Rational Rambles – Another Economics Blog

The Purpose of this Blog

I am writing this blog because, as I work out my own mental models of how the world works, I need to declutter my brain by putting those ideas on paper. It’s like software engineers when they need “rubber ducking” … you are my rubber duck. You have the face for it, pal, and I mean that as a compliment.

I am publishing this blog because my dear friends, who inspire me with their compassion and achievements every day, convinced me that someone else might benefit from my tangential tirades.

I hope, dear reader, that by witnessing my learning process, you can take something useful away from it. I cannot promise that everything herein will be perfectly accurate, but I do promise that I will do my best and promise to respond to your feedback and corrections with glee. Learning is a two-way street, and I hope to learn more from you than you will from me. Let’s make each other better.

So why male models? Why an economics blog?

One of the best classes I ever took was “human behavioral biology” from Prof. Robert Sapolsky (at Stanford around 2014). The thing I liked best about it was that it took at least ten different scientific disciplines, from bio-chemistry to ethology, as lenses from which the mystery of human behavior could be at least predicted if not well understood. Tellingly, microeconomics by way of game theory was one of the frameworks covered in that class. Whenever organisms interact, economics is happening. I am not saying that economics is all truth, nor am I claiming that no one discipline can provide satisfactory answers. Economics, applied correctly and withing its scope, can help us move through the world with impact, and that is what I hope to share and improve.

There is a lot of discussion about economics, the economy, and the word strategy in our modern culture and media. My education so far says much of that discussion is misleading, wrong, boring, or poorly explained. To fulfil my ambition to be a part of the solution, I will share my understanding of economics, how it relates to current events, and hopefully get a little smarter along the way so I can contribute a little better to my community. As a voter, a worker, and a neighbor, I believe the topics I will post about here are important to understand to make decisions that leave this world a little better than I found it. I believe progress is possible – for you, for me, and for my future nieces and nephews.

Who am I?

(in song) 24601!!!

I am an engineer by training and nature. I am that guy who actually uses the Pythagorean theorem (and all the other stuff the internet says was useless about high school math class) on a regular basis. I have actually referenced each of my textbooks from college in some professional capacity, from history of China to compressible fluid dynamics. I am a nerd with enough luck to get by with my limited social graces. I am a gamer, a lover of puzzles, and a game master (GM) for dungeons and dragons (DnD). It should be no shock that I see economics and game theory touching almost everything I do.

I put great stock in using science to understand and predict the world around me. My life is better for it. First principles thinking (as scientific thinking is more often called) enables me to be less frightened and more effective as I navigate life. I know how get stains out of my shirts, how best to manage my acid reflux, and how to spot a perpetual motion machine scam because of my education in science.

What I don’t know is why grocery prices seem to only ever go up, why insurance companies are leaving Florida rather than negotiating higher rates, or why electricity prices change hour to hour but natural gas prices almost never change. My hypothesis is that for these human behaviors (and yes human actions are causing these phenomena) economics is a good lens we can use to predict it.

Economics is a social science, which means that we bring as much of the scientific method as we can to it while recognizing that we often must switch the convenient designed experiments of physics labs for the unwieldy and sloppy natural experiments of the real world. This stuff is fascinating and infuriating in equal parts because it eludes our ability to examine it as we would like to. But as my favorite lab technician used to often say, “that hasn’t stopped us before.”

Economics and physics are kind of like a bike – it is only as useful your ability to ride.

I believe that economics can be leveraged to explain how human transactions work similarly to physics. Remember, physics is not the study of how the universe actually works but rather how we model our observations about the universe in the hopes of making useful predictions. Similarly, economics is a study of models for human interactions, not the omniscient truth of how humans interact. I don’t intend to explain all human behavior, but to the extent that I believe economics provides a useful way to explore important questions and take useful action, I will do my best to share what I learn.

Physics and economics are very similar – including that scale and scope change the models we find useful. Where physics has models for hypothetical perfectly elastic collisions, economics has the simplistic market models of Adam Smith and Milton Friedman. Where physics has Boltzmann’s statistical mechanics, economics has econometrics (Samuelson and Frisch to name two notable pioneers). Where physics has quantum mechanics, economics has behavior economics (Kahneman, Tversky, and Simon). All of these ideas are built upon assumptions that may or may not be true in any given real-world application. It is our job to select the right tool for the job, not to blame the hammer when the situation requires a rivet rather than a nail. I intend to convince you it is wrong to discard economics outright when one economist says something wrong-headed or one economics tool doesn’t match reality (looking at you Jon Stewart, whom I adore), that progress is real, and that better ideas can take emerge to replace imperfect ones. In any case, that is what I believe, and it’s the premise that guides my journey forwards.

Also like physics, economics starts simply and becomes mind-numbingly complex. This stuff is hard, but we can learn and apply it! I hope to explain what I learn simply, with attention to nuance and preferably without losing you along the way. Thanks for joining me on this journey.