisciplined, @SimpleStacker, @denlillaapan, and anyone else who wants to join in. Do you guys agree with this take?

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354 sats \ 5 replies \ @SimpleStacker 18h

No, I think it's wrong and I'm not sure where he got that idea from. Some examples or citations would have helped to explain where he's coming from.

First, I don't think it's true at all to say that academic economics is "enamored with finance". That's a weird thing to say, because finance is actually considered an entirely separate field, with the finance and econ usually being separate departments, granting separate degrees, up to and including PhDs in Finance vs. PhDs in Economics. There are a bunch of economists, including myself and probably @Undisciplined, who don't primarily deal with finance.

Second, the mathematization of economics was happening long before financial data became widely available or prevalent. I'd say that the mathematization of economics happened because (if you want to look at it charitably) it was necessary. Some problems get too complicated to analyze easily with words, especially when there are competing forces that push in opposite directions. A less charitable interpretation would say that economists have "physics envy". That is, they want to be taken seriously as scientists and therefore prize rigorous mathematical analysis. I'd say the latter interpretation may be driving the obsession with math nowadays, but that the introduction of math to econ was more driven by necessity at the start.

Lastly, I don't think political interference in economics has much to do with its mathematization, nor would I say that the interference is primarily through financial markets. There are plenty of examples of political interference through fiscal policy and through regulation.

So... yeah, this may sound critical, but I have no idea where he got these ideas from...

144 sats \ 4 replies \ @siggy47 OP 18h

I didn't include it in the quote, but "physics envy" is a big part of their argument in the chapter.

111 sats \ 3 replies \ @Undisciplined 17h

That part is definitely true and my view is that it leads to using the wrong kind of mathematics, more so than too much.

69 sats \ 2 replies \ @siggy47 OP 17h

Just for perspective, neither Farrington nor Sacha Meyers are economists. Farrington has a first in Mathematics and Philosophy. Meyers is a geologist, I think.

105 sats \ 1 reply \ @SimpleStacker 17h

It may be a function of the kinds of economists they tend to interact with. It does seem to me that a lot of the "think bros" that investors are likely to interact with, and especially those likely to comment on bitcoin, are financial economists. Nouriel Roubini and Nassim Taleb, for example, are both financial economists.

0 sats \ 0 replies \ @siggy47 OP 17h

Aha. I think you may be on to something.

36 sats \ 1 reply \ @BlokchainB 7h

I read this book a few years ago and did a write up on it

And it was very meh. To me as well

87 sats \ 0 replies \ @siggy47 OP 6h

I know. I started writing a post about it and I referred to your post. We had almost identical reactions. But, I tried it again and now I think it has a lot more going for it than I did the first time I tried it.

36 sats \ 0 replies \ @Artilektt 15h

This is the common view among Austrian School type economists.

57 sats \ 0 replies \ @Undisciplined 18h

It’s an overly broad brush and the motivations don’t really resonate with me.

Most economists are labor economists and couldn’t care less about what’s going on in finance.

This is specifically about the fairly small minority of macroeconomists. Even there, I agree that they rely on bad mathematical models (most of them seem to realize that too, btw), but I think they mostly do it out of expedience rather than those other factors. To the extent they actually are enamored with finance, my sense is that it’s because they can test their models on financial data.

36 sats \ 0 replies \ @0xbitcoiner 18h

I totally agree with that take. You don’t need to be some econ genius to see it.