How does this notion of partial preferences differ from saying “preferences are determined by a causal net”? I.e., the y’s would be the direct causal parents of a decision, and the z’s everything else.
Economists tend to view the business cycle as one of the main stylized facts which any theory must account for, rather than a principle in itself.
In terms of statistical evidence, market price movements are definitely not a vanilla random walk—random walks don’t have long tails unless you add something else into the theory. The usual baseline model is a random walk in which the variance is also governed by a random walk; a quant trading shop will augment this with occasional jumps and a few small terms to account for higher moments of the distribution. And even that is just the baseline to reasonably model a single asset—modelling multiple assets is far more complicated, since they usually become more correlated during a crash (another phenomenon which wouldn’t happen in a vanilla random walk). If you want to learn more about this stuff, look for a mathematical finance class.
Getting back to the economics side, every major class of macroeconomic theories has an answer to the question “What the heck is up with these business cycles? Why do markets sometimes crash way harder than they should with random walks?” Real business cycle (RBC) theory posits that they’re the result of shocks to the economy, e.g. hurricanes or wars. Market monetarism attributes crashes to tight money, as measured by NGDP. Keynesianism focuses on variation in aggregate demand. Monetarism focuses on variation in the money supply and/or money velocity. Etc, etc. If you want to see the fancy stuff, pick up a book on “recursive macroeconomic theory”.
But to the degree that the business cycle is a separate understandable phenomenon, can’t investors use that understanding to place bets which make them money while dampening the effect?
This is part of what the various theories try to explain. Some require irrationality in order for business cycles to exist—usually in the form of “sticky wages”, meaning that people don’t like wage cuts even if the alternative is getting fired and accepting lower pay elsewhere. In this case, traders can’t necessarily counterbalance the whole effect, no matter how clever they are—so markets will crash as soon as the traders know that a sticky wage problem is on the horizon. On the other hand, RBC explains (some) business cycles without any irrationality at all: if a big hurricane significantly lowers GDP this year, then society as a whole will eat into their savings to cover the costs—which means eating into the capital stock, and lowering GDP over the next few years. Traders can’t price that in until they know about the damage, at which point there’s a market crash.
“From Personal to Prison Gangs” is my main foundation here. I say real-world coordination problems “usually” look like this, because these are the kinds of problems we’d expect to increase over time, based on the ideas in that previous post.
That said, Personal to Prison Gangs attributes both the information problems and the trust problems to the same root cause: I interact with a larger number of people, with fewer interactions per person. On the one hand, fewer iterations means less penalty for “defectors”, and common knowledge of this fact means less trust. On the other hand, more people + fewer interactions per person means both less time and less mental resources to customize my interaction with each individual person. Thus, in a large company, people are forced to rely more heavily on job titles—and in a larger society, people are forced to rely more heavily on identities more generally.
All the examples listed in the OP are the sorts of things you’d expect in a world with more people, more specialization, and fewer interactions between any given pair. (In some cases, this means zero interactions between a pair which would really benefit from interacting, as in several of the examples.)
I don’t disagree that alignment & trust have a role here. But I do think that the large majority of real-world coordination problems could be solved by sticking the right two or three people in a room and just letting them talk for a full day. And in most cases, I think the relevant people would actually like to talk! The problem is finding the right two or three people and building that communication channel.
Is “shilling point” some new thing I’ve never heard of, or is this just another spelling of “Schelling point”? I assume the latter, but it sounds like a name someone would come up with for a concept similar-to-but-slightly-different-from a Schelling point.
I looked through Tabarrok’s book, and my general impression is:
He does a decent job going through the education data. (At least, he finds the same stuff I did when I went through the data a few years ago.)
He totally whiffs on healthcare data. In particular, I saw no mention of demographic shifts, which are far and away the biggest driver of growth in US healthcare spending.
He then takes a hard left turn and goes off talking about the Baumol effect, without grounding it very well in the data. He gives a bunch of qualitative arguments that things look consistent with Baumol, but never makes the quantitative arguments that Baumol explains all the growth, and never properly rules out alternative hypotheses.
A good example is on page 50: “it is evident that despite higher costs Americans have chosen to buy more healthcare output over time. Once again, this is consistent with the Baumol effect but inconsistent with a purely cost-driven explanation for rising prices.” It’s also consistent with the demand curve shifting up over time, and Baumol having nothing to do with it. Which is exactly what we’d expect in an aging population.
