Good Entropy

From Megan McCardle

In a discussion of the causes of the Financial Crisis:

Confirmation bias: The tendency to look for data that confirms your theory, rather than data that falsifies it. Yes, we all know how this works in politics, but it’s a much broader problem. People will repeatedly devise tests that give positive proofs of their theories, but much less often devise tests to falsify them.

And this harmonious chord from Hamming referencing Darwin:

Darwin writes in his autobiography that he found it necessary to write down every piece of evidence which appeared to contradict his beliefs because otherwise they would disappear from his mind.

In the debate over the economics of global warming the correct discount rate to apply to future generations is a key variable with those arguing that we should do something now, implicitly (and explicitly) arguing for a low discount rate. But if we count future generations highly we ought also to be in favor of reforming social security. Investing social security in the stock market “royally screws” current retirees but increases the savings rate which will be benefit future generations. Thus, a low discount rate ought to weigh in favor of doing something about global warming and investing social security funds in the stock market. Not many people come out consistent on these grounds (I think Brad DeLong is one of the few.) I know, I don’t but Landsburg has got me thinking.

Full text at marignal revolution

Is Wal-Mart Good for the American Working Class? – One last response, I promise. By Barbara Ehrenreich and Jason Furman

Asymmetrical Information: Reihan Salam says it all

I read “Nickeled and Dimed”, and was impressed by its detailed description of life at the bottom . . . and completely unimpressed by its economic illiteracy, paternalistic snobbery about the people she worked with, disdain for her customers, bizarre fantasies about the motives of middle-class consumers, and her complete and total lack of even a vestigial sense of humour. Her dialogue with Jason Furman has not improved any of these opinions.