Sunday, 17 January 2016

The Best Analogy I've Seen Explaining Why Economists 'Get It'

Tyler Cowen has perhaps the best analogy I know to illustrate how it is that economists understand the world so much better than anyone else. He refers to A de Groot’s famous experiment in which he showed several chess masters and chess novices images of chess positions for a few seconds and asked the players to reconstruct the positions from memory. The chess experts made relatively few mistakes, whereas the novices made plenty. Then he repeated the experiment but this time he showed them random positions not found in chess, and this time the chess experts performed no better than the chess novices, demonstrating that the expert advantage appears to come from familiarity with actual chess positions, not more efficient memory recall.
Tyler Cowen believes this is a good analogy for economic understanding (and I think he's onto something). The 'recognition chunks' related to chess configurations are similar to those of economics in terms of patterns of logic and behaviour. Economics involves understanding those patterns in ways that inform us about good and bad policies, sound and unsound arguments, predictions of human behaviour, and so on. It is one of the mind's most reliable heuristics.
But, of course, that's only the first part of it - understanding it is of little use to others if you cannot articulate it to others in ways they can understand. That's what I try to do on this blog - I use what I call the 'Teenager on an envelope' approach, and it comes in two parts.
In the first place, if you're going to explain something, make sure you have it nailed in its most simplistic form, such that you could easily summarise it on the back of an envelope. If you can't truncate it that much, the chances are you need to do some more work on it. In the second place, once you've written it on an envelope, make sure it is clear and simple enough so that a teenager not apprised in the subject can understand it, at least in its basic form. If both those conditions are met, your preposition should make sense. Then it should be ready for public consumption.
Naturally, the key is to master the habit of doing this without an envelope or a teenager - because when you have your next bright idea you can't guarantee that either of those things will be in sight.