He does do a decent job ruling out “purely cost-driven explanations” as an alternative hypothesis, but that does not imply Baumol.
Great question. The setup here assumes zero interest rates—in particular, I’m implicitly allowing borrowing without interest via short sales (real-world short sales charge interest). Once we allow for nonzero interest, there’s a rate charged to borrow, and the price of each asset is its discounted expected value rather than just expected value. That’s one of several modifications needed in order to use this theorem in real-world finance. (The same applies to the usual presentation of the Dutch Book arguments, and the same modification is possible.)
We’re not actually talking about the VNM formalism here. That’s why the “in the absence of uncertainty” part is important.
We have a finite set of world-states and preferences over those world-states. We do not care about preferences over random mixtures of world-states, we don’t even have a notion of random mixtures, just the deterministic states themselves. We want a utility function which encodes our preferences over those deterministic world-states.
In the absence of uncertainty, we don’t actually need the continuity assumption or the independence assumption for anything. They don’t even make sense; we need a notion of random mixtures just to state those assumptions. VNM utility needs those because it’s trying to get expected utility maximization right out the door. But we’re not starting from VNM utility, we’re starting from deterministic utility.
Whether we need completeness or not is more debatable. It depends on how we’re interpreting missing preferences. If we interpret missing preferences as “I don’t know”, then it seems natural to allow the utility function to give any possible preference for that pair. In that case, lack of completeness may mean our utility function isn’t unique, but it won’t prevent a utility function from existing.
It’s exactly the same in Eliezer’s post. His circular preferences argument comes before random outcomes are even introduced. There’s no notion of randomness at that point, no notion of lotteries, so he’s not talking about VNM utility. The circular preferences argument is not the VNM utility theorem, it is a separate thing which makes a different claim under weaker assumptions. That does not make it incorrect.
Right, we need to use experiments to figure out that Y is needed in the first place. That’s the “figuring out the structure” part—figuring out what the relevant gears are and how they fit together.
Now, experiments also inherently involve some kind of observation. You make a change, then observe the effect of that change. In some cases, the observation built into the experiment may be enough to figure out the system’s state—that’s what happens in your small doses idea. But this is a very indirect (and likely error-prone) way of figuring out that Y is high in our rat strain.
I’ve tried to minimize the technical prerequisites for this post, but it’s still very abstract and mathy. If you understand it and can write well, please consider writing up a more human-readable version which builds around a concrete example or two rather than keeping everything abstract. Alternatively, if you are Eliezer Yudkowsky, consider integrating the FTAP into that great intro I linked above.
I’ll probably get around to writing a more concrete version of this post eventually, but I wanted to get the idea out there, since hardly anyone seems to know about it.
Yeah, that gets into the technical details brushed under the rug. There’s two relevant types of equations governing the equilibrium value of PP:
The thermodynamic equilibrium equation, which fixes a product/ratio of the concentrations of the 3 species (linear in log-concentrations)
The stoichiometric constraints, which fix a couple linear combinations of the concentrations of the 3 species (linear in concentrations)
I’m effectively assuming that the thermodynamics favor X + Y over PP, so that the stoichiometric constraints can be approximated as “X and Y concentrations are each fixed”—there’s never enough PP produced to significantly decrease them. That way, we can ignore the stoichiometric limit (so long as X and Y are abundant), and just pay attention to the equilibrium equation. Then log-concentration of PP is a positive linear function of log-concentrations of X and Y, so everything is easy to think about. Increasing/decreasing either X or Y by enough can always shift the equilibrium PP above/below the threshold.
The problem with separate reactions (X → PP and Y → PP) is that, if Y is high, then increasing or decreasing X does nothing—PP will always be above threshold regardless of the X level. It’s an or-gate, rather than a linear function. Similarly, if PP were mainly determined by stoichiometric limits in my original reactions, we’d have an and-gate.
I definitely think it’s fine for the short term. I don’t want to push premature perfectionism here—this will not make the site worse than it is, and may make it better.
I wouldn’t want it to go up and then forget about it, and have several years of newcomers dropping off because the entry point didn’t grab them. (I’m less concerned about perfecting a page whose purpose is not entry-point.) That said, if I’m ever really unhappy about it, I can always just draft something up myself and then propose it to you guys.
