Seeing as it has remained obscure to me for some time now, what are the main differences between the Austrian and Behavioral Economics? Or, more specifically, between Praxeology and its correspondent in the enemy camp (i.e. behavioral school).
mickanomics: nirgrahamUK:so clearly he prefered the state of affairs he thought would follow from his buying the ticket to what he thought would follow from not buying the ticket. Lets do an imaginary interview with a guy who has just bought a lottery ticket but before the result is known... Q: "Do you expect to win the lottery?" A: "No. Obviously its possible... but I don't expect to win" Q: "What will be the consequence of you not winning the lottery?" A: "I will have lost the cost of the ticket" Q: "How will your 'state of affairs' be after finding out you've not won, compared to how you were before buying the ticket?". A: "I will be less happy". Q: "Let me get this straight, you have taken an action for which you forecast that your state of affairs after the action is less good than before your action?" A: "Yes." BTW, this interview was conducted with a "desperate man" who is not getting any thrill from the gambling process.
nirgrahamUK:so clearly he prefered the state of affairs he thought would follow from his buying the ticket to what he thought would follow from not buying the ticket.
Lets do an imaginary interview with a guy who has just bought a lottery ticket but before the result is known...
Q: "Do you expect to win the lottery?"
A: "No. Obviously its possible... but I don't expect to win"
Q: "What will be the consequence of you not winning the lottery?"
A: "I will have lost the cost of the ticket"
Q: "How will your 'state of affairs' be after finding out you've not won, compared to how you were before buying the ticket?".
A: "I will be less happy".
Q: "Let me get this straight, you have taken an action for which you forecast that your state of affairs after the action is less good than before your action?"
A: "Yes."
BTW, this interview was conducted with a "desperate man" who is not getting any thrill from the gambling process.
The whole interview is mute and irrelevant. Your first question should have been.
Q: Why did you buy the lottery ticket?
A: Because I wanted to.
End of discussion. Valuation is subjective. Your trying to pass judgement on another mans subjective valuation process. Unless your intentions are to make everyone think and value things as you do you cannot do this without you yourself sounding irrational. It's like making everyone only like/eat chocolate and everyone's favorite color only being red.
Statism is a religion.
asusenior:I don't believe the study of economics, particularly macroeconomics, is complete without the understanding of human mass psychology.
asusenior:I don't think bubbles and manias can ever be stopped, because it is against human nature to do so.
There really is no excuse to have such opinions of economics unless in the state of ignorance. Before having an opinion you must first doing some actual reading on Praxeology and ABCT first.
This applies to Mickanomics as well. No Offense my friend, but it's like me arguing against physicists about the nature of physics.
Allow me to use Rothbard's famous quote.
Murry Rothbard: “It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”
“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”
Much of the expansion of money supply does not even come from the federal reserve. In fact they've expanded the money supply very little until last fall. Much of the expansion of money (actually credit) came from private banks themselves. So explain that one.
lets face it asusenior, you have no economic understanding of the causes of the trade cycle, since the best you can do is appeal to 'mass psychology', which is 'everyone went nuts'.
your definitions are circular. People unconsciously become participants in bubbles you say.
and what formed the bubble that Mr Smith unconsciously then becomes participant in? well, it was what Mr Jones unconsciously participated in? then i will ask you what formed the bubble that Mr Jones unconsciously participated in... and we will be here all night.
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
I actually meant to reply to someone else's post.
asusenior:Much of the expansion of money supply does not even come from the federal reserve. In fact they've expanded the money supply very little until last fall. Much of the expansion of money (actually credit) came from private banks themselves. So explain that one.
the fed are complicit in the maintenance of the fiat money regime, they set reserve ratio's which means private banks necessarily multiply money that the fed injects in, and they have the FDIC and other things to put all the private banks in moral hazard etc.
is that a good start?
Sorry, I couldn't delete my last post. I meant to reply to this:
mickanomics:I see you are avoiding the question... obviously the price of any individual class of goods can rise for a very wide variety of reasons other than money supply growth.
No it can't. You're mixing paradigms here. If money is stable, a good can only rise if others fall. That is not a bubble, and it is not a reflection of what has gone on now, which you have based your rational exuberance post on. Your rational exuberance post is analyzing a period where the money supply was not stable, and so, we know that when the money supply inflates, bubbles form due to a mis-allocation of capital.
mickanomics:I could go on and on....
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Much of the expansion of money supply did not even come from the federal reserve. Much of the expansion of the money supply came from private banks themselves. So explain that one.
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