Are You Living Mindfully or Mindlessly? | The Aspen Institute

Are You Living Mindfully or Mindlessly? | The Aspen Institute

Thomas Sargent 's 12 Economics Principles

Economics is organized common sense. Here is a short list of valuable lessons that our beautiful subject teaches.

1. Many things that are desirable are not feasible.
2. Individuals and communities face trade-offs.
3. Other people have more information about their abilities, their efforts, and their preferences than you do.
4. Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.
5. There are trade-offs between equality and efficiency.
6. In an equilibrium of a game or an economy, people are satisfied with their choices. That is why it is difficult for well-meaning outsiders to change things for better or worse.
7. In the future, you too will respond to incentives. That is why there are some promises that you’d like to make but can’t. No one will believe those promises because they know that later it will not be in your interest to deliver. The lesson here is this: before you make a promise, think about whether you will want to keep it if and when your circumstances change. This is how you earn a reputation.
8. Governments and voters respond to incentives too. That is why governments sometimes default on loans and other promises that they have made.
9. It is feasible for one generation to shift costs to subsequent ones. That is what national government debts and the U.S. social security system do (but not the social security system of Singapore).
10. When a government spends, its citizens eventually pay, either today or tomorrow, either through explicit taxes or implicit ones like inflation.
11. Most people want other people to pay for public goods and government transfers (especially transfers to themselves).
12. Because market prices aggregate traders’ information, it is difficult to forecast stock prices and interest rates and exchange rates

h/t Ezra Kline and Jim Rose 

Update:  Chris Dillow's "Alternative Principles" 

Daniel Kahneman changed the way we think about thinking

Daniel Kahneman changed the way we think about thinking. But what do other thinkers think of him? | Science | The Observer

Carlo Cipolla 's "The Basic Laws Of Human Stupidity"

A l w a y s  a n d  i n e v i t a b l y  e v e r y o n e  u n d e r e s t i m a t e s  t h e    n u m b e r  o f  s t u p i d  i n d i v i d u a l s  i n  c i r c u l a t i o n .

Moreover, its not only that we are stupider than we think, we are also less competent than we think! Ha! Check the Dunning-Kruger effect and/or this pdf

Noahpinion: What does it even mean to "believe" something?

Noahpinion: What does it even mean to "believe" something?: I've done three posts recently that dealt with the issue of "beliefs". First I talked about "derp" , which I defin...

Many years ago I struck out "believe" from my vocabulary.Why? Because I came to the conclusion that one believes what one desires not what one knows. At best, one believes a theory that is not yet proven, i.e. the Laffer curve or that humans are subject to a second judgement. 

Warren Buffet: “listen to those who insist you’re wrong”!.. Paul Krugman....

Great quote from Warren Buffet.
h/t to Thierry Malleret at Pieria

Listen to contrarian opinions! This is what some of the world’s most successful fund managers do. As this year’s Berkshire annual meeting, for example, Warren Buffet invited Doug Kass, who’d taken a short position against Berkshire, to take part in the meeting, inviting everybody to “listen to those who insist you’re wrong”!

Paul Krugman advises to:
“Pay attention to what intelligent people are saying, even if they do not have your customs or speak your analytical language.”
 

Henry Farrell 's excellent turn of phrase

Great quote:

.. if you want to criticize it, you need to understand it

at Crooked Timber  

Jonathan Portes advises on Which Economists we should listen to

Well, I for one, read Jonathan Portes at his blog: NotTheTreasuryView but also at the excellent new site pieria .
What he suggests is

that policymakers and the public should listen to economists who fulfill two criteria: first, they have made empirically testable predictions (conditional or unconditional - see Krugman here) that have proved, by and large, to be broadly consistent with the data; and second, they base those predictions on an analytic framework (not necessarily a formal model) that is persuasive.

SS. For exactly the same two criteria J.Portes proposes, I am not that keen on reading our Yiannis Varoufakis, who contributes at pieria. You see, I have a third criterion, i.e. brevity.

Great quote

"The key concepts with which to approach any problem were to understand the choices available to those involved, to define the relevant costs, and to understand the constraints under which choices are made, ... "

David Glasner  , economist at the Federal Trade Commission, Washignton, DC , on Armen Alchian 

Επιχειρηματολογία ή Αγγιτάτσια;

Στα μέσα των '90'ς παρακολουθούσα σεμινάριο πάνω στην Διαπραγμάτευση στο INSEAD όταν ο καθηγητής/εισηγητής εμφατικά είπε:

'Αν δέν έχεις τρία ισχυρά αντεπιχειρήματα στην θέση, που υποστηρίζεις, δέν έχεις μελετήσει το θέμα επαρκώς... μελέτησέ το κι άλλο!

Έ, λοιπόν, πρίν απ' αυτόν, ο John Stuart Mill είχε γράψει

“He who knows only his own side of the case knows little of that.

His reasons may be good, and no one may have been able to refute them. But if he is equally unable to refute the reasons on the opposite side, if he does not so much as know what they are, he has no ground for preferring either opinion... Nor is it enough that he should hear the opinions of adversaries from his own teachers, presented as they state them, and accompanied by what they offer as refutations. He must be able to hear them from persons who actually believe them...he must know them in their most plausible and persuasive form.”