As written, it feels like this is trying to mix some aspects of a mission statement and some aspects of an entry point, and doing neither one very well. A lot of it comes out sounding like bland generispeak—not all of it, but a lot. It would be easy to make it more engaging if that’s what we’re going for, or more informative if that’s the objective, etc—it needs some goal that says what readers are meant to get out of it, and then more focus on achieving that goal.
(Sorry if that sounds overly harsh. I’m viewing this thread as a round of editing, so critiquing it as a piece of writing seems right.)
A few other things rationality is not:
An aesthetic preference for square grids
Assertion of the superiority of Western culture
The belief that credentialed experts always know better
Abandoning your ethics/morals
Always defecting in the prisoners’ dilemma
I would guess that making it clear what we’re not talking about is more important to hooking new people than precisely defining rationality. Also, I would avoid using the word “truth” explicitly in the “what is rationality” section.
More generally, if the purpose of this page is be an entry point, I would front-load it with more hooks, examples, and links, and push less hook-y things toward the end. On a meta-level, if it’s going to serve as an entry point, then it’s also a key page to instrument with tracking, a/b test copy, and all that jazz. On the other hand, if the main purpose of the page is to serve as a mission statement or something along those lines, then parts explicitly aimed at newcomers could be dialed back, especially things like “What is rationality” or “Why should I care” that are addressed within the sequences.
I was reading The Biology of Aging. Several times, the author says something to the effect of “experiment beats observation, therefore the gold standard in aging research is to show that adding X accelerates aging and removing X slows it.” For many values of X, experimental manipulation definitely makes organisms live longer/shorter, but it’s not clear that X actually changes significantly during actual aging.
So in this instance, we don’t fully understand how the system works either, but a measurement of X could still tell us whether it’s relevant (based on whether it changes).
General notes, before I actually propose a solution:
A lot of proposals so far involve things like “use my education and predictive talents to achieve a high position in society”. Given how quickly smart people with amazing predictive talents walk into the White House today, combined with the political talents of LWers, I doubt that has any hope of working.
A lot of proposals involve introducing technologies like mills, cannon, etc which would be massive capital outlays by the standards of the time. You’d need to already have an empire’s worth of resources on hand, and early-modern tech probably still wouldn’t be enough to make the economy more efficient right away.
In terms of real economic value, probably the largest chunk of potential is corn and potatoes—both are New World plants, corn has caloric yield an order of magnitude higher than wheat (in terms of both land and labor requirements), and potatoes don’t get burned when an army comes by. If I could manage a round trip to the New World, bringing back those crops would be huge—although that still leaves the question of how to capture the value. Conversely, it would be hard for any ancient economy to accumulate capital—and thus begin the trek to automation—without higher-yield crops. Unfortunately, a New World round-trip would itself take a massive capital outlay.
Thinking about low-capital-investment tech which could be implemented without advanced manufacturing...
RSA encryption & signing
logarithms & the slide rule
sextant & compass & associated navigation techniques
18th-century design of chimneys and stoves (before which they were impractical for heating)
demonstration-scale telegraph (two magnets and some copper wire would suffice for material)
maybe very rudimentary radio (magnets, copper wire and copper foil suffice in principle)
aniline dyes—relatively easy once you know to look for them, and would be worth a fortune in ancient Rome
incremental metallurgical improvements
… I’m sure there’s more to think of here, but that should be enough for a viable solution.
Tech is the big edge, obviously. Moderns don’t have a major edge in politics or war (absent the tech needed for modern military doctrine). Economically, most tech involves large capital outlays, and value capture is difficult when you’re not already emperor. Given all that, general shape of solution I want is:
1. accumulate some initial resources using a low-barrier technological advantage
2. bring together a relatively small group of people (company-sized), in a remote location, for rapid vertical development of higher tech—not necessarily all the way to modernity, but enough to decisively swing the balance in a war
3. Go shopping for allies who don’t like the Romans
Most of the effort is in step 2 - our relative advantage is tech, so our strategy puts most of the work in tech.
Let’s flesh all that out.
