An app to demonstrate econ policies' efficacy? (helping to show extern)
July 19, 2012 6:35 AM   Subscribe

Conservatives in the U.S. seem to inherently assesses economic policies based on the personal ethics (as in, self-reliance) involved, not on overall benefit or harm to the society. Is there a (simple, credible) online app that lets you easily try different policies (including "each must pay his own way" personal-ethics ones) & compare the outcomes?

It would need to have characteristics that make it credible, and not be vulnerable to "the author wrote that into the game"-type dismissal.

(Flipping it on its head, this is really a question about how to demonstrate externalities and the need for pricing them in.)
posted by ahaynes to Computers & Internet (11 answers total) 5 users marked this as a favorite
No, it isn't possible to program an app to tell you the full outcomes of an economic policy. It would have to be very simplistic and wouldn't take into account all intended and unintended consequences. In fact, conservatives are often especially aware of unintended consequences, which is one way to be focused on outcomes. (I don't know of any serious conservative commentators who analyze economic policy solely in terms of the virtue of self-reliance.) In my experience, liberals are more likely to support a policy simply because it benefits certain people, without considering unintended consequences. If you really want to do some serious thinking about how to weigh the full costs and benefits of economic policies, an app isn't going to do the job for you — read a good book on the subject. I highly recommend The Instant Economist: Everything You Need to Know About How the Economy Works by Timothy Taylor, or The Undercover Economist by Tim Harford. The first book is rigorously non-ideological (the author presents opposing arguments in a neutral way, never revealing his own views) but a bit dry; the second book is more opinionated but also more fun to read.
posted by John Cohen at 6:47 AM on July 19, 2012 [3 favorites]

I think that your premise is not necessarily accurate.

As someone in the US that leans economically conservative but socially liberal, consequences to the society are actually considered very deeply. What you refer to as "personal ethics," they simply refer to as "societal ethics." I.e., they consider it a grave harm to the society as a whole to introduce a culture where people take more out of the society than they give in. They also consider it a strong benefit to the society on the whole to prioritize the funding on things that benefit the entire society, rather than a subsection of the society. So, for example, they may not consider funding poverty programs to be a priority, but they may believe in funding the space program. Or they may not consider funding all students to go to college to be a benefit to the society, but they might consider funding the most deserving and brightest students to go to college to be a benefit to the society.

There are no real apps that I've seen that measure economic policies in terms of secondary impact, in part because, as someone noticed, it is so terribly complex, and also because I think no such app could be impartial. The consequences that people notice are heavily predicated by the consequences people believe to be bad. For example: take the school system. Economic onservatives tend to notice the negative impact of more equal school funding on wealthier school districts that could ordinarily afford much more comprehensive programs. Economic liberals tend to notice the negative impact of more unequal school funding on poorer school districts that are not equal to wealthier ones.

I would say that economic conservatives tend to believe that it's better as a society for some people to get strongly ahead than for all people to be moderately okay. So I'm not really sure that even if this app existed, that it would do what you wanted - economic conservatives are often aware of the negative consequences to some of their economic policies, it's simply not their priority.
posted by corb at 7:42 AM on July 19, 2012 [3 favorites]

I'm not aware of such an app or program, and I think John Cohen is correct - any such app would be entirely too simplistic.

In a way your question is kind of unanswerable, because my understanding is that there's currently a lot of debate in economic circles regarding the entire concept of reducing economics to mathematical formulas.

If I've been reading their books and articles and blog posts correctly, a large group of "New Keynesian" economists (Brad DeLong, Robert Shiller, Paul Krugman, Joseph Stiglitz, and Nouriel Roubini, among others) - who are generally considered "liberal" - feel that an over-reliance on simple formulas is one of the things that led to the recent (current) economic troubles.

Short version as I understand it: Economics was long considered a "soft" science, and in an effort to achieve greater scientific legitimacy, both in perception and in actuality, economists began to develop mathematical models and used them to both analyze and predict economic developments. However, in order to actually reduce complex economic actions and results to formulas, it was necessary to eliminate some unquantifiable variables - like, for example, the fact that people don't always act in their own best interest. While this approach was widely considered useful for analyzing past events, some economists - mostly "conservative" - began to claim that this relatively simplistic approach was actually an accurate model of reality and could be used to predict future events and to guide economic policy. Generally, the idea that "markets are self-correcting and should have little or no government oversight."

Conservative politicians and their brain trusts seized this idea and ran with it. Then, as financial markets and transactions got more and more and more complex, banks and other financial institutions began to hire mathematicians and programmers and had them develop models and programs to guide the banks' policies. But all of these models were still rooted in the idea that all economic actors are "rational", and so when large groups of economic actors began behaving "irrationally" - at least "irrationally" by the standards of these mathematical models - the models failed and the system collapsed.
posted by soundguy99 at 8:06 AM on July 19, 2012 [1 favorite]

this is really a question about how to demonstrate externalities and the need for pricing them in

The genuine progress indicator (GPI) might be something to put into your Google.
posted by kmennie at 8:08 AM on July 19, 2012

Try this...

It is very simple. Every conceivable economic transaction is based on the premise in the App. Just substitute burritos for any good or service of your choice.
posted by otto42 at 8:20 AM on July 19, 2012

You are not going to find an app for this. Full stop.

Economics is complicated and humans are unpredictable. If the world were so mechanistic that an online app could accurately predict the fine-grained results of prospective policy changes, there would never be any economic crises.

What you should do instead is to read up on economics and to consult credible, well-cited articles and books on issues that you are especially concerned about.
posted by Sticherbeast at 9:01 AM on July 19, 2012 [1 favorite]

What Sticherbeast said.

I can't fathom how it would be possible to build such an app, as even economists can't predict outcomes of various policies. But then, I subscribe to Hayek's knowledge problem: a human society is too complex for any person or group of people to completely understand.
posted by John Farrier at 9:07 AM on July 19, 2012 [1 favorite]

Economics is complicated and humans are unpredictable.

This is true but only part of the story. The economy is dynamic with massive churn. Yesterday's economy is not tomorrow's economy. A compnay or industry is on the rise one day then subverted by an upstart the next. It is also not a zero-sum game. People create wealth from (seemingly) thin air all the time. How would you predict that in a computer model?

Whatever policies are in play today affect how people react, which is where the unpredictability of humans comes into play. Politicians and beaurocrats delude themselves into believing people will behave a certain way but they are uniformly wrong. People adapt to policy and economic changes in ways far outside the miniscule imagination of the legislative branch.

One tiny example. Years ago the clever people in Congress decided to eliminate the deduction for company vehicles. Great idea! No "loophole" for the cars they let executives drive! Except that they needed to keep the deductions for company trucks as those were considered "legitimate" business vehicles.

With amazing speed, the small business owners traded in their Accords for Suburbans, because they could still use the deduction, and the SUV market exploded.
posted by trinity8-director at 12:14 PM on July 19, 2012

It's impossible to design such a model because this is a completely subjective question about free will, social obligation, and the priorities thereof.

Liberals believe people have a responsibility to look after their fellow man, and thus tend to support policies that allow taxation to make sure people don't fall through the cracks of society... in theory.

The trouble is that once such a system is implemented, anybody who is irresponsibly unhealthy is essentially getting subsidized by the state. That fatass who eats two steaks for dinner? (Let us call him Lardo for purposes of this example.) Society is paying for his quadruple bypass operations.

This then leads to the logical next step, which is forcing him to eat healthy. Now, no liberal would ever claim Lardo is mandated to eat healthy - that would be an indefensible argument. But when confronted with the indisputable economic argument of skyrocketing health-care costs, most liberals (who are arguing in good faith) will concede that while they can't technically force Lardo to eat healthy, they would be without their rights to "incentivize" his behavior through taxes or restrictions on his health plan so as not to put too much of a strain on society.

This is where conservatives get up in arms, because the thing they hate most of all is government regulation. To conservatives, free will is more important than anything. They will champion Lardo's right to eat as many steaks as he wants, as long as society doesn't have to pay for it.

So in an ideal world governed by a strictly purist conservative ideal, Lardo gets a heart attack and dies, at no cost to society. Of course, he's lived a rich and steak-filled life, so the conservatives would have it that at least he died happy.

In an ideal world governed by a strictly purist liberal ideal, Lardo is incentivized (by fear of having the government restrict his healthcare options or taxing him more) into a vegan diet. He lives to a ripe old age, even if he does constantly dream of bacon.

As you can see, both of these hypothetical situations carry pros and cons, and both incur the same extra cost to society (in an ideal case, zero). Determining which abstract society is better is thus an ethical question, not a mathematical question.

Of course, in the real world, the liberals obviously offer the best mathemical argument, since realistically Lardo will eat tons of steak, fail to see a doctor (since he has no insurance) and get taken to the emergency room, which cannot turn him away, so that excess cost burdens society. Essentially we get the worst of both worlds right now, which is the problem with healthcare as it stands today.
posted by wolfdreams01 at 2:38 PM on July 19, 2012 [2 favorites]

Your question actually does have an answer, and a simple chart will get the job done as well as any app. To have a good discussion with someone about externalities, just start pointing them out - they're everywhere. What you and your friend each take away from such a dialogue will, unfortunately, be heavily colored by your respective world views. The "soft" parts of economics are eternally up for debate, at least until one team gets to run things their way for an extended period of time and manages to destroy (or not) the economy. (we can only hope for such unequivocal data.)
posted by Chris4d at 6:02 PM on July 19, 2012

Of course, in the real world, the liberals obviously offer the best mathemical argument, since realistically Lardo will eat tons of steak, fail to see a doctor (since he has no insurance) and get taken to the emergency room, which cannot turn him away, so that excess cost burdens society. Essentially we get the worst of both worlds right now, which is the problem with healthcare as it stands today.

Conservatives would argue that this sort of thing is why hospitals should be able to turn away patients: I believe in their ideal world, it doesn't matter if Lardo eats tons of steak and fails to see a doctor and gets taken to the emergency room, because no one will operate on him there unless they pay him. So it's a similar mathematical argument, but coming from a very different ethical place.
posted by corb at 4:48 PM on July 20, 2012

« Older Would you kindly explain these plot points to me?   |   Sending money directly from A to B? Newer »
This thread is closed to new comments.