TED, Tim and God

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TED talks are great at giving you a brief overview of an area (or more often, one view of an area). So I usually like watching the non-economic talks. In contrast, the economics talks always leave me with more questions than insight. So it was with some trepidation that I watched a recent talk by Tim Harford available here.

I recommend it. The talk helps remind us of our own limitations and biases – and that is always a good thing.

These limitations are always useful to remember. When I came back to academia from the ACCC, I was asked by a colleague about merger analysis. How did the ACCC go about analysing the likely future effects of a merger? My reply was simple. We used a range of economic models that roughly described the industry. We used data and market inquiries to hone these models. We then used the alternative models to try and get likely patterns of behaviour. If the evidence and economics together was ambiguous, we worked out what information would separate the models and tried to get that information. There was no one ‘correct’ model and any theoretical results had to be compared and contrasted against the information from market inquiries and common sense.

My colleague was horrified by this reply. Apparently they had assumed that there was a ‘correct’ model that the ACCC could apply to get the ‘right answer’ for the competitive effects of a merger. My answer showed the limitations of economic analysis. I saw this as a benefit. My colleague had the opposite view. So I seem to be in Harford’s camp – and maybe the talk simply reinforced my own biases!

 

3 Responses to "TED, Tim and God"
  1. Tim Harford’s talk reminds me of a tenant of conservative beliefs.  Conservatives believe that social systems are too complicated to change radically.  They believe that advocates of radical social reform are hopelessly over-optimistic about their ability to understand the consequences of large incremental change to social and political arrangements — because of the complexity of social arrangements. Moreover, conservatives believe that the social order is the result of hundreds of years of trial and error.  Therefore, they argue, radical social change – even moderate social change – exhibits hubris and a rejection of trial and error.  Conservatives advocate incremental (or no) change in the social and political order using just the reasoning advocated by Tim Harford.

  2. @SW  Maybe reinforcing my biases but I took it as a tenent of progressive politics – that even if we don’t fully understand something, if it is producing inequality/harm/climate change, you improve by trying something different, even if not 100% guaranteed.  In fact the closest politician to the one Harford was seeking -the one who embraces trial and error – was FDR (in 1932):
    “The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach.”

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