Thursday, February 11, 2016

Why Is Macro So Hard? The Parallels Between Cancer Advice and Macroeconomic Policy

People get buggy about cancer. They get the same way about macroeconomics.

It’s bizarre.

Check out Harriet Hall’s review of the book entitled This Book Won’t Cure Your Cancer, by Gideon Burrows. Here’s where she’s going:

Gideon Burrows has an inoperable brain cancer that is slow growing but is inevitably going to kill him. He has written a remarkable book about his experience … The gradually unfolding episodes of his personal story are interwoven with what amounts to a primer on how to think critically about science-based medicine vs. alternative treatments. I can’t recommend this book highly enough.

From there, the similarities to macroeconomics blossom. People are often desparate regarding cancer — it turns out that some of the pathologies described match up pretty well with common but f***ed up views of macroeconomics.

Here’s what Hall says about what Burrows said:

Untrustworthy information

When people are diagnosed with cancer, they are vulnerable and desperate. They look for information and are likely to find cookbooks, miracle stories, alternative medicine, and “forbidden cancer cures.” Their friends bombard them with advice. Most of those sources “offer hope to people when they need it most, but have earned no right to do so.”

… Unwarranted extrapolations from single scientific studies and anecdotes, and he is blaming the victim by trying to establish a lifestyle cause … for which science has found no cause and which is likely due only to bad luck. … Instead of acknowledging that his methods hadn’t worked, he rationalized that he hadn’t followed his own advice carefully enough.

Now draw the parallel to macroeconomics.

I think it’s fair to say this election cycle that both Sanders and Trump are offering policy proposals that are the analog of alternative medicine, and forbidden cures.

And seemingly everyone gets macroeconomic advice from friends. As a professional macroeconmist, I can tell you it’s nothing short of astounding the extent to which people will not ask a macroeconomist what’s going on with the macroeconomy. I think they get answers they don’t like — it’s all about mood affiliation, and professionals try not to do that much.

Unwarraneted extrapolations? Near as I can figure that’s pretty much every politicians source for policy recommendations.

Blaming the victim? Isn’t that what Obama has done for the last 7 years to the financial industry … which was hit harder than most other industries during the Great Recession. Sanders is, of course, doubling down on that.

“Instead of acknowledging that his methods hadn’t worked, he rationalized that he hadn’t followed his own advice carefully enough”. In macroeconomics we call these people Keynesians.

Hall then quotes Burrows:

The cancer culture

Cancer is not a brave battle to fight … It is a puzzle to try to solve, something to try to keep at bay using the very best tools we have …

Think about how commonly battlefield metaphors are tossed out by politicians trying to address weak economies.

But the truth is, business cycles are puzzles that macroeconomists haven’t really figured out yet. Each one is different, and we don’t see very many of them.

Next up is the desparate search for conforming opinions:

When to stop looking for other opinions

Three different specialists give him the same prognosis. His cancer is inoperable. … Friends suggested he keep looking for a surgeon who would be willing to operate. What if he searched the world and found five doctors who wouldn’t operate and a sixth who would? Would it be rational to trust the sixth doctor’s opinion more than that of the other five? Of course not. He should trust him less.

… It is not reasonable to “try anything” if there is no evidence that “anything” works. People say it’s worth trying because there is no evidence that it doesn’t work. He spots the fallacy in that reasoning:

There are many millions of things that have not been proven to not cure cancer, but mostly because many millions of things have never been tried. That does not mean they are a potential cure, nor that they are sensible to pursue.

What if he proposed that blowing up 100 red balloons would cure cancer? Is that really any more ridiculous than coffee enemas? When does anything become something we should try …

He doesn’t blame people who go off in pursuit of a promised miracle cure. He understands their desperation and the comfort of having a hope to cling to. Rather, he blames those who offer that anything without a fair, accurate, and accountable foundation. The power and responsibility to advise about cancer treatment “should only be earned by results, proof, and accountability.”

Bryan Caplan of EconLog called this the Activist’s Fallacy.

Lynne Kiesling of Knowledge Problem has noted that it’s best that we “Don’t confuse activity with accomplishment.”

In my classes I discuss this problem in terms of the legacy media. They love to have two pundits with opposing views. But they never tell you if it was easy to find someone to support the one viewpoint (because it is common) and hard to find a crackpot to support the other one. Hall parallels this in another section:

The media … strive for “balance” and give alternative treatments more credit than they deserve. This is wrong-headed … The news serves to confuse rather than to inform

As to trying anything, the best example of this may be the “Cash for Clunkers’' program.

My parallel with Hall’s discussion of diet is more of a stretch:


Diet advice and cancer cookbooks and abound, but:

The most science has shown is that having a generally healthy diet and exercising regularly lowers our risk of getting cancer. It does not prevent cancer. It does not cure it.

Think about that while the economy expands: good policies lower our risk of recessions, the do not prevent recessions, or keep them from ever happening again.

Burrows wonders about our disposition:

Confronting rubbish

Is it rude or cruel to confront people who talk rubbish about cancer? If we don’t, are we allowing potentially more damage to be done just to avoid a personal feeling of discomfort? “How far does our reluctance to criticise mean that energy, passion and grief is channeled away from cancer cure research, not towards it?”

Let me try that on for size: Sanders fans — Bernie advocates wholesale prejudice against the minority working in the financial professions. This reeks of the caste system in India.

In class I note that a lot of what passes for government policy merely passes the we’ve-always-done-it-this-way tests. Here’s Hall quoting Burrows:

Ancient wisdom

Ancient practice is not always ancient wisdom…That something was being done in the earliest days of civilisation to cure illnesses should make us more wary of those treatments, not keener to try them for ourselves…progress means replacement of the old and ineffective …

How did that Rooseveltian stimulus package of 2009 work out for you? Sowell made a similar point about how Obamacare is actually an old-fashioned approach.

I emphasize for my students that macroeconomists are the first people to say we don’t know everything we should. With cancer, this is:


Proponents of alternative medicine love to criticize doctors, and it’s undeniable that there is a lot wrong with conventional medicine. The system is flawed. Individual doctors are not perfect; they miss diagnoses and make mistakes.

But if we exercise scepticism and doubt about medically trained doctors, oncology and conventional medicine, then we should subject alternative medicine to at least the same level of doubt and scrutiny. In fact, I would argue alternative medicine deserves far more doubt because it self-consciously puts itself outside conventional medicine that has been proven by time and experience to, mostly but not always, get it right.

Here I’ll return to Trump on the right, and Sanders on the left. We need more evidence from you two, not less.

A few times each semester, a student will bring me something they’ve found and are trying to muddle through. Almost never do they bring up something from a professional economist. Instead, they’ve found a crackpot. Same thing with cancer:

Who is an expert?

Self-declared “experts” write books. But it only takes two minutes on the Internet to demonstrate that there are experts in that field who question or disagree with them. Failure to reveal the controversy should make readers question whether anything else in the book is true.

I feel like The Amazing Randi sometimes as I try to gently debunk these sources for the students. It’s great that they’re interested, but how do I not kill that interest when what’s piqued their interest is junk? It’s rather sad actually: the kids who bring me nonsense in their 2000 level macroeconomics class almost never show up in the 3000 level macroeconomics elective.

In the end, I’m gobsmacked by the parallels here. But I really don’t know what to do about them.

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