How precision-loving economists make "rigor distortis" errors

Here's the psychology that explains why many economists prefer to be narrowly right yet broadly wrong (they suffer from professional "rigor distortis").

Illustration by Julia Suits, author of The Extraordinary Catalog of Peculiar Inventions, and The New Yorker cartoonist.
Illustration by Julia Suits, author of The Extraordinary Catalog of Peculiar Inventions, and The New Yorker cartoonist.

1. Isn’t it odd that real economies often defy economists? Has post-financial-crisis criticism made us savvier consumers of economic ideas? Let’s consider the precise professional habits that generate “cry wolf”, “what wolf?", and “rigor distortis” errors in many economists.

2. A rigor-loving psychology, paradoxically, predisposes many economists to prefer being narrowly right yet broadly wrong. Their precision-seeking methods rigorously misrepresent reality (“rigor distortis”).

3. Cry-wolf “economists have had another terrible year,” writes right-wing journalist Jeremy Warner. A “substantial majority of economists” predicted “market mayhem” after Trump’s election. The IMF expected a “profound shock to global confidence” after the Brexit vote. Neither happened.

4. Meanwhile a “what wolf?” free-markets-benefit-all faction continues preaching markets-know-best doctrines, despite decades of contrary data (unshared gains) and many disastrous market “decisions.”  

5. How are such smart experts seduced into “rigor distortis”? Their approved methods (“methodological monism”) permit only precise, rigorous logic which excludes factors lacking data (+ equation filtering). And they’re predisposed to resist unavoidably imprecise reality-reinjecting adjustments (McNamara Fallacy).

6. “All-else-equal” thinking also worsens these rigorous-but-wrong habits. In reality, many factors shift simultaneously. And incentives often cut both ways—do higher taxes mean people work less, or more, to maintain prior spending?

7. Fans of “self-organizing” markets often ignore that self-organization needn’t be benign. Misaligned and bad actor incentives abound.

8. For instance, pervasive incentive flaws arise because both sides of voluntary transactions “gain” from cost exclusions (”externalities”). However repulsive rigor-lovers find unavoidably imprecise externality adjustments, reality has precisely zero unaffected markets (all offerings consume energy… pollution externalities always > 0).

9. Indeed, there are no “unfailed” markets in reality (see Brad Delong’s unrealistic caveats).

10. The vast academic literature on externalities is used like “holy water” (Garrett Hardin), sprinkled then ignored. Shouldn’t noneconomists judge economic ideas as enacted (however selectively)?

11. A dysfunctional ethics-outsourced-to-markets game gives executives excuses to cherry-pick economic ideas. While “what-wolf?” economists ignore how routinely greed-guided businesses subvert market doctrines (e.g., economists mostly just assume away “pricing power”).

12. Reality-denying methods led Andrew Gelman to compare economics to Freudianism. Both are explain-all, know-the-answer-in-advance frameworks convincing to rich clients.

13. Another Freud-like habit of economists is to project their love of incentive optimization onto others. Many real humans find such calculated decisions stressful, and avoid them. Why organize life around a rare sort of rationality (rare even among economists)?

14. Economics’ defenders trumpet their (shockingly recent) embrace of data, but as Warner notes, descriptive data is used in models that presume mechanistic responses, ill-suited to social systems.

15. Always ask how economists adjust for known exclusions. And why given models presume causal stability. Unless they offer practical answers and adjustments for unmodeled effects, you can ignore them, just like real economies do.

16. Rationalist economics is almost self-refuting. Is it rational to continue paying experts whose models assume rationality, yet often fail to match reality?

17. Descriptive economics is useful (see Noah Smith’s minimum-wage research summary), but prescriptive, often reality-denying, market faith is far from irrational.



Illustration by Julia Suits, author of The Extraordinary Catalog of Peculiar Inventions, and The New Yorker cartoonist.


What early US presidents looked like, according to AI-generated images

"Deepfakes" and "cheap fakes" are becoming strikingly convincing — even ones generated on freely available apps.

Abraham Lincoln, George Washington

Magdalene Visaggio via Twitter
Technology & Innovation
  • A writer named Magdalene Visaggio recently used FaceApp and Airbrush to generate convincing portraits of early U.S. presidents.
  • "Deepfake" technology has improved drastically in recent years, and some countries are already experiencing how it can weaponized for political purposes.
  • It's currently unknown whether it'll be possible to develop technology that can quickly and accurately determine whether a given video is real or fake.
Keep reading Show less

Catacombs of Paris: The city of darkness finds its new raison d'être

Ancient corridors below the French capital have served as its ossuary, playground, brewery, and perhaps soon, air conditioning.

Excerpt from a 19th century map of the Paris Catacombs, showing the labyrinthine layout underground (in color) beneath the straight-lined structures on the surface (in grey).

Credit: Inspection Générale des Carrières, 1857 / Public domain
Strange Maps
  • People have been digging up limestone and gypsum from below Paris since Roman times.
  • They left behind a vast network of corridors and galleries, since reused for many purposes — most famously, the Catacombs.
  • Soon, the ancient labyrinth may find a new lease of life, providing a sustainable form of air conditioning.
Keep reading Show less

Baby's first poop predicts risk of allergies

Meconium contains a wealth of information.

Surprising Science
  • A new study finds that the contents of an infants' first stool, known as meconium, can predict if they'll develop allergies with a high degree of accuracy.
  • A metabolically diverse meconium, which indicates the initial food source for the gut microbiota, is associated with fewer allergies.
  • The research hints at possible early interventions to prevent or treat allergies just after birth.
Keep reading Show less
Mind & Brain

Big think: Will AI ever achieve true understanding?

If you ask your maps app to find "restaurants that aren't McDonald's," you won't like the result.