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Comments on: Causation is just a mirage… http://www.tvhe.co.nz/2009/03/07/causation-is-just-a-mirage/ The Visible Hand in Economics Sun, 08 Mar 2009 04:46:33 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Matt Nolan http://www.tvhe.co.nz/2009/03/07/causation-is-just-a-mirage/#comment-17860 Sun, 08 Mar 2009 04:46:33 +0000 http://www.tvhe.co.nz/?p=3109#comment-17860 @Paul Walker

Hi Paul,

Even Vernon Smith himself felt that current laboratory experiments are severly constrained insofar as what type of empirical evidence they provide.

He is confident that using experiments has shown that individuals to act in an “unconsiously rational” way (http://www.tvhe.co.nz/2008/11/01/quote-6-vernon-smith-unconscious-optimisation/). However, we already anticipate agents that act rationally in economics – but we still face the correlation vs causation issue because there may be “multiple ways” the agents may act rationally, or multiple types of rational expectations that agents may hold.

Laboratory experiments are great ways of testing our priors – but even with this the issue of correlation vs causation remains difficult.

]]> By: Matt Nolan http://www.tvhe.co.nz/2009/03/07/causation-is-just-a-mirage/#comment-17859 Sun, 08 Mar 2009 04:39:27 +0000 http://www.tvhe.co.nz/?p=3109#comment-17859 Hehe XKCD 😀

]]> By: rauparaha http://www.tvhe.co.nz/2009/03/07/causation-is-just-a-mirage/#comment-17858 Sun, 08 Mar 2009 02:22:10 +0000 http://www.tvhe.co.nz/?p=3109#comment-17858 @Paul Walker
Paul, thanks for your comment. I am aware of the field of experimental economics. However, as I’m sure you know, its results are often accused of being inapplicable to the ‘real world’. Furthermore, experimental economics hasn’t shed much light on the major problems in macroeconomics which are usually the focus of causation/correlation debates lampooned in this cartoon.

]]> By: Paul Walker http://www.tvhe.co.nz/2009/03/07/causation-is-just-a-mirage/#comment-17857 Sun, 08 Mar 2009 01:21:36 +0000 http://www.tvhe.co.nz/?p=3109#comment-17857 “If only economists could do randomised experiments like real scientists.”

You may want to check out the journal “Experimental Economics” and note that Vernon L. Smith got the Nobel Prize “for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms”.

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