Thursday, August 27, 2015

The Economists' Disease

Before you read on, please watch this.

As you watched through the video, I would guess that you were thinking about the beauty of nature, diversity,  sustainability, environmental awareness and so on. If I am right in your case, then you are likely not an economist, but for sure you have a beautiful heart.

If you are one of us, a gang of people burdened by a "rational brain" to the point of it being in fact an affliction, you would have not seen the beauty you just saw; the birds and the rabbits and the regrowth of willows and the less-meandering river. You would have not seen the colors and the hues as your brain connected the dots from the reintroduction of the wolves to the changing of the river.

Instead, you would have seen a multiple regression model, with predictor variables and correlation coefficients. You would have thought, "hmmm, what tests are applicable: multicollinearity, heteroscedasticity  and/or autocorrelation? Will the values of x's be true blue unbiased estimates? Do I just look at the residual plots or perform the White Test or the Goldfeld-Quandt Test?" You would be yearning, longing, thirsting, aspiring for a data set, both time-series and cross-section. You would be fumbling for what dummy variables can be used. And after all the number-crunching you would have came up with a thought: "It makes me wonder, what it we introduce dingoes and not wolves?"

Yes, we kind of always spoil it, even in the case of love and beauty.

And that is why I call it an affliction.