Date: 2019-10-10
Ways to interpret
I don’t recall if I heard or read this example of hasty generalization: the story of a few blind people’s touching different parts of an elephant and their respective takes on what elephant is. While successfully didactic, the story could have approached the audiences in a more intuitive manner. This is because we perceive the world as one of those blind researchers, rather than as an observer of the above-mentioned experiment. So instead, let us pose the following questions from the opposite end.
When we observe a dot, how do we know if it is a dot, a sphere, or a cylinder? Or could it be something a lot more complex, for instance, a roundly shaped base of an intricately carved sculpture? Is it hollow? Is it made of wood? Gold? Or is it a reflection or an illusion?
As challenging as it sounds, the object might well be a very simple one: possibly just a ball. Though anti-climactic, things are as they are; many good researches lead to nothing much. So that is that.
What if the topic of interest were of very complicated nature, such as: global economy or financial markets? In the prior example, at least I had some assurance that I only had to consider three dimensions to observe the comprehensive exterior of the object (and four, if the changes over time were observed), but how many dimensions an intangible research topic must be observed from, anyways? Or can we make it tangible? Moreover, do I manage to effectively observe just one dimension, even?
While challenging, I am still hopeful that one can do a good analysis of global economy.
Surprise, surprise, economists took the most reasonable approach on this topic from long ago. Given the complexity, it makes sense to oversimplify by building models. I tend to think that the problems of economic models are not with the models themselves but with those (including myself) who do not know when and how to make good use of the models. That said, an all-weather model is also difficult to come across. So that is that.
Effective categorization is also very powerful. When research areas are well defined and compartmentalized, researchers can keep track of the topic much more efficiently. This is like how it is much easier to claim to have covered the world by counting all the continents rather than counting all the countries.
I find the following-oversimplified equation very useful in all human matters, including global macro.
Do = Want + Can
Sure, there are many who ‘do’ something even when they do not ‘want’ to do it, but when decided to abandon the traditional definitions and assumed that the actions justify the intention, like how economic ‘rationality’ is defined, this model really works. (Compare to the popularity and enthusiasm around behavioral economics, surprisingly little number of people seem to understand the definitional difference between colloquial one and the economic one.)
This probably does not work as well as before thanks to the algorithmic trades though, sian.
Well, living life as how I define the ‘want’ and ‘can’ factors is probably mentally healthier anyways. In any case, I am of the view that whatever one does, it would be better if the person acknowledged it as something he or she chose to do (among all available options), hence with full accountability. While it could appear harsh in some ways, I just think it may be better for the that person’s coping. (I do feel the pain of those who feel stuck, because I’m highly incompetent in some ways and so I feel stuck frequently. While personal feelings are difficult to measure on a relative basis, in terms of how each person perceive his or her problems, I would argue that they take their own pain very seriously: from a kindergartener who was dumped by a boy/girl-friend to a salaryman just fired, divorced, and bankrupted, standing on the bridge, pondering to jump or not.
What a convoluted digression and no conclusion.