Aniline dyes are the hot item for step 1 - they don’t require advanced manufacturing or materials, capital investment required is relatively low, and given that ancient Rome was already hemorrhaging gold to buy Chinese silk, they’d definitely sell like hotcakes. Care must be taken to make sure we paid for the dyes rather than arrested or enslaved somehow, but that’s probably tractable.
Round trip to the Americas is the next big step—we can’t support people off the trade grid without high-yield crops, and fertilizer alone won’t get us there. Outfitting a long-range ship should be viable for a dye-lord, and modern knowledge of sailing and the trade winds should help out. Ancient seafarers did not like leaving sight of land, but that’s the kind of problem which can be solved by throwing money at it—and we’d want to train them in modern sailing anyway. Pack to trade in both directions, the voyage should be quite profitable, and we come back with all-important corn and potatoes.
At this point, it’s viable to hire a couple hundred people with varying specialties and move to a remote patch of land somewhere on the edge of the empire where nobody will pay much attention, with running water and wood. Coastal would be useful, but not if it increases visibility too much. Get the corn and potatoes growing, and it should be viable to support the whole crowd with a fairly small agricultural base.
Now we have the base to make some capital investments while safely capturing their value, without fear of seizure. Let’s say we have half of our two hundred people farming (comparable ratio to early modern England); most of the remaining hundred are artisans—smiths, carpenters, etc. They’ll build most of our capital assets. We’ll import most raw materials, like wool and metal ore, plus some processed material like sailcloth (until we can produce it ourselves), necessaries like salt, and whatever luxuries our team can enjoy without attracting undue attention.
Early capital assets are mainly ships and water mills—the former for trade, the latter for automation. Note that overland trade is not a high value prop—ships in any era have capacity multiple orders of magnitude higher than wagons/trucks, and premodern roads were pretty bad anyhow. The ships will sail the trade routes, and should provide ample profit for anything we need to buy. (We won’t be able to keep our navigation secrets under wraps forever, but they should last long enough—ancient sailors’ fear of the open sea works in our favor here.)
With plenty of wood and artisans, the mills can provide power for whatever light industry we want, but that industry itself will probably not be profitable—labor is very cheap relative to capital in the premodern world. The point of the mills is to power anything we want to keep away from prying eyes, in our remote corner of the world. Metallurgy will be the first and biggest priority—we can import ore, but the secrets of steel need to stay local.
The precision manufacturing feedback loop: build more precise tools, and those let us build even more precise tools. High-quality materials are a limiting factor for that loop, thus the importance of metallurgy.
Building a dynamo shouldn’t be too hard, once we’ve imported magnets. We’ll want to produce crap-tons of copper wire for anything electric—that shouldn’t present any difficulties. Electricity would mainly be useful for chemical processes, e.g. splitting water—communication wouldn’t matter much in our tiny remote town, and we don’t want any secrets getting out. We’d need a dam to get useful power production, but dam-building isn’t too hard.
Hand-cranked radios are still a maybe, but they’d be pretty cool and a huge military advantage.
Haber-Bosch process is the next big jump: with a source of ammonia, both chemical fertilizer and explosives become viable. (We could go the old-fashioned route for explosives, but Rule of Cool.) Against the famed legion phalanxes, we’re looking at tight-packed targets—ideal for things that go boom.
At this point, we’d probably have the pieces to move on Rome. A decent-size trade fleet provides both support infrastructure and mobility for any troops we ally with, and a trade business provides connections throughout the empire and surrounding areas. Explosives would, honestly, be as much about marketing ourselves to potential allies as about actually winning fights, but they’d be awesome marketing. Encryption and (maybe) primitive radios would be a less flashy but more practical military advantage, if it actually came to a fight. All that’s left is to find someone with a reasonably-sized military who’s more interested in beating the Romans than in taking their stuff, and strike a deal.
Major barrier right at the start: buying a little chunk of land is one thing, but a bunch of the stuff in step 2 will require very large capital outlays by the standards of the time—especially the mill.
There’s a reason automation didn’t catch on before the industrial revolution: capital was scarce and peasants were abundant. It wouldn’t be easy to actually produce crops more cost-effectively than peasant labor, when the peasant labor is absurdly cheap. Things like fertilizer could help, but even that will run into problems—people don’t like poop on their food, and chemical fertilizer/insecticide requires relatively complicated manufacturing facilities.