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5 tweets,
2 min read
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1/5 An example of the kind of mathematics we find in economics. It's wrong: second underlined sentence contradicts the first.
It's psychologically hard: could this be just a cultural difference? Is there a way to make it true without abandoning the meaning of words and symbols?
It's psychologically hard: could this be just a cultural difference? Is there a way to make it true without abandoning the meaning of words and symbols?
2/5 To be clear, using what we learn in high school about probabilities, here's the natural immediate response to reading this passage.
@alex_adamou, @bermanjoe, and I had the same response independently.
@alex_adamou, @bermanjoe, and I had the same response independently.
3/5 In this case, as in many others, the difficulty goes back to the Original Sin of economics, which is to ignore time and work instead with expectation values - averages across the multiverse.
4/5 Someone may come up with new meanings to words and symbols that make the second underlined sentence true. Maybe.
But remember: the statement 3=4 is also true if "=" signifies "is equal to what's one the right minus one."
But remember: the statement 3=4 is also true if "=" signifies "is equal to what's one the right minus one."
5/5 Finally, I have never looked for mathematical errors in economics.
The pattern is this: we work on some famous problem (here discounting) and do the due diligence of reading the standard references - and they turn out to be formally wrong.
The pattern is this: we work on some famous problem (here discounting) and do the due diligence of reading the standard references - and they turn out to be formally wrong.
