Quote of the Day

by JS

A meta-lesson: Microeconomics ain’t easy, and don’t let a regression–or division by a baseline–be a substitute for clear thought. It’s a classic error to analyze a decision as if it were a one-time choice, without recognizing the underlying incentives that make the situation come up repeatedly. It’s disappointing to see Levitt make this mistake and then see him double down and defend his error.

I have a problem with the desire of certain economists to articulate simple models that lead to counter-intuitive results and then argue that our intuition is wrong. Well, sometimes it is, but often it’s not and the model is too simple or the assumptions are incorrect. It’s nice to see someone as notable as Andrew Gelman making a variant (and more specific version) of this same point.

The problematic assumption that Gelman highlights is something that seems to happen over and